Development model of renewable energy policy for sustainable bio-pellet industry in Indonesia using interpretive structural method

Abstract

New and renewable energy development should be encouraged because Indonesia is net importer of oil. Government subsidy for transportation and electricity is more than Rp 300 trillion per year. Presidential Decree No. 5, 2006, mandates that energy-mix target by 2025 will be 17 % for new and renewable energy. The demand growth of energy is about 7 %, compared to developing countries with only 2-3 %. This study aims to develop renewable energy policy models concerning biomass for rural electrification; to identify the factors that influence price of feed-in tariff (FIT) determination, in particular wood-based biomass; and to design the role of social forest as raw materials for bio-pellet industry in sustainable supply chain. Research method using soft systems methodology (SSM) is the application of interpretive structural modeling (ISM) and strategic assumption surfacing and testing (SAST). The results showed that the key elements of development policy model are feasible biomass energy tariff, competent human resources, coordination among related local government offices, and community participation. Other important factors are funds and investments for business, microfinance, state-owned forest lands, and smallholder plantations policy one spatial regions plan institutions. The strategic assumptions have been identified, which are sufficient supply of raw materials to industry, availability of alternative potential industrial biomass raw materials in the local areas, the obvious trade system to accelerate the model implementations that requires regulatory support from local governments, inventory land use and forest area inventory, and support of community leaders.