Energy Consumption and Savings in Indonesian Resort Hotels

Perspectives for Energy Efficiency and Renewables

Master's Thesis, 2011

125 Pages, Grade: 1,3



List of Tables

List of Figures

List of Abbreviations

1 Foundations
1.1 Overview
1.2 Indonesia and Tourism
1.3 Weather and Climate Conditions
1.4 The Energy Sector of Indonesia
1.4.1 Supply Side
1.4.2 Demand Side
1.4.3 Energy Policy
1.4.3 Energy Prices
1.4.4 Trends for Energy Efficiency in Buildings

2 Research Method
2.1 Reasons for the selected Method
2.2 Energy Consulting
2.2.1 The German Guideline VDI
2.2.2 Energy Consulting Approach by the dena
2.2.3 Implementation
2.3 Data Processing
2.3.1 Energy Conversion Factors
2.3.2 Correction of the Energy Consumption
2.3.3 Energy Characteristic Values
2.4 Comparison with Benchmarks
2.5 Economic Concepts
2.5.1 Methodical Procedure
2.5.2 Static Payback Period
2.5.3 Dynamic Economic Concepts

3 Findings of the Energy Consultations
3.1 About the collected Data
3.2 Introduction of the Hotels
3.3 Current Energy Situation of the inspected Hotels
3.3.1 General
3.3.2 Current Practice and Energy Infrastructure
3.3.3 Energy Consumption and Energy Carrier Mix
3.3.4 Constant and variable Energy Consumption
3.3.5 Air Conditioning
3.3.6 Energy Flow Analysis
3.3.7 Energy Costs
3.3.8 CO2 Emissions
3.3.9 Best Practice Examples
3.4 Benchmark Comparison
3.5 Energy Saving Measures
3.5.1 Order of Measures
3.5.2 Avoiding unnecessary Energy Consumption
3.5.3 Optimizing the Energy Infrastructure
3.5.4 Energy Recovery
3.5.5 Investment in efficient and renewable Technology Solutions
3.6 Catalogue of Measures

4 Perspectives for efficient and renewable Technology Solutions
4.1 Overview and Technology Requirements
4.2 High System Efficiency with Heat Pumps
4.2.1 Heat Pumps and Operation Conditions in Indonesia
4.2.2 Exemplary Calculation of Profitability
4.2.3 Combination of Heat Pump and Chiller System
4.3 Suitable Renewable Energy Solutions
4.3.1 Overview on Renewable Energy Policy in Indonesia
4.3.2 Irradiation
4.3.3 Solar Thermal Water Heating
4.3.4 Further Application Fields for Solar Energy
4.3.5 Photovoltaics
4.3.6 Energetic Use of Organic Waste
4.3.7 Chances and Barriers of Renewable Energy Use

5 Conclusion and Recommendations for Action



List of Tables

Table 1.1: Electricity consumption per capita in Indonesia, Java, Bali and the USA

Table 2.1: Energy and CO2 conversion factors

Table 2.2: Laundry correction factors

Table 2.3: Guest night specific benchmarks for hotels in Indonesia

Table 2.4: Area specific benchmarks for luxury serviced hotels in different climatic zones

Table 3.1: Classification and description of the counseled hotels

Table 3.2: Comparison of energy prices per kWh

Table 3.3: Heat pump payback period calculation: basic assumptions

Table 3.4: Heat pump specifications and consumption

Table 3.5: Exemplary heat pump investment: energy saving in the fuel boiler

Table 3.6: Energy prices

Table 3.7: Basic parameters of exemplary solar thermal system

Table 3.8: Exemplary solar thermal system investment: energy balance

Table 3.9: Catalogue of energy saving measures

Table 4.1: Dynamic profitability analysis for a heat pump investment

Table 4.2: Sensitivity analysis of heat pump investment

Table 4.3: Heat pump performance for different heat sources

Table 4.4: Potential and installed capacity of renewable energy options (MW)

Table 4.5: Energy gain of a solar collector in Indonesia

Table 4.6: Summary of system parameters for IRR calculation

Table 4.7: Economic parameters and IRR of exemplary solar thermal investment

Table 4.8: Sensitivity analysis of the IRR of exemplary solar system investment

Table 4.9: Rough calculation of PV efficiency in Indonesia

Table 4.10: Rough calculation of PV profitability in Indonesia

Table 4.11: Sensitivity analysis of PV system investment

Table 4.12: Theoretical energy content of methane from food and garden waste

Table 4.13: Theoretical energy content in organic waste of resorts

List of Figures

Figure 0.1: Typical energy flow chart for large hotels with fuel boiler in Indonesia

Figure 1.1: Map of Indonesia

Figure 1.2: Annual average temperature in Indonesia in ° C

Figure 1.3: Monthly average temperatures in Denpasar

Figure 1.4: Total primary energy supply 2008 in Indonesia

Figure 1.5: Electricity generation by fuel in Indonesia

Figure 1.6: Indonesia ’ s TFEC by sector in

Figure 1.7: Electricity price development in Indonesia

Figure 1.8: Price development of oil products in Indonesia

Figure 2.1: Proceeding of the research

Figure 2.2: Procedure of an Energy Consulting

Figure 2.3: Implementation of the energy consulting guideline

Figure 3.1: Comparison of the energy consumption 2010 in kWh per guest night

Figure 3.2: Comparison of energy consumption 2010 in kWh per m ² (GFA)

Figure 3.3: Correlation between occupancy rate and total energy consumption

Figure 3.4: Typical energy flow chart for large hotels with fuel boiler in Indonesia

Figure 3.5: Average energy prices in Rp

Figure 3.6: CO2 emissions per guest night

Figure 3.7: Example for an efficient warm water supply solution

Figure 3.8: Benchmark comparison of the energy consumption per guest night

Figure 3.9: Benchmark comparison of the energy consumption per gross floor area

Figure 3.10: Illumination saving approach

Figure 3.11: Illumination in a laundry

Figure 3.12: Heat exchanger without insulation1 ; example for an insulation box2,3

Figure 3.13: Comparison of efficiencies of some water heating systems

Figure 4.1: Scheme of a heat pump

Figure 4.2: Scheme of heat pump using the chiller return circuit as heat source

Figure 4.3: COP graph of Rheem HWW50 3 heat pump (heat source: water)

Figure 4.4: Solar irradiation map of Indonesia annual mean

Figure 4.5: Function principle and picture of solar thermosyphon heater system

List of Abbreviations

In this survey, abbreviations are used for institutions and terms that are mentioned regularly. They are written out when mentioned for the first time and appear abbreviated afterwards. This list provides an overview of the abbreviations used.

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The main currency used in this survey is the Indonesian Rupiah (IDR). For an easier comparison, prices and costs get stated in the U.S. dollar (USD) as well. The currency rate that is used for the conversion is 1 USD : 8600 IDR. This is the recent half year average rate, rounded to hundreds (cf. Appendix 1).

In some cases Euro prices are converted to IDR. Therefore the conversion rate, generated by the same method, is 1 € : 12 300 IDR (cf. Appendix 2).

Editorial Changes

For the purpose of publishing a few editorial changes were performed. This includes the anonymization of an interview partner and an adjustment of the text in chapter 4.

Executive Summary

The Problem and the Objectives

The hotel industry in Indonesia faces serious challenges: Massive energy price increases since the beginning of the new millennium and a trend towards sustainable tourism call for urgent action. Decision makers in hotels are confronted with the increasing impact of the energy consumption on their business profitability as well as on the image of the hotel. The question arises how to improve the energy performance and reduce costs without harming the guest comfort. At the same time hoteliers and hotel associations have an increasing desire to contribute to the protection of the environment and request for sustainable technology solutions. To answer the question how to cope with the challenges this research has three objectives:

1. To provide a catalogue of improvement measures, applicable as a pool of ideas and a guideline to save energy for engineers and decision makers.
2. To assess the profitability of efficient and renewable technology solutions and to work out attractive investments for the decision makers.
3. To point out potentials for renewable energy use and energy recovery in hotels and moreover to introduce approaches for their utilization.

Applied Methodology

To generate a profound basis of data and experience for the research, energy consultations for seven hotels were conducted. This provided a deep insight into current energy practices and made it possible to give recommendations on a technical level. The research focused on resort hotels. Due to matters of feasibility only resorts in Bali were counseled, the most popular tourism destination in Indonesia.

The consultations were conducted according to the German industry guideline VDI 3922 ‘ Energy Consulting for Industry and Business ’. The proceeding consisted of an initial questionnaire, an energy audit, a site inspection, employee interviews, the delivery of the individual consultation report and a final presentation. The energy consultations were substantiated by literature research about the Indonesian country specifics on climate and the energy market development.

The gathered data was anonymized and used to draw a more general picture about current energy practices in Indonesian resorts, which is presented in this survey. Energy consumption characteristics on per guest night and per square meter basis were generated. Latest benchmarks for Indonesian hotels were used for a solid comparison. Afterwards observations were used to develop and evaluate improvement measures that are generally applicable in Indonesian hotels. A review of technology market prices in Indonesia was performed to enable profitability assessments of the investment suggestions. The assessments were executed by using static and dynamic economic concepts which were backed by sensitivity analyses to show the impact of the crucial assumptions.


The inspected resorts had an average annual consumption of 72 kWh per guest night respective 300 kWh per square meter in 2010. Thus, the average of the sample is close to best practice level of the applied Earth Check benchmark, although plenty of energy saving potentials were detected, even in the top performer hotels.

Energy prices in Indonesia showed a drastic development in the last decade. The removal of subsidies for business customers and the oil price development led to an average annual increase in the price for diesel of 9.4 % from 2006 until 2011. Comparing the subsidized diesel prices for industry in 2000, the customers have to pay a price that is more than 18 times as high as one decade ago. The price for liquefied petroleum gas (LPG) increased by 17.6 % and the electricity price by 4.2 % in the annual average between 2006 and 2011. Compared to other energy carriers, electricity is relatively cheap as it is still subsidized and remains around 30 % below production costs.

Four of the five counseled large hotels operated diesel fired steam boilers for warm water production and direct steam use in kitchen and laundry. This hotel category is represented in the typical energy flow chart.

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Figure 0.1: Typical energy flow chart for large hotels with fuel boiler in Indonesia

Source: own illustration

The flow chart shows that electricity is the most important energy carrier. However, in the large hotels diesel fuel is often used to produce warm water and steam in boilers, installed in times of low diesel prices. A vast waste energy flow is the chiller system’s waste heat. Figure 0.1 indicates that this energy flow is typically more than half as large as the total energy consumption in resorts.

The audits revealed that there is often no metering and monitoring of key information, such as the electricity consumption of the chiller or of air conditioning (AC) units. Another example is the lack of knowledge about the distribution of heat energy. The share of the heat that goes into the warm water production, which is 50 % of the total production, is an estimation of the engineers. However, if the purchase of a new efficient warm water heater is considered, precise heat demand figures rather than estimations are necessary for an accurate dimensioning.

The report provides a detailed description of energy saving measures and comprehension in form of a catalogue with four suggestion categories:

1. Avoidance of unnecessary energy consumption
2. Optimization of the energy infrastructure by improving efficiencies
3. Recovery of waste energy flows
4. Investment in efficient and, if feasible, renewable technology solutions

It turned out that a substitution of the diesel fired water heating system offers high potential for energy consumption and cost reductions. The profitability analysis of an exemplary ambient air heat pump investment revealed a very attractive internal rate of return (IRR) of around 80 %. The sensitivity analysis showed that the investment remains absolutely beneficial, even in case of an unfavorable development of the economic and technical parameters. A smart approach to combine the chiller system and the heat pump to utilize the chiller waste heat flow indicates even higher system efficiencies and generates additional electricity savings in the chiller system.

A competitive renewable energy solution is the solar thermal system. The site inspections showed that almost every resort has appropriate roof or back house areas which are not visible from the recreation areas. With a calculated IRR between 18 and 27 % the solar system is profitable if it substitutes diesel fired water heating. Although the solar thermal system cannot compete with the heat pump, it can provide temperatures up to 150 °C using vacuum collectors and therefore support the steam production. In this concept both sustainable systems can be applied.

A further investigation points out the conceptual advantages of photovoltaic (PV) electricity generation and own consumption in Indonesian hotels. The electricity demand in hotels exceeds the maximum PV production permanently, what makes batteries unnecessary. The still unprofitable technology may get attractive in the coming years if increasing electricity and decreasing technology prices as well as the plans of the government of Indonesia to promote renewable energy solutions are considered. A further energy source is the permanent organic waste stream in hotels. A biogas plant on an external site is an approach to harness the contained energy.

Recommendations for Action

Considering the findings of the research, the following suggestions can be addressed to the decision makers in Indonesian resorts:

Set the improvement of the energy performance as a high priority and a permanent objective of your business to cope with likely further energy prices increases and the trend to sustainable tourism.

Integrate employees throughout the whole hierarchy to exploit the energy saving potential to a high degree. Delegate responsibilities and motivate the staff to work on the energy saving target. An energy management system can be beneficial for large hotels.

Improve the metering and monitoring of the main energy flows and processes. The knowledge about the current system is essential to do the right investment decisions in the future.

Implement large and even small impact saving measures to develop energy saving know how and to raise awareness. This leads to new energy saving suggestions and ideas from the own staff.

Substitute diesel or LPG fired warm water production with efficient heat pumps or solar systems to realize substantial energy consumption and cost reductions.

A further recommendation addresses the hotel associations in Indonesia: The own generation and public provision of up to date energy benchmarks would be a helpful service for the members and would enable the association to monitor the development of the energy efficiency in the branch.

1 Foundations

1.1 Overview

The energy infrastructure of a resort hotel is determined by country specific conditions, such as the local climate or the energy carrier availability and energy prices. The following chapters provide background information about country specifics that led to current practices of energy consumption in Indonesian hotels.

A short introduction about Indonesia and its key indicators give an impression about the setting of the research. A brief assessment of the countries’ tourism sector determines the most relevant tourist destination in Indonesia: Bali, an island with plenty of vacation resorts and therefore the appropriate location for the conducted examination of current energy consumption practices.

The climate conditions are introduced as they affect the demand for heating and cooling to achieve comfortable conditions for the inhabitation of people in hotels.

The accessibility and the prices of energy carriers are important criteria for the choice of warm water supply and air conditioning technology. Therefore the Indonesian energy market is introduced. Key statistics about the supply and demand side are presented. The current market situation is the basis for the following chapters: The price of energy carriers and aspects of the energy policy. These parameters of the energy sector have an immediate impact on the current and future energy situation of the examined resort hotels.

In the following, a brief abstract about the beginnings of efficiency programs for buildings in Indonesia give an impression about trends in this new field.

Foundations about energy infrastructure in buildings are not presented in this part. This is because the conducted energy consultations have the object to generate fundamental information about energy practices in Indonesia. To provide a comprehensive report about energy infrastructure in Indonesian resort hotels, relevant theoretical aspects are combined with the audit results in the ‘Findings’ part of the paper.

1.2 Indonesia and Tourism

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Figure 1.1: Map of Indonesia

Source: CIA (2011)

The archipelago of Indonesia, with its 6000 inhabited islands, is estimated to have a population of 245 million in 2011. The economic development is stable. Since the Asian financial crisis of 1997 1999 the Indonesian economy showed a constant growth between 4 6 % annually (MEMR, 2010, p. 3). With an estimated gross domestic product (GDP) per capita in 2010 of 4200 US$, adjusted by purchase power parity, Indonesia is on position 157 of 228 total countries in the global ranking. Indonesia has a huge labor force. The median age of the people is 28.2 years with only 6.1 % of the people being older than 65 years. Recently the economic growth is also reflected by an improving employment situation. After the unemployment rate reached a peak of more than 10 % in 2005 and 2006 it is constantly decreasing to an estimated percentage of 7.1 % in 2010. (CIA, 2011)

The direct contribution of the travel and tourism sector to the GDP of Indonesia is expected to be 3.2 % in 2011. However, if including its wider economic impacts the contribution is expected to be at 9.1 %. The share of employment, accounting direct jobs as well as indirect supported jobs by the travel & tourism industry is estimated to be at 8.1 % of the total employment in Indonesia (World Travel & Tourism Council, 2011, p. 6).

Two relatively small provinces attract around 45 % of all travelers in Indonesia: Jakarta and Bali. Together with the other provinces of Java the share of total visitors sums up to 73 %. Especially Bali is a popular holiday destination. In 2008, 54 % of foreign tourists that came to Indonesia were accommodated in Bali (Ministry of Culture and Tourism Indonesia, 2009). This leads to the assumption that the main share of the visitors is tourists. On the contrary, Jakarta is the center of business in Indonesia. Around 75 % of the Jakarta visitors are Indonesians. This leads to the assumption that the visits are mainly for business purposes.

Being the main destination for tourists in Indonesia, Bali established an extensive accommodation branch. Whereas in former decades the focus in Indonesia and especially in Bali has been on resort tourism, the ministry for culture and tourism is going to support eco tourism in the future (Germany Trade and Invest, 2011a). The former successful resorts are forced to present themselves more ecologically friendly to sustain their competitiveness regarding to the changes in tourism trends.

1.3 Weather and Climate Conditions

The weather and climate conditions of a country set the requirements for a hotel’s room heating and cooling system. The energy consumption is determined by the average temperature, whereas the dimensioning and capacity of a heating or cooling system is determined by the minimum respective maximum temperatures that occur during the year.

Indonesia is located in the tropical climate zone with wet and dry seasons. Figure 1.2 shows the annual average temperature in the Indonesian region.

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Figure 1.2: Annual average temperature in Indonesia in °C

Source: Food and Agriculture Department of the United Nations (1997); modified In most of the areas the annual average temperature is between 20 30 °C. Only some parts of the country have average values below 20 °C, which are mountain areas. The relative uniform average temperatures show that the temperature related requirements for resort hotels regarding energy infrastructure are similar in the whole country.

The variation of the temperature over the year gives information about the maximum load for the heating or cooling energy infrastructure. The measurement data from Denpasar, the capital of Bali has been chosen as the representative dataset.

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Figure 1.3: Monthly average temperatures in Denpasar

Source: data from the Indonesian ‘Climatology Meteorology and Geophysics Agency’ (Badan Meteorologi Klimatologi dan Geofisika, 2009)

Figure 1.3 shows that there is only a slight variation of temperature in Denpasar during the year. The temperatures oscillate with a value of approximately +/ 3 °C around the monthly average values of 25 27 °C.

The relative humidity in Denpasar varies between 75 % and 80 % during the year (Badan Meteorologi Klimatologi dan Geofisika, 2009). The high temperature combined with high humidity is typical in tropical climate zones, which is the reason for the high AC requirements in Indonesian hotels.

In essence, the climate conditions are relatively constant throughout the year with only a low level of variation.

1.4 The Energy Sector of Indonesia

1.4.1 Supply Side

The most actual energy balance of Indonesia provided by the International Energy Agency (IEA) is from 2008 and is used to analyze the energy supply and demand side in this survey.

Indonesia has own coal, oil and natural gas resources. The country developed a strong dependence on oil in times when the production was sufficient to meet the domestic demand. Besides the transport sector, oil products are used extensively in electricity generation and industry (fuel oil and diesel) and households (LPG and kerosene) (IEA, 2008, p. 125/133). Also the hotels developed the practice to heat water and produce steam with diesel or fuel oil.

Meanwhile market parameters changed and Indonesia is not able to supply the oil demand self dependent anymore. The old main oil sources are depleting and produce a declining oil flow since 1998. In the meantime the GOI failed to develop new comparable sources. The result is that the growing demand, especially from the transport sector, needs to be covered with increasing imports. In 2004, Indonesia became a net oil importer. It is not foreseeable that this trend will change in short term. Therefore the membership in the Organization of Petroleum Exporting Countries (OPEC) was suspended in January 2009 (EIA, 2011, p. 2).

Figure 1.4 gives an overview about the current total primary energy supply (TPES) in Indonesia.

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Figure 1.4: Total primary energy supply 2008 in Indonesia

Source: data from the IEA (2011)

Although biomass has a large share of the TPES, it is mainly unsustainably managed firewood that is particularly utilized in rural areas of Indonesia (Greenpeace International, 2007, p. 56). Indonesia holds 40 % of the worldwide geothermal potential of which only 4 % are used today. However, the goal of the GOI is to rise up to be the global leader in utilization of geothermal sources, passing the Philippines and the USA (EIA, 2011, p. 8).

The TPES in Figure 1.4 does not include Indonesia’s high exports of coal and natural gas. In 2009 around 77% of the total coal production was exported, what made Indonesia the second largest net exporter of coal worldwide in 2009 (EIA, 2011, p. 6). Natural gas is exported especially as liquefied natural gas (LNG). 50 % of the total production was exported in 2008 (IEA, 2011).

The future availability of the economically mineable energy carriers is indicated by the reserves to production ratio expressed in years. For Indonesia, the reserves to production ratio of the year 2009 is 82 years for coal, 23 years for crude oil and 52 years for natural gas (MEMR, 2010, p. 42/50/54).

Figure 1.5 reveals the increasing importance of electricity particularly in the last three decades. The expansion of the necessary generation capacities lags behind the rapidly growing demand.

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Figure 1.5: Electricity generation by fuel in Indonesia

Source: IEA (2011)

The total electricity generation in 2008 amounted to about 150 TWh with a total installed capacity of 30.4 GW, which are mainly coal , gas or oil fired power plants. Indonesia’s most important renewables in electricity generation are hydropower with 7.5 % and geothermal electricity with almost 5.5 % of the production (IEA, 2011). Figure 1.5 underlines the long standing dependency on oil in electricity generation.

The main supplier for electricity in Indonesia is the state owned company Perusahaan Listrik Negara (PT PLN), shortly called ‘ PLN ’. In 2008, PLN owned around 83 % of the installed power plant capacity, which in absolute terms is 25.5 GW (Direktorat Jenderal Listrik dan Pemanfaatan Energi, 2009, p. 1). Additionally, PLN is the only certified transmission and distribution grid operator in Indonesia. With its subsidiaries it enjoys a powerful monopoly (Greenpeace International, 2007, p. 86).

The GOI manages only slowly to supply the country comprehensively with energy, particularly with gas and electricity. A main reason is the underdeveloped infrastructure. In terms of gas the main demand centers Java and Bali have no transportation networks to the producing regions of Sumatra, Kalimantan, Sulawesi and Papua (IEA, 2008, p. 141). The electricity grid reveals with 67 % in 2008 one of the lowest electrification rates in South East Asia (Direktorat Jenderal Listrik dan Pemanfaatan Energi, 2009, p. 37).

1.4.2 Demand Side

The result of the constantly growing population and a sound economic growth is that the energy demand increases noticeable. Between 2000 and 2009 the total final energy consumption (TFEC) increased by around 21 % to a level of 6088 PJ in 2008. Figure 1.6 gives an overview on the sectoral contribution to the TFEC and the respective utilized energy carriers.

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Figure 1.6: Indonesia’s TFEC by sector in 2008

Source: data from the IEA (2011)

In Indonesia, the largest energy demand results from the residential sector, with biomass such as firewood as the main energy carrier. On the contrary electricity still plays a minor role in the residential sector.

The transport sector consumes almost exclusively oil products. The GOI plans to substitute them partly by biofuels in the future. This is also an economical solution.

An example is the production of palm oil, which is very profitable since the world oil price increased at the end of 2006. A governmental committee for biofuel development was set up, which formulated ambitious targets. Until 2025, 20 % of all consumed diesel and 15 % of the consumed gasoline is planned to be biodiesel and bioethanol (IEA, 2008, p. 96).

In the commercial sector, in which the hotel branch is classified, electricity is with around 66 % the most utilized energy carrier.

Regarding the electricity market, a mismatch exists between supply and demand. In areas without connection to the grid the electricity is mostly generated with fuel fired generator sets, which is more expensive and less effective in terms of energy use. However, the areas with the highest demand, which are Java and Bali, are completely covered by electricity grids. In these areas the challenge for the state owned electricity supplier PLN is to satisfy the fast growing energy demand, which is relatively high compared to other areas in Indonesia. Table 1.1 shows, that the energy consumption per capita in Java and Bali is twice as high as in other Indonesian areas. On the other hand the table points out that electricity consumption, even in the hotspots Java and Bali, is very low in an international comparison with the USA.

Table 1.1: Electricity consumption per capita in Indonesia, Java, Bali and the USA

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Source: Direktorat Jenderal Listrik dan Pemanfaatan Energi (2009, p. 38); IEA (2011)

The electricity suppliers can hardly cope with the fast growing energy demand in the hotspots of Java and Bali. This leads to higher fluctuations of the voltage in the grid and even regular blackouts of electricity in peak load times. Current practice is that the operator PLN reacts on predictable power shortages with planned blackouts. For the hotels it means, that generator sets have to be used regularly, which is more expensive for the hotels at current fuel prices.

1.4.3 Energy Policy

The GOI is working on plenty hot spots in the energy sector and applies therefore a range of policy instruments. In the following a few important aspects of the energy strategy and the applied policy instruments are introduced. The understanding of the current political decisions gives an impression about the likely future developments in the energy sector.

The Main Objectives

Energy Policy objectives in Indonesia are based on the Presidential Decree No. 5 of 2006 and its Blueprint of National Energy Management 2005 2025 (Pengelolaan Energi Nasional PEN). The IEA summed up the main objectives of the present energy policy until 2025 (IEA, 2008, p. 30). These objectives are:

to reduce the use of oil significantly to below 20 % to increase the use of:

- coal from 19 % to more than 33 %
- liquefied coal to more than 2 %
- natural gas from 16 % to more than 30 %
- geothermal from 1.9 % to more than 5 %
- biofuel to more than 5 %
- other renewable energy from 0.5 % to more than 5 % to reduce energy elasticity1 to below 1 to improve the energy infrastructure

The planned changes in the supply structure are a great challenge, considering that the shares of energy sources have to be adjusted whilst the energy demand is increasing quickly.

Another central goal of the GOI is to make energy accessible in whole Indonesia and at the same time, enable the large share of poor citizens to utilize energy.

However, with current policy strategy, both goals impede each other. Providing the poor with cheap energy is so expensive for the country, that it is not possible to invest the necessary capital in infrastructure and other improvements.

In terms of sustainability, the acting president Yudhoyono formulated the objective to reduce the CO2 emission by 26 % until 2020 (Germany Trade and Invest, 2011b).

Energy Price Subsidies

The GOI wants to support the low income class of population in Indonesia and uses price caps and subsidies to provide electricity and oil products below market price level. Although the low prices are not available to large industrial customers anymore, the poor as well as the wealthy individuals in Indonesia have access to the subsidized energy. The result is a situation, in which the top 40 % of high income families benefit from 70 % of the subsidies whilst the bottom 40 % of the low income families benefit from only 15 % of the subsidies (IEA, 2008, p. 24).

The GOI is aware of this problem and performs a change in strategy. The government wants to decrease the subsidies continuously and additionally divert from price subsidy to direct subsidy in order to help the intended target group. Recent information says that the subsidies for oil and electricity are to be removed by 2014 (Germany Trade and Invest, 2010a). However, the financial burden of the fuel and electricity subsidies were still around 13 % of the state budged in 2010 (Germany Trade and Invest, 2010b).

Investment in the Energy Sector

Constant investment in the energy supply is an important step on the way to a functional energy sector. Investments are done by the state and by private investors. To attract more private investment in the energy sector, the GOI tries to remove the monopolies of the state owned energy supply companies Pertamina (oil), PLN (electricity) and Perusahaan Gas Negara Persero (gas). This restructuring process takes time, and the lack of clarity and transparency in the regulatory framework and the missing state guarantees for high risk projects still hinder comprehensive private investment (Germany Trade and Invest, 2011c). To push this development, all goods associated with energy applications can be imported without the payment of duty since the beginning of 2010 (Germany Trade and Invest, 2010b).

As a reaction to the increasing electricity demand, the GOI started two Fast Track programs in 2010. The first program which is planned to be realized in 2013 contains the erection of 35 coal fired power plants with a total capacity of 10 GW. The portfolio for the second Fast Track program is more differentiated. Until 2014 a further capacity of 10 GW shall be installed, consisting of 12 % hydropower, 48 % geothermal power, 14 % gas and 26 % coal fired power plants. Furthermore, the investment budged for solar power plants in 2010 was 880 billion Rupiah (102.3 million US$). Considering electrical power transmission, investment packages of around 3 billion US$ were fixed by the GOI (Germany Trade and Invest, 2010b).

1.4.3 Energy Prices

The development of energy prices in Indonesia is a result of the changes in subsidy policy. Since 2005 the subsidies are not available for large industry and commercial customers anymore, rapid developments of prices for all relevant energy carriers could be observed. In the following, price information from the government is presented. This information on prices will be compared to the price data that has been gathered during the energy consultations (cf. chapter 3.3.7).

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Figure 1.7: Electricity price development in Indonesia

Source: Ministry of Energy and Mineral Resources MEMR (2008)

Figure 1.7 shows that the commercial sector has a noticeably higher electricity price, compared to industry and households. However, the development of the electricity is a burden for all consumers. For households the price per kWh increased by nearly 200 % between 2000 and 2007 to a rate of 575 Rp (6.7 US cent) per kWh. For industry customers the rate increased around 100 % in the same period to a rate of 610 Rp (7.1 US cent) per kWh in 2007. For hotels, which belong to the segment of commercial customers, the price increased about 100% between 2000 and 2007, with a rate of 775 Rp (9.0 US cent) regarding to governmental information.

Despite the steady price increase, the electricity prices in Indonesia still are around 30 % below the production costs (Germany Trade and Invest, 2011b). As the GOI wants to remove the subsidies until 2014, the increase in price can be expected to continue in the years to come until the economic price is reached.

The removal of subsidies is reflected in the development of oil product prices as well. The price developments of products which are relevant for the hotel industry are presented in Figure 1.8.

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Figure 1.8: Price development of oil products in Indonesia

Source: data from the MEMR,(2008, p. 13)

Figure 1.8 shows an extraordinary price increase for oil products in Indonesia between 2000 and 2008. Whereas gasoline and automotive diesel oil still is available at petrol stations in subsidized form, industrial diesel and fuel oil has followed the market price since 2005. Particularly relevant for the hotel branch are the prices of industrial diesel oil and fuel oil, which are used in the backup generator sets and the fuel boilers. The price for industrial diesel oil developed from 513 Rp (6.0 US cents) per liter still subsidized in 2000, to 8434 Rp (98.1 US cents) per liter non subsidized in 2008. The fuel oil price developed from 363 Rp (4.2 US cents) per liter to 5810 Rp (67.6 US cents) per liter. Thus, the costs for oil products are more than sixteen times higher for businesses than in 2000.

Small hotels are still able to consume the subsidized products, by simply obtaining the oil products from petrol stations, and using the automotive diesel oil in the engines of the backup generator sets. However, for the subsidized automotive diesel oil the price increased as well from 563 Rp (6.5 US cents) to 4646 Rp (54.0 US cents) per liter.

A consequence of the rapid increase in price of oil products is that energy efficiency measures or energy carrier shifts in hotels get more and more profitable.

1.4.4 Trends for Energy Efficiency in Buildings

The global trend for energy efficient and sustainable buildings has reached Indonesia as well. With targeted interventions in the construction sector the GOI wants to improve the energy efficiency of buildings. Therefore the government plans to implement a new decree, which sets standards for green buildings considering the building materials, energy carriers and water and waste management. In the beginning these standards shall be reached on voluntary base (Germany Trade and Invest, 2010a).

In its energy conversation program the GOI tries to reduce the consumption of energy in buildings in cooperation with the large consumers. Therefore energy managers shall receive training and are obliged to deliver consumption data to a central database. Additionally mandatory energy audits and the implementation of energy conservation plans are going to be regulated in the new program of the GOI (Girianna, 2009, p. 3).

Whereas the governmental side is still in its beginnings to formulate future standards, certification organizations in Indonesia are already prepared to assess the buildings. The Green Building Council of Indonesia (GBCI) for example, which is a partnership of property associations, universities and consulting agencies, wants to speed up the erection of environmental friendly buildings. With a comprehensive certification system the GBCI offers to evaluate buildings Indonesia wide on a neutral basis. Moreover, there are plenty of private companies that offer green certification for example the international operating Australian company Earth Check.

2 Research Method

2.1 Reasons for the selected Method

A main objective of this work is to generate detailed information about energy consumption practices in Indonesian resort hotels. Although the key figures of the energy consumption can be collected by questionnaires, it is hardly possible to learn about energy practices in detail, without a site inspection. To conduct the analysis on a technology based level, knowledge about energy practices is necessary. To gain this knowledge, the energy consulting method was chosen, which allows a deep insight into the hotels’ energy situations. The data is generated in the different steps of the consulting: the collection of energy consumption data; the inspection of the energy infrastructure and the analysis of consumer behavior by employee interviews.

Information gained from the energy consulting projects builds the foundation for the second part of the research. By considering the country specific energy requirements of the hotels, efficient technology solutions can be determined. Figure 2.1 shows the five main tasks during this research and the implementation of the energy consulting project in the research proceeding.

illustration not visible in this excerpt

Figure 2.1: Proceeding of the research

The guideline for the energy consulting projects during this survey is the VDI2 3922, published by the Association of German Engineers. It was chosen because it is a binding German guideline for companies and persons that conduct energy consultations.

2.2 Energy Consulting

2.2.1 The German guideline VDI 3922

The guideline VDI 3922 with the title: ‘ Energy Consulting for Industry and Business ’ has two target groups. The first group consists of companies that use energy for production or conversion purposes or room heating and cooling, such as industrial or commercial enterprises like resort hotels. The other target group consists of companies, persons or institutions, that conduct energy consultations (VDI 3992, 1998, p. 2).

The guideline informs about the contents and the proceeding of an energy consulting. Consultants can use the guideline as an assistance to set up the process sequence and compare their service to the standard. On the other hand customers of energy consultations learn what can be expected from an energy consulting. The guideline is written in German and English.

The procedure for the energy consultations, conducted in this survey, is taken from the VDI 3922 guideline. Figure 2.2 shows all steps of the energy consulting process.


1 Energy elasticity is a ratio of the countries percentage change of the energy consumption, divided by the percentage change of the gross domestic product.

2 The VDI Verein Deutscher Ingenieure (free translation: Association of German Engineers) was established in 1856 and is the largest association of engineers and natural scientists in Germany.

Excerpt out of 125 pages


Energy Consumption and Savings in Indonesian Resort Hotels
Perspectives for Energy Efficiency and Renewables
University of Flensburg  (Energy and Environmental Management)
Energy and Environmental Management - Industrial
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
2830 KB
energy, consumption, savings, indonesian, resort, hotels, perspectives, efficiency, renewables
Quote paper
Jan Sternstein (Author), 2011, Energy Consumption and Savings in Indonesian Resort Hotels, Munich, GRIN Verlag,


  • M.Eng. Jan Sternstein on 4/30/2012

    Dear energy-savers!

    As the author I want to encourage you in your will to use your energy as effective as possible. Good for the planet and good for the purse. Especially engineers and managers of hotels in tropical areas find a specialized guideline to reduce the energy bill. Have a look on the key results which you can read in the preview....The main part of my work would be a guide later on, showing you how to evaluate the saving potentials in your hotel, by following my examples step by step.

    I want to thank the buyers amongst you and give you the offer to discuss that topics as well as give you hints for your personal energy saving project.

    I wish you an interesting read and the power to tackle the energy flows!

  • guest on 9/19/2014

    Hi im now working on small island development research, did you explain how much energy that tourist consumed every person per day in your book? thank you in advance

  • M.Eng. Jan Sternstein on 11/4/2014

    Dear Nadia,
    apologize for my late answer, got the info of your post just 5 days ago from grin (how is that possible, grin?).
    I hope my answer is still worthy for you. In my paper I am using two benchmarks to compare the seven consulted hotels with energy benchmarks for hotel energy consumption. The first one is energy consumption per guest night (source: earth check). The other benchmark is energy consumption per square meter of hotel space (source: International Tourism Partnership). To answer your question: My studies compare energy performances of hotels an the best ways to reduce energy consumption. About the energy use of a tourist per day inside and outside the hotel (transportation etc.) you won't find appropriate data in my paper.
    I wish you success with your research!
    Best Regards,
    Jan Sternstein

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