Project title - Casindo

Capacity development and strengthening for energy policy formulation and implementation of sustainable projects in Indonesia CASINDO DELIVERABLE NO.: 27

Biogas construction plan in Jeruk Manis Village in Lombok, West Nusa Tenggara Author: Abdul Natsir University of Mataram

Bilateral energy cooperation between Indonesia and the Netherlands BECIN October 2011

Preface

This report is deliverable No. 27 of the project ‘Capacity development and strengthening for energy policy formulation and implementation of Sustainable energy projects in INDOnesia (CASINDO)’. The CASINDO project aims to establish a self-sustaining and self-developing structure at both the national and regional level to build and strengthen human capacity to enable the provinces of North Sumatra, Yogyakarta, Central Java, West Nusa Tenggara and Papua to formulate sound energy policies and to develop and implement sustainable energy projects. The CASINDO project is funded by NL Agency and implemented by a consortium coordinated jointly by the Indonesian Ministry of Energy and Mineral Resources and the Energy research Centre of the Netherlands (ECN), comprising the following organisations:  Indonesian Ministry of Energy and Mineral Recourses, Jakarta.  Muhammadiyah University of Yogyakarta, Yogyakarta.  Diponegoro University, Semarang.  University of Sumatra Utara, Medan.  University of Mataram, Mataram.  University of Cenderawasih, Jayapura.  Institute of Technology of Bandung (ITB), Bandung.  Technical Education Development Centre (TEDC), Bandung.  Technical University Eindhoven, Eindhoven.  ETC-Nederland, Leusden.  Energy research Centre of the Netherlands ECN, Petten.

The sole responsibility for the content of this report lies with the authors. It does not represent the opinion of NL Agency and NL Agency is not responsible for any use that may be made of the information contained herein.

Executive summary The proposed small-scale renewable energy project to be developed under the Casindo Technical Working Group IV in West Nusa Tenggara is focused on household biogas. The project will be implemented in Jeruk Manis, which has been selected as the target location for the implementation of the renewable energy project in the program Casindo. Administratively, the village of "Jeruk Manis" is located in the district Sikur, East Lombok, West Nusa Tenggara province. The number of households eligible as the target of the program in Jeruk Manis is 63. To implement the project, the Casindo team in WNT has partnered with Hivos and its BIRU program. The biogas digester contruction will be conducted by BIRU Lombok, in collaboration with a construction partner organization called “Yayasan Mandiri Membangun Masyarakat Sejahtera (YM3S)” and managed by the Casindo project team from the Faculty of Engineering at the University of Mataram. Up to now, the BIRU program in Lombok has not yet been able to partner with a financial institution to provide the credit for household biogas digester construction, so that the necessary funds will have to originate from vilagers and a subsidy from Hivos. If the project is implemented, it will bring many benefits for poor people in the target location, which are likely to be sustained for a long time, including:  Strengthen the integration of agriculture and cattle breeding for the improvement of agricultural resources.  Creating jobs in the biogas construction sector.  Strengthen food security by improving agricultural output through the use of biogas slurry.  Empower women by providing opportunities in the national domestic biogas program as operators of biogas engines, lights, and refrigerators. In Indonesia, women can also take the role of campaigners for biogas, biogas users coaches, and small and mediumscale entrepreneurs selling slurry.  Promoting environmental awareness while linking it to an economic advantage.  Reducing the burden of women to collect firewood and facilitate alternative additional activities to fill the time available.  Improving household sanitation and reduce diseases associated with poor sanitation.  Reducing air pollution from smoke, which is closely related to respiratory diseases, eye infections, and accidental fires accidents due to the use of fire in closed spaces. While the benefits of developing biogas in the selected low-income location are obvious and abundant, there are also many challenges. The main problem for the proposed project is finding other interested funders to support the building of household biogas, as the financial capacity of the target households is very small.

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Table of Contents Executive summary............................................................................................................. 2 1 Introduction ................................................................................................................. 4 2 Market analysis ........................................................................................................... 5 2.1 Geographic description of selected location ........................................................ 5 2.2 Demographic profile of selected location ............................................................ 6 2.3 Educational profile ............................................................................................... 7 2.4 Economic profile .................................................................................................. 7 2.5 Energy profile....................................................................................................... 8 2.6 Current energy provision...................................................................................... 9 2.7 Estimate of total demand for the proposed technology...................................... 10 2.8 Cultural factors underpinning energy choices.................................................... 10 3 Product or service description................................................................................... 12 3.1 Introduction to household biogas ....................................................................... 12 3.2 Technology description ...................................................................................... 12 3.3 The cost of a biogas installation and financing options ..................................... 14 3.4 Mantainance requirements ................................................................................. 15 3.5 Construction process .......................................................................................... 15 3.6 Social and economic impact............................................................................... 17 4 Regulatory setting ..................................................................................................... 18 4.1 Relevant policies and programs ......................................................................... 18 4.2 Environmental permits ....................................................................................... 19 4.3 Construction and operating permits ................................................................... 19 4.4 Applicable taxes and charges or obtainable grants and subsidies ...................... 19 5 Project management .................................................................................................. 20 5.1 Description of the project champion .................................................................. 20 5.2 Description of the project team .......................................................................... 21 5.3 Monitoring after construction............................................................................. 22 6 Technical feasibility .................................................................................................. 23 6.1 Technical requirements of the technology ......................................................... 23 6.2 Output ................................................................................................................. 23 6.3 Availability of input requirements in the selected location................................ 23 7 Financial analyses.................................................................................................... 24 7.1 Costs ................................................................................................................... 24 7.1.1 Capital costs ................................................................................................ 24 7.1.2 Operating costs............................................................................................ 24 7.2 Grants and subsidies ........................................................................................... 24 7.3 Revenues ............................................................................................................ 25 7.4 The cash flow ..................................................................................................... 25 8 Risk analysis and contingency planning ................................................................... 27 ANNEX 1: Financial, social and environment impact ..................................................... 30 ANNEX 2: Proposal Logical Framework ......................................................................... 33 ANNEX 3: Project milestones .......................................................................................... 34

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1 Introduction CASINDO stands for CApacity development and strengthening for energy policy formulation and implementation of Sustainable energy projects in INDOnesia. The overall objective of the CASINDO programme is to establish a self-sustaining and self developing structure at both the national and regional level to build and strengthen human capacity to enable the provinces of North Sumatra, Yogyakarta, Central Java, West Nusa Tenggara and Papua to formulate sound policies for renewable energy and energy efficiency and to develop and implement sustainable energy projects. The project focuses on five provinces: North Sumatra, Yogyakarta, Central Java, West Nusa Tenggara and Papua. These provinces were selected by the Ministry of Energy and Mineral Resources based on the identified need for assistance in the province.

Figure 1.1 Geographic overview target provinces CASINDO To achieve the CASINDO objective seven Technical Working Groups have been established with the aim to conduct the technical activities under the various work packages and to produce the agreed deliverables. This report presents results from Technical Working Group IV on Renewable Energy project development. Its main aims were:  To identify suitable non-hydro RE projects that can be developed in the province.  To conduct an energy needs assessment in a selected location.  To develop a business plan for a proposed solution to the identified main energy problem of the target community.  To identify potential investors.  To start construction.

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2 Market analysis 2.1 Geographic description of selected location

Figure 1. Map of the target location Jeruk Manis is the name of the target location chosen for the implementation of the renewable energy project in the program CASINDO. Administratively, the village of "Jeruk Manis" is located in the district Sikur, East Lombok, West Nusa Tenggara province. Geographically, it is located at 08o 34' 21.50" North and 116o 25' 22.17" East. The village "Jeruk Manis" is bordered on the west by Tetebatu village, east by Jurit Baru village, north by the Forest Conservation area and south by the village of Kembang Kuning. This location is ± 54 km east of Mataram and is accessible using two wheelers and four-wheel with a travel time of about 90 minutes. This area has abundant natural resources, such as protected forests, springs, waterfalls, rice fields, flora and fauna. The surrounding forests and waterfalls are part of a protected nature reserve, which acts as a storage of forest water resources and tourist attraction. Fertile land and availability of adequate water sources makes this region very suitable for agriculture, especially for growing rice, tobacco and pulses. The total area of the village of "Jeruk Manis" is estimated at 14 km2 , with rainfall levels of 3,000 mm per year and average air temperature of 30 degrees Celsius. This area has some unique features like an unspoiled rural atmosphere, trees, water flowing all year long, green fields, a strong culture, a high spirit of mutual help and social life that pursues the public interest. In addition, the community is upholding the rule of

verbal agreement about illegal logging and protection of water resources and natural environment around them. When viewed from the village topography, this area is very safe from natural disasters such as floods, landslides, forest fires etc.

2.2 Demographic profile of selected location The village "Jeruk Manis" has three sub-villages, namely Barang Panas, Kebun Baru and Gawah Buak, with a combined population of 2033 souls living in 761 households, as shown in the following table. Table 1. Number of population and household Population No of Village/Sub Village household Male Female Total Jeruk Manis (total) 991 1.042 2.033 761 Barang Panas 303 320 623 237 Kebun Baru 310 315 625 240 Gawah Buak 378 407 785 284 Source: Data villages Jeruk Manis in October 2010.

The size and structure of families in the village of "Jeruk Manis" is basically the same as in other areas on the island of Lombok. The structure of household (families) consists of father, mother and children, and households can be grouped in small household size (1-3 persons), middle household size (4-6 people), and large household size (> 7 people). The largest number of families belong to the group of middle-size households. Table 2. Size of household in the village of Jeruk Manis Size of household 1 – 3 person 4 – 6 person > 7 person

Percent (%) 30 62 8

Source: Data villages Jeruk Manis in October 2010.

According to age structure, the villagers of "Jeruk Manis" are grouped in groups of children and adolescents (aged 50 years). Table 3. Age structure in the village of Jeruk Manis Age structure (year) Children & adolescents : < 17 years of age Adult : 18 - 50 years Elderly : > 50 years

Percent (%) 25 76 9

Source: Data villages Jeruk Manis in October 2010.

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2.3 Educational profile The educational profile of a village can be seen from the availability of educational facilities at the village level, community level of education achieved, and number of students from the village who are currently attending elementary, junior high schools, high schools and universities. Table 4. Number of educational facilities Number of Educational Facilities Village Junior High Elementary High School School Jeruk Manis 2 1 Table 5. Number of villagers with completed schooling Number of villagers with completed schooling Village High school Bachelor degree University Jeruk Manis 186 4 8 Table 6. Number of students currently enrolled in schools Number of students currently enrolled in schools Village Elementary Junior high High school University school school Jeruk Manis 308 158 50 7 Source: Data villages Jeruk Manis in October 2010.

As can be seen from tables 4-6, the general educational level of villagers in jeruk Manis is relatively low.

2.4 Economic profile When viewed from the daily activities of villagers "Jeruk Manis" and the availability of extensive agricultural land, most of the population of Jeruk Manis who are of childbearing age (18-50 years old) seem to have a permanent livelihood. Nevertheless, based on information from the village officials, the unemployment rate in this region has reached 20-25%, which suggests that low levels of education led to high unemployment. Society has not been able to fully create their own jobs despite the vast agricultural land. Villagers of "Jeruk Manis" mainly work in the sectors of agriculture, commerce, government, and local handicrafts industry. Workers in the agricultural sector are mostly farmers and farm laborers.The local industrial sector consists mainly of craftsmen. Table 7. Employment sectors and number of employees Village Jeruk Manis

Employment sectors Farmer & Farm Labor Trade 1091 32

Government 5

Craftsman 40

Source: Data villages Jeruk Manis in October 2010.

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Households that serve as the target group for Casindo activities are classified as poor. From the survey results obtained, the average household income is IDR 5.291.222,00 per year or IDR. 440.935,00 per month (Source: Need assesment questionnaire carried out for this project). In the village, 189 households also receive government subsidies in the form of BLT (Bayar Langsung Tunai) of the amount of IDR 200.000,00/family per month. From the perspective of low income households, expenditure for energy (kerosene and lighting) is also minimal at about 10% of total household expenditure. Usually the poor people receive scholarship aid from the government for school fees. Average household expenditure for food, energy and school fees is IDR 4.583.917,00 per year or IDR 381. 993,00 per month. Table 8. Average household expenditure Type of expenditures Food Energy School fees Total

IDR per year 4.125525,30 458.391,70 0,00 4.583.917

IDR per month 343.793,70 38.199,30 0,00 381.993

(Source: Need assesment questionnaire carried out for this project).

2.5 Energy profile An energy needs assessment was conducted in the Jeruk Manis village in October 2010, where 100 households were surveyed on their energy uses. From the energy needs survey, the following energy use patterns emerged:  The main energy source for cooking is firewood, mainly collected free of charge in the surrounding forest area  The main energy source for lighting are kerosene and electricity and  The main energy source for vehicles is gasoline Table 9. Average household energy expenditures per fuel type Energy service

Fuel type

Cooking

wood

Lighting

kerosene lamp Lighting Electricity (Solar PV) Lighting Electricity (MHP) * The electrcity price

Average cost Average monthly (in IDR, at the Total monthly consumption time of cost writing) 55,8 bundle IDR 0,00 IDR 0,00 13,37 litre

IDR 6.000/l

IDR 80.220

0,84 kWh

IDR 10.000 IDR 10.000 per month* (100W x 12 hour IDR 5.000 per IDR 5.000 x 30 day) = month* is fixed per month, not per kWh

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Expenditures for energy are usually managed by housewives. The type of energy used for cooking and lighting depends on the capability of a household economy. The energy consumption of the villagers for cooking and lighting does not experience significant changes from year to year, it is relatively constant. Provision of energy services at the village/sub-village level is also relatively constant; Pertamina supplies kerosene to the level of retail agents, typically with a fixed schedule of once a week. Energy supply barriers for the local people are caused by various factors. These factors are current government policies to reduce kerosene subsidies, the fact that during the tobacco harvesting season the owner of tobacco ovens buys any available subsidised kerosene that was meant for the poor people and kerosene suppliers who try to sell kerosene at higher prices so that it becomes too expensive for the poor.

2.6 Current energy provision The main sources of household energy for cooking are firewood and kerosene. Fuel wood is obtained from nearby forest while the kerosene is supplied by Pertamina shops. Energy for lighting is obtained from the following sources:  solar panels with capacity of 650 watts peak provided to 100 families by the national electricity company (PT PLN) through their corporate social responsibility program.  electricity from a microhidro power plant which consists of 3 turbines with capacity of 3 kW, 5 kW and 10 kW each, which serve approximately 110 other households. The current energy supply to the village is shown in the below table : Table 10. Current energy supply in Jeruk Manis Energy supply Type of energy Remark (bundle/litre/watthour) Wood unlimited supply from cooking nearby forest Kerosene Pertamina shop cooking &lighting Electricity SHSs: 650 Wpeak x 8 lighting hours Electricity Micro-hydro: 18 kW x lighting 12 hours The price of energy supplied to the population depends on local conditions. Firewood from the surrounding forest is easily accessible and free, which means that villagers tend not to buy it. The retail price of kerosene depends on the cost of transport to the retailer level (village / sub-village); people usually buy kerosene at Rp. 6000 per litre. The limited electrical energy in this region is provided by solar panels and a microhydro power plant. The price of electricity from solar panels for 100 families has been agreed to

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IDR 10.000 per month for each household, while the price of electricity from micro hydro is IDR 5.000 per month, because the recipients of the hydro-electrcity have contributed on average IDR 1 million per family to build the micro hydro plant.

2.7 Estimate of total demand for the proposed technology The technology proposed to be developed in Casindo TWG IV is household biogas. This technology has been selected based on community needs for energy for cooking. The villagers who became the target location of this activity, cook mainly using firewood gathered from the surrounding forest. Thus the biogas technology could be used as an alternative solution for cooking fuel for the people in the target location. The total demand for energy in the village of "Jeruk Manis" comes from 761 households. However, not all households are candidates for the implementation of household biogas. Only households which keep cows can benefit from a household biogas installation. Based on the results of the needs assessment, which surveyed 100 families and gathered information from the head of village/sub-village, it was concluded that there are 63 families which have 3 or more cows and 137 families have 1 – 2 cows, as shown in the table 11. Table 11. Number of families with cows in the target location No. 1 2 3

Village/Sub-village Barang Panas Kebun Baru Gawah Buak Total

Number of families have cows 3 or more cows 7 34 22 63

1 - 2 cows 18 65 54 137

Total Nothing Families 212 237 141 240 208 284 761 561

To benefit from a household biodigester, a household must have 3 or more cows, enough land available for constructing the biogas digester and slurry pits, and water resources available in the neighborhood of the location. Based on this criteria, the number of households that are eligible to be selected as the target of the program were 63 families or households. that the number of households that would continue useing firewood and kerosene for cooking remains at around 561 households. So the percentage of people who use firewood and kerosene remains large at 73,72%.

2.8 Cultural factors underpinning energy choices Besides economic factors, there are other factors why this technology (biogas digester) has not been used so far, namely cultural factors. So far, the community has not received the benefits of coverting cow manure to biogas, so that people are not accustomed to lifting, let alone hendling the cow manure because it is still considered a taboo or to be unclean.

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With the education and socialization conducted by relevant agencies such as Department of Mines and Energy, University of Mataram, BIRU Program, NGOs as a partner of Hivos, the public gradually realized that turning the cow manure into biogas is very useful, with the motto "Turns Waste Into Benefits".

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3 Product or service description 3.1 Introduction to household biogas The product/service proposed under Casindo TWG IV in West Nusa Tenggara is household biogas. Household biogas digesters convert animal dung and various other organic materials into a combustible composite gas know as biogas. Biogas consists primarily of methane (CH4) and carbon dioxide (CO2). Methane is a valuable product as it is an efficient energy carrier that has a wide range of uses, from simple gas stoves for cooking to lamps for lighting. The proposed technology would be implemented in partnership with Hivos’ BIRU (Domestic Biogas) program. The BIRU program promotes the use of biogas to fulfil the daily needs of fuel for cooking. Meeting the family cooking fuel needs with biogas is very satisfying, it can replace the role of firewood or kerosene. Biogas digesters owners are no longer spending time looking for firewood in the forest and do not spend money to buy kerosene. Biogas technology provides many benefits to its users, even when compared with other technologies. Biogas development contributes to poverty reduction and strengthening the resilience of livelihoods. In addition, the approaches undertaken by the BIRU program has a broad effect on health conditions and job creation as well as the local economy. BIRU is a new program in the community, but the cow manure digester for biogas production has been introduced some years ago as a demonstration project in many locations.

3.2 Technology description The reactor used by BIRU has six components, namely: 1) inlet that serves as a mixing room for the entry of animal manure 2) reactor that serves as the anaerobic decomposition chamber 3) gas container, storage space, 4) outlet which serves as a space divider 5) the gas transporter room 6) hole deposition The reactor components are shown in the figure.

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Figure 2. Biogas reactor components The reactor works by putting cow dung into the mixing chamber, where the cow dung is mixed with water under the terms of the ratio 1: 1. Cow dung and water mixture flows into the reactor, where biogas is created in the process of anaerobic decomposition. In a few days (3-7) gas will be produced in the anaerobic decomposition chamber and then it is flowed through the pipe to the stove. The residual cow dung flows out of the hole sediment (waste processing reactor) and can be used as fertilizer. The installation of a biogas reactor can be shown in the following diagram:

Figure 3. Diagram of installation of a biogas reactor The technical design of a typical biogas reactor of the BIRU program is shown in the following figure:

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Figure 4. The technical design of a typical biogas reactor The model used is based on the model of cement biodigester used in Nepal (SNI Indonesia). The household size reactors can be of 4, 6, 8, 10, 12 m3 . The use of this biogas reactor technology is still limited to cooking, not for lighting. It can meet the cooking needs of small and medium households and small businesses. With proper care, biogas reactors are expected to stay safe for 20 - 30 years. The material used for construction of biogas reactors such as sand, gravel, bricks, cement and iron are available at many locations. The technical components largely ordered from outside the region are stoves, water drain, the main gas valves, gas pipes, hoses, and others. An important component that can be manufactured by small industries in the vicinity of an implementation location is the mixer. Materials and components used by the BIRU program must meet the criteria / standards set both by Hivos and SNV.

3.3 The cost of a biogas installation and financing options The technical specifications and the cost of a biogas are: Table 12. Cost of biogas reactors 3 Sizes (m ) 4 No of cows required 3 Total kg of manure per day 30 3 Gas produced (m ) 1 Duration of stove use (hour) 4 Construction cost (IDR million) 5,7 Subsidies from Hivos 2 (IDR million) The cost to be paid by 3,7 user/household (IDR million)

installation (depending on its size)

6 4-5 45 1,5 6 6,3

8 6 60 2 8 7

10 7-8 75 2,5 10 8

12 9 90 3 12 8,8

2

2

2

2

4,3

5

6

6,8

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The price of a biogas reactor unit is not cheap. Therefore, to reduce cost barriers, in some provinces the BIRU program connects creditor institution and / or banks with potential candidate biogas users, to provide access to credit facilities. This program also provides an incentive to prospective users in the form of a direct subsidy (of 2 million IDR/digester). Unfortunately in Lombok, there are still no credit facilities available for biogas users. Biogas users get protection against the errors of development, with a warranty for 3 years for the reactor and other components 1 year warranty. Additionally, the BIRU program also integrates the role of rural development NGOs with government, private-run agricultural sector, and live cattle business.

3.4 Mantainance requirements BIRU biogas reactor has a standard in the construction, i.e standard materials, standard work processes, standards builders and supervisors, the standard way of working, and management standards. So when the construction of biogas reactors is in accordance with these standards, special mantainance is not required, the most important thing is to continuously incorporate manure in accordance with the provisions of the biogas reactor operation. Occasionally, some maintenance is needed on the reactor to prevent leaking (guaranteed for 3 years) and supporting components (stove, pipe, main valve, hose, etc.) that are guaranteed for 1 year.

3.5 Construction process The construction process begins with designing the construction area, then dig the ground according to the size of the reactor to be built. Next are the hardening of the foundation and basic reactor dome, the building inlet, entering the soil to form a dome construction, put the dome in accordance with the standards, add cement, aggregate and sand mixed in the ratio 1: 2: 3, build outlets, and install other components such as pipelines. After the dome is finished, it is casted and dried. The construction sequence of a biogas digester can be seen in the following pictures:

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(a)

(b)

(c)

(d)

(e)

(f)

(g) Figure 5. The construction process sequence of a biogas digester Availability of skilled builders for the construction of the reactor is a key condition of the BIRU program. In every area of work, BIRU carries out training for local builders by a professional trainer. The goal is to have in each work area professional local builders who have ID cards. In Lombok, BIRU has 31professional builders and 9 supervisors. The BIRU program has obtained permission from the Ministry of Energy and Mineral Resources of the Republic of Indonesia for its biogas reactor technology implementation in Indonesia. In 2008, the Directorate General of Electricity and Energy Utilization, Ministry of Energy and Mineral Resources requested the Embassy of the Kingdom of the

Netherlands to do a feasibility study of biogas potential in Indonesia and asked SNV to conduct research supported by ITB. The result was that the potential for biogas in Indonesia is sufficient to reach one million units and the level of financial benefit to users is satisfactory. Under this agreement, the implementation of biogas BIRU permit in Indonesia has been there and no other permissions are required.

3.6 Social and economic impact Economic benefits The biogas digestors installed through the BIRU program will have broad effects on health conditions and job creation as well as the local economy, including:    

Strengthen the integration of agriculture and cattle breeding for the improvement of agricultural resources. Creating jobs in the biogas construction sector. Strengthen food security by improving agricultural output due to use of biogas slurry. Providing economic opportunities for women in the national domestic biogas program as operators of biogas engines, lights, and refrigerators. In Indonesia, women also can take the role as campaigners for biogas, biogas users coaches, and small and medium-scale entrepreneurs selling slurry.

Social benefits Social benefits to adopting the proposed technology are:  Empowering women by reducing their burden to collect firewood and facilitating alternative additional activities to fill the time available.  Improving household sanitation and reducing diseases associated with poor sanitation.  Reducing air pollution from smoke generated by burning firewood for cooking, which is closely related to respiratory diseases, eye infections and accidental fire accidents due to the use of fire in open and closed spaces.  Improving hygiene education. Environmental benefits    

Reducing deforestation. Controlling greenhouse gas emissions from livestock and organic waste disposal. Recycling of nutrients and restoring soil fertility. Promoting environmental awareness and link it to economic advantage.

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4 Regulatory setting 4.1 Relevant policies and programs There are several relevant policies on national, regional or local level influencing the BIRU program in WNT province i.e : Table 13. Relevant policies on national and regional level Policies Programs

/

National level : Substitution of kerosene with LPG; Phase-out subsidy for kerosene & provide (free of charge) LPG system to the poor

Regional or local level : Self-sustained energy village (Desa Mandiri Energi): 60% of the community energy needs is provided by local resources

A million cows (BSS)

Policy objectives

Implementation

Policy objective likely to be achieved

Main obj.

Secondary obj.

To date

Future

Lower the cost of subsidizing fuel (for the government)

To reserve the kerosene for use in transport (instead of cooking); to support the use of gas, which is the more abundant fuel in Indonesia

In Lombok, this measure should start in 2010 with 500 000 households. (Jeruk Manis in 2011: 256 household)

Will likely be fully implemented

Yes, in the longer term it will cost the government less to subsidize gas than it would cost to keep subsidizing kerosene.

20 target locations of DME by 2013

Will be implemented

Mixed results

One million cows population in 2012

Will be implemented

Yes.

To provide To reduce fuel energy supply oil for underdeveloped communities, to diversify energy sources, to introduce productive activity, increase job opportunities. Program To increase accelerating the rural income, development of meet the needs animal farms of national with the aim to demand for achieve as soon meat. as possible the o optimum population in accordance with the carrying capacity of the region.

The proposed biogas technology is especially consistent with the regional government program in the West Nusa Tenggara which aims to achieve about one million cows population (BSS) in the province. The problems that arise with the existence of such BSS

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program include increasing amounts of manure, and the related hazard to hygiene and environmental sanitation, which can be resolved by the use of biogas technology.

4.2 Environmental permits The BIRU program builds household scale biogas reactors, with no negative impact on the environment. On the contrary, there are clear positive impacts (as mentioned above), so it requires no environmental permits.

4.3 Construction and operating permits Construction and operation of biogas reactors in BIRU program have a standard, thus the only approval needed is that of the customer (user).

4.4 Applicable taxes and charges or obtainable grants and subsidies The BIRU Program does not apply taxes and levies. BIRU Program provides subsidies amounting to IDR 2 million to the customer (user) who build the biogas reactor. Hivos also started implementing the concept of "carbon market" and “carbon credits”. With the implementation of biogas in various countries or in Indonesia, Hivos has contributed to reducing carbon emissions. The magnitude of the reduced carbon emissions will be calculated and converted to be able to claim the related amount of carbon credits.

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5

Project management

5.1 Description of the project champion1 The BIRU (Domestic Biogas) program is managed and implemented by Hivos (Humanitarian Institute for Development Cooperation) and SNV Netherlands Development Organisation (an International Non-governmental Organisation) - both are from the Dutch development agency, and funded by the Embassy of the Kingdom of the Netherlands and supported by the Directorate General of Electricity and Energy Utilization of the Indonesian Ministry of Energy and Mineral Resources. In running the biogas program in Indonesia, SNV and BIRU adopt a multi-stakeholder sectoral development approach, namely involving local contractors and construction workers, supported by local and national training institutions. In this strategy, increased interest in biogas is offset by the availability of quality services, competitive price and satisfactory after-sales service. To achieve these conditions, BIRU enthusiasts should really understand their needs, understand the quality of biogas, and realize the value of money to be invested to build a reactor unit. BIRU is a decentralized program. The unit at the provincial level will be responsible for implementation at the provincial and district levels. The design and biogas volume is adjusted to the conditions in the relevant area: the density of livestock, cooperation with other parties, and the ability of prospective users for investing. With the design and installation (the handling of bio-slurry, use of the reactor, mixing of animal dung, the distance between the cage and the reactor, water availability) appropriate, the operational resilience of a biogas unit can be guaranteed. This program uses environmentally friendly biogas reactors which have been successfully used in various countries such as Cambodia, Bangladesh, Laos, Vietnam, Pakistan and Nepal. In Nepal, biogas reactors have been constructed for cca 200 thousand households over more than 15 years, and are still functioning. The BIRU program initially focused on four provinces (West Java, Central Java and Yogyakarta, and East Java). Currently, the BIRU Program is also running in two other provinces outside Java (Bali and WNT). The BIRU programme headquarters is located in Jakarta. The coordinator of the BIRU program in Lombok, WNT is Mr. Umar. The BIRU program started in 2009, and by early 2010 had built a total of 100 digesters in Java. In July 2010, the BIRU courses started running in West Nusa Tenggara (WNT). By December 2010, the program has been able to build about 84 units of biogas reactors on the island of Lombok.

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Champions are the people w ho convert ideas into action. They take on the chores and responsibility and make the needed commitment. These are the men and w omen w ho generally understand best what must be done to succeed and are the ones w ho realize w hat resources – expertise, money, skills – must be obtained. (UNFCCC (2006): Preparing and presenting proposals; A guidebook on preparing technology transfer projects for financing Issued by the Climate Change Secretariat (UNFCCC) Bonn, Germany)

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Mr. Umar has gathered experience working with Care Indonesia from 1992 until 2010. There he worked on areas such as health, education and energy. His experience in the field of renewable energy is with biogas in the province of East Nusa Tenggara. In July 2010 he joined Hivos as coordinator of BIRU Lombok. His objectives in the BIRU program are:  To construct 256 biogas units in Lombok in 2011.  Addition of a new CPO and training professional builder and supervisor.  To extend the work area in North Lombok regency, and add new districts in other regencies.

5.2 Description of the project team The BIRU program is managed and implemented by Hivos and SNV. BIRU representatives in Lombok consist of a Coordinator, Quality Auditor, Promoter as well as administration and finance staff. The construction partner organisation (CPO), in East Lombok, with which Hivos cooperates is an NGO named YM3S (Yayasan Mandiri Membangun Masyarakat Sejahtera). The CPO has a supervisor and professional builders. In addition, the Casindo team from University of Mataram provided support to the program by conducting prepreparation and socialization in Jeruk Manis village. As the implementing agency, Hivos manages and coordinates the overall program. Hivos work areas include planning, monitoring and reporting, technical assistance, managing knowledge, policy dialogue, stakeholder mobilization, advocacy and communication. Hivos is also responsible for managing the financing programs and relationships with institutions that have formed a partnership with BIRU program. SNV’s responsibility in the implementation of the program is for the effective knowledge exchange in the preparation and implementation of the program. These responsibilities are directly related to institutional development, planning and implementation of program activities such as promotion, training, quality control, establishment of biogas enterprise, services and financing related to the construction companies and users of biogas as well as empowerment of women in the program, ranging from an inclusive social aspects and environmental conservation. As a Casindo partner, the University of Mataram’s role in the program was to prepare the feasibility study in Jeruk Manis village and carry out the socialization of the technology. In support of its responsibilities, the Casindo team conducted a survey in the village, with which it established the technical feasibility, as well as the social and cultural feasibiliy of the program in the selected location.

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The organisation of the project can bes een in the scheme below:

Figure 6. Organization of the project

5.3 Monitoring after construction The responsibility for monitoring the biogas reactors after construction is completed lies with the CPO and audit quality from Hivos. CPO regularly monitor the biogas reactors. Each reactor is assigned to the responsibility of a certified supervisor (ID card). The quality monitoring is carried out on a regular basis every 6 months until the guarantee is completed (3 years). Monitoring is conducted to see if the biogas reactor functions properly, resulting in gas with 80 cm of water pressure on the pressure reader, no leakage of the reactor, no hose and faucet leaks, the stove burning with blue flame, forming slurry, and so forth.

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6 Technical feasibility 6.1 Technical requirements of the technology Input requirements Cattle dung 20-30 kg per day (at least 3 cows) for a biogas reactor of 4 m3 and 6 m3 and the avalability of adequate water for mixing manure and water under the ratio 1:1. Space requirements Space requirement for the biogas reactor according to the size of the reactor is shown in table 14: Table 14. Space requirement for the biogas reactor 4 6 8 Sizes (M3 ) (3 x 6) (3,5 x 7) 4x8 Space requirement (M x M)

10 4,5 x 9

12 5 x 10

Other requirements Distance between the biogas reactor and the kitchen should be between 12 and 200 meters. Biogas reactor can work at ambient temperature, best at a temperature of 35o C.

6.2 Output Under normal conditions, a BIRU biogas reactor will produce gas that has an average gas pressure of 80 cm of water (and min 55 cm water pressure; cm of water is a unit to measure gas pressure) 2 days after full charging, and cook with blue flame and faster than a kerosene stove.

6.3 Availability of input requirements in the selected location Based on the survey conducted in the villages, the number of households that have 3 or more cows is 39 households from a sample of 100 households. In addition, based on information from the head of village/sub-villages, there are 24 additional household that have 3 or more cows. Water avalibility in the selected location is also sufficient. The households have sufficient space to install the digesters. Based on the needs assessment questionnaire the households in the selected location (villages) have extensive land. When a household has 3 or more cows, the supply of feedstock to the digester will be constant. In case a household sells one or more of their cows, the feedstock supply to the digester will descrease. According to the CPO coordinator in the field, the number of cows is not a major problem, because 1 or 2 cow can produces 20-30 kg manure, still enough to fill the digester 1 time in 2 days. If the digester functions well and the user continous to fill it with dung and water with a ratio 1 : 1, then the digester will produce a contant supply of gas of consistent quality, which will be sufficient to meet household cooking requirements of some 3 hours per day.

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7

Financial analyses

7.1 Costs 7.1.1 Capital costs The BIRU program is covering the planning and pre-operational cost, including the final engineering design and also workers training. There are no additional planning costs related to the installation of biogas digesters, except the feasibility study and socialization of the technology in the community, which was done by the Casindo team at University of Mataram, but have not been explicitly quanitified. 7.1.2 Operating costs As mentioned, the number of biogas digesters to be installed in Jeruk Manis village is 63 units, a higher target for the first two years aims to maximize the use of the BIRU subsidy to households, with a yearly targeted installation rate as shown in table 15. Table 15. Estimated number of digesters to be installed each year Number of digester (unit)

Year 1 Year 2 Year 3 Year 4 Total 25 25 10 3 63

The most units planned are 4 m3 and only 3 units in the first year which are 6 m3 . The installation rate depends on the total demand for digesters and speed of construction.The total demand depends on socialization, technical (number of cows) and financial possibilities of households. Operating cost consist of general and administrative costs, labor costs and material costs. Opearting cost for each year are shown in table 16 (for the trageted number of installations in that year). General and administrative costs mentioned here consist of the maintenance and construction fees. Table 16. Operating cost for digester in Jeruk Manis OPERATING COSTS

Year 1

Year 2

Year 3

Year 4

1

General and Administrative Costs

17,650,000

17,500,000

7,000,000

2,100,000

2

Labor costs

27,060,000

26,625,000

10,650,000

3,195,000

3

Material costs

87,842,000

86,675,000

34,670,000

10,401,000

TOTAL

132,552,000

130,800,000

52,320,000

15,696,000

7.2 Grants and subsidies The BIRU program will give a subsidy of 2 million IDR to a household that wants to install a biogas digester (until 2012). The subsidy is provided after the biogas digester is completed and not in the form of cash but by buying support equipment like, stove, waterdrain, etc.

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Table 17. Grant and subsidies for biodigesters in Jeruk Manis Grants Subsidies 1 2

and

Casindo pre-operation support Hivos subsidies Subtotal TOTAL all years

Year 0 unspecifie d -

Year 1

Year 2

50,000,000 50,000,000

50,000,000 50,000,000

Year 3

Year 4

-

-

-

100,000,000

In addition to the Hivos subsidy, the Lombok team of Casindo Technical Working Group IV has helped in conducting needs assessments and socialisation to villagers about the use of biogas from cow dung. In addition, Casindo also contributed a grant to build one digester as a demo unit in Jeruk Manis village.

7.3 Revenues Revenues represent what customers are expected to pay for goods and services offered. In this case, yearly revenues are the number of digesters installed multiplied by the price of one unit minus the 2 million IDR subsidy. Table 18. Revenues for digester in Jeruk Manis R1

R2

Revenues

Year 1

Year 2

Year 3

Revenue from 4 m3 Units Revenue per Unit Revenue from 6 m3

71,104,000 22 3,232,000 11,448,000

80,800,000 25 3,232,000 -

52,320,000 10 5,232,000 -

Units

3

-

-

Revenue per Unit REVENUES

3,816,000 82,552,000

3,816,000 80,800,000

5,816,000 52,320,000

Year 4 15,696,000 3 5,232,000 5,816,000 15,696,000

After year 2, the revenue per unit is expected to increase, because the Biru subsidy will no longer be available.

7.4 The cash flow The discount rate used in the cash flow projection for the implementation of biogas digesters in “Jeruk Manis” village was the bank interest rate set at 12%. The results of the cash flow analysis can be seen in the following table 19:

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Table 19. Cash flow analysis biogas digester in Jeruk Manis TOTALS COSTS (& GRANTS/SUBSIDIES)

Yea r0 201 0

Year 1

Year 2

Year 3

Year 4

2011

2012

2013

2014

Capital Cost

Cc

0.0

0.0

0.0

0.0

0.0

Capital / pre-operation grants

Gc

0.0

Operating costs

Co

0.0

0.0 15,696,000 .0

Go

0.0

TOTAL COSTS NPV TOTAL COSTS (discount rate = 12%)

TC = (Cc-Gc)+(Co -Go ) NPV TC = TC / (1+disc rate)t; t = year of operation

0.0 130,800,000 .0 50,000,000. 0 80,800,000. 0 64,413,265. 3

0.0 52,320,000 .0

Operating grants

0.0 132,552,000 .0 50,000,000. 0 82,552,000. 0 73,707,142. 9

0.0 52,320,000 .0 37,240,342 .6

0.0 15,696,000 .0 9,975,091. 8

0.0

82,552,000. 0 73,707,142. 9

80,800,000. 0 64,413,265. 3

52,320,000 .0 37,240,342 .6

15,696,000 .0 9,975,091. 8

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0 12 %

185,335,842 .5

0.0

BENEFITS Revenues NPV revenues

R NPV R = R / (1+disc rate)t; t = operation

0.0

NET INCOME

NIt = Rt -TCt

Accumulated Income* NPV NET INCOME

AIt = AIt-1 + NIt NPV NI = NI / (1+disc rate)t; t = year of operation

Benefit/cost Ratio

B/C ratio = NPV R / NPV TC

year of

12 %

12 %

185,335,842 .5

0.0 1.000

The cashflow analysis shows the following: o Movement of annual net income is zero o Cost/benefit ratio is 1.0. The costs of the biogas program is exactly the same as its income.

8 Risk analysis and contingency planning The construction of biogas digesters in the village "Jeruk Manis" needs to be subjected to a risk analysis and contingency planning to assess the possibility of the biogas digester project to be blocked or delayed. Some risks to consider include: Completion risk : Completion risk involves the risk that something started might not be completed after some funds have already been made available by the government, lender or investor. This can happen when a proposal costs far more than originally expected or the market has changed significantly during construction. There are several things that can cause delays in the construction of the biogas digesters although funds were available, including: o The cost of cement: cement is a very significant material in the construction of a biogas digester, and if cement prices increase, the total cost, and hence the price, of a digester will also increase. A higher price might mean slower up-take by users. o Some of the professional masons (trained for this job) might go after other jobs that are more promising (where cost of labor is higher) compared with standard rates paid by HIVOS. o CPO or Hivos could be late in responding to users who are interested to build a biogas digester. After users fill out the form provided, CPO or Hivos should check that the potential user meets the criteria set by the BIRU program. Technology risk The biogas digester technology used in the BIRU program gets a warranty of 3 years. By December 2010, the BIRU program has built 84 biogas digesters spread in many villages across Lombok. Based on information from the Coordinator and promotion staff of the BIRU program Lombok, all but one digester function properly. So it could be said that the BIRU program is almost 100% successful in building biogas digesters which are operating properly on the Lombok island. Thus the risk of the technology not performing well is negligible. So far, the BIRU program in Lombok only had problems with 1 user, where the inserted cow manure did not produce gas for 7 days. After a re-evaluation of the construction of digester and cow manure, the digester was checked for leakage and new dirt was reentered (dirt not mixed with soil), and within 2-3 days the biogas digester functioned properly by producing a blue flame. Apparently, cow dung must not be mixed with the soil because it causes the anaerobic process to be long, so that the biogas is only produced after a long time i.e. more than 7 days. That means that the only plausible technology risk is possible wrong mixing of manure. This risk can be eliminated with a proper socialization process and a user manual. Supply risk The materials needed to build a biogas digester are available in adequate quantity around the target location, so there is no risk of supply shortage for construction material. A

more possible risk is a delay of delivery of components for biogas stoves. Biogas stoves are imported from outside the area (Bandung) and thus require a long time and by considering efficiency, a one-time delivery consists of 25 biogas stoves. However this risk is not significant, since the delay is usually only 2 or 3 days. Economic risk There is a real risk that people in the village can not pay for the biogas digester, because the price to build a biogas digester is 3 million IDR and more (after the subsidy). Average income of the villagers in "Jeruk Manis" is very low, so most households cannot afford it. The Hivos subsidy is not sufficient to build a biogas digester. Economic risk would be smaller if there was support from the government, cooperatives, banks, other financial institutions to build a biogas digester through soft loans or credit. Unfortunately, this is not yet the case on Lombok. Financial risk Occurs either when variable interest rates are used, refinancing of the project is assumed sometime during its life or additional financing is required in the future. Changes in interest rates would cause financial risk to occur. Historical growth shows that interest rates in Indonesia are relatively stable (constant) so that the financial risk is very small. Political risk The political framework at the regional level in WNT did not change rules and regulations relevant for the implementation of the BIRU program in Lombok. Instead the local government is supporting the implementation of the biogas digester program, because the government's main priority now is the utilization of renewable energy. In addition, local governments have a program which aims to achieve one million cows population (BSS) in WNT, which fits well with the BIRU program. The BSS program will increase the number of cattle which means there will be a lot of dirt, which could be used for biogas. Biogas can replace kerosene and firewood as a substitute energy for cooking. Therefore, the political risk for the project is negligible, the political framework is in fact very favourable for the BIRU program. Environmental risk Biogas digesters have no negative environmental impact on the community or a user, but several positive impacts, including: o Dirty cages and cows that used to disturb the environment, are now clean, tidy and do not represent a health hazard. o The smoke from wood stoves and fuel oil which can harm the health, is now replaced by a clean and safe cooking fuel. o Less pressure on forests around the village which are harvested by residents looking for firewood.

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Social risk Implementation of biogas can be burdened by possible social risks from some people, namely: o Residents who have not obtained the education and socialization of the benefits of biogas still think of it as a taboo / unclean use of cow dung. So it is important to carry out more socialization. o The implementation schedule can create jealousy with those that cannot afford a digester, or towards those that get it first. Force majeure risk Force majeure risk that may occur in the construction of biogas digesters in the village "Jeruk Manis" is the occurrence of earthquakes, volcanic eruption, or landslide. Generally, the occurrence of earthquakes in Lombok island can be considered realtively high, but the scale is usually under 5.0 SR. Volcanic eruption or landslides have not occured in the last 10 year.

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ANNEX 1: Financial, social and environment impact Financial Returns Why will the proposal be successfull? Strong Demand

X Urgent Need

Government Incentives

Lack of Alternatives

Other

If 'Other' was chosen above, please expand

Have other projects / enterprises tried to be profitable in serving this market? X Yes

No

Unknown

If Yes - Have these failed? Why? Biodigesters funded by the government have been introduced in some villages in the area, but their performace was not good, due to unprofessional contruction Why is your proposal different? Hivos' contruction partners are well-trained and follow strict quality standards and have professional builders to build digesters Why do you expect to succeed? The Biru program has a lot of experience and has been very successful so far; in addition, the project includes socialisation of the technology and after construction monitoring What resources - services and funding - do you think are essential to your success? Additional funding to lower the cost of biodigesters for the users, beyond subsidies from HIVOS

What kind of funding do you need? X Loan

Investment

From what kind of institution? Commercial Bank X Charitable foundations

X Government-sponsored development institutions and banks Socially responsible investment fund

Venture Capital

What is the projected interest rate range that can be paid to a lender? X 0% - 3%

4% - 8%

8% - 12%

Greater than 12%

What are the projected investment terms (i.e. length of time for loan or investment)? Less than 1 year

1 - 2.99 years

3 - 5.99 years

X Over 6 years

What is the projected Internal Rate of Return? X Less than 5%

5% - 9.99%

10% - 14.99%

Greater than 15%

Has this proposal received any grants/subsidies? X Yes

No

If Yes - How Much

_________________

Is this proposal expected to receive any grants/subsidies? X Yes

No

If Yes - How Much

_________________

If Yes - Who provided (or is expected to provide) the grants and/or subsidies? HIVOS, Casindo Will audited financial statements be available for review on an annual basis? X Yes

No

Indicate the size of the group who will reap financial benefits from this proposal Individual

Small Group

X Community/Region

Country

Provide an indication as to the length of time anticipated before profits are realized Immediately

1-3 Years

4-6 Years

6+ Years

Why would customers choose the product and/or service over those currently available? New

X Improvement

Lower Cost

X Better Quality

Social and Development Impacts With respect to your proposal, check all of the following social/development impacts that are applicable for your country/region X Better Health X Jobs for Women X Saves Time

X Quality of Life Eliminate Child Labor

Education

Job Creation

Income Generation

Access/Water Quality

X Better Food Production X Energy Efficiency

X Other (improve manure management)

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Definitions: Better health Quality of Life Education Job Creation Jobs for Women Eliminate Child Labor Income Generation Access/Water Quality Saves Time Better food production

Energy efficiency

Less smoke, more light; better ventilation, sanitation and waste disposal Level of well-being i.e. access to electricity for home/store/community center Increased income to finance formal education or electricity for school Creation of more or better gainful employment opportunities Creation of gainful employment opportunities specifically for women Improvement in productivity that ensures child labor not needed; time for education Stimulation of economic development in the region through energy services Better access to water; higher quality of water Higher productivity through energy services; more free time available Improved food production through safe food storage, lighting, etc. Same level of end-use services (ex: lighting, heating) with less electricity or lower economic costs and environmental impacts

Explain which three of the above answers will have the highest positive impact 1) Better health, no more burning wood in the kitchen and associated health hazards 2) Saves the time so far consumed for collecting wood and/or for buying kerosene at the market 3) Better food production because of use of slurry, which is an organic fertilizer Projected number of households served through this proposal per year X Less than 100

100 - 999

1,000 - 10,000

Greater than 10,000

Projected number of people provided access to modern energy services through this proposal Less than 100

X 100 - 999

1,000 - 25,000

Greater than 25,000

In the direct new jobs created by your enterprise, how much will each employee earn per year? Less than $250

$250 - $500

$500 - $999

X Greater than $1,000

Projected number of jobs created or sustained through this proposal Less than 5

5 - 10

X 11 - 20

Greater than 50

Provide an indication as to the timeline of the social/development impact of your proposal Initial Impact Only

1 - 3 Year Impact

4 - 6 Year Impact

X 6+ Year Impact

Why is this proposal important for your country/region? There is one million cows policy in WNT provience, more manure for reduce more cow dung Energy demand in Lombok very high and very clean. Discuss potential negative social/development impacts from your proposal that could offset some of the benefits discussed above No negative impact

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ANNEX 2: Proposal Logical Framework Goal National goal: increase the utilization of renewable energy in Indonesia Sector goal : improve energy access for poor people through use of household biogas Logical Framework Purpose The development outcomes being pursued.

Objectives Each of the purposes needs to be quantified.

Outputs The specific results and tangible products the project will produce through a series of tasks and activities.

Activities The specific tasks the project will need to undertake to achieve the required outputs.

reduce the firewood and/or k erosene consumption

a 100% reduction in firewood consumption for households with a biodigester

25 digester 1st year, 25 digester 2nd year, 10 digester 3th year, 3 digester 4th year

feasibility study, BIRU management socialisation of the experience, CPO and their technology, construction equipment, external funding of biodigesters, afterconstruction monitoring

improved manure management

between 50 -100%

How will the outputs and purpose be measured? Indicators How will you know you've achieved your purpose? Indicators quantify the outputs, purpose and objectives. (e.g. Reduced firewood consumption, number of installations.) number of biodigesters installed

socialisation, training of biogas users

Inputs The resources available to perform and enable the activities (i.e. human resources, equipment, capital)

Unram socialization experience

Means of Verification Assumptions The information source or process that will enable Conditions which could effect you to prove that you've achieved the results. progress but over which managers have little control. personal visit to the village

the villagers may not have sufficient money

ANNEX 3: Project milestones TO DO LIST

TO BE DONE BY (Month ?) DONE BY (Who?)

COST

PLANNING STATE MILESTONES Completion of Planning Every year Biru Program No cost All the factors that go into a plan have been identified and are understood. The conditions under which something is feasible or infeasible are clear Financial Structuring

Every year

Biru Program

No cost

Financing structure is arranged. Where will the monies come from? Where will the monies go? How will the financial structure evolve over time?

AUTHORIZATION MILESTONES Closing 2009,00 Biru Program Financing contracts, construction contracts, land purchase or leases, approvals to build or operate or cross public lands or use natural resources, contracts to sell the output of what is being built or to provide a service in a particular region, contracts to provide fuel, equipment, trucking and staff must all come together. CONSTRUCTION OR PRE-OPERATIONS MILESTONES Equipment Installation July 2010

Biru Program

Unknow

Biru Program

Unknow

Equipment installation and acceptance testing complete.

Human Resources

July 2010

Selection of management, skilled workers and semi-skilled workers should be done and any necessary training carried out

OPERATIONS MILESTONES Production Setup

Ongoing

Biru Program

Unknow

Ordering supplies and production materials should be complete.

Routine Maintenance Ongoing CPO Unknow Routine maintenance schedule should be complete. This includes - how will the project be operated and maintained. Will its value grow or shrink over time? After it is built, should major repairs and re-fittings be expected? How will routine matters be handled? What records will be maintained? How will these be shared and discussed? How will decisions be made? How often and based on what documents? Major Maintenance

Ongoing

CPO

Unknown

Major maintenance/rehabilitation schedule plan should be complete. This includes - how will the project be operated and maintained. Will its value grow or shrink over time? After it is built, should major repairs and re-fittings be expected? How will non-routine matters be handled? What records will be maintained? How will these be shared and discussed? How will decisions be made? How often and based on what documents?

Performance Reporting

Ongoing

CPO

Unknown

Financial reporting schedule should be established. How often will the company report its performance. Monthly, quarterly, annually? Who will keep track of the company's finances? Who will prepare the financial statements? Who will audit the financial statements?