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PLN needs to subsidize geothermal power
The government needs to subsidize PT PLN as much as 3
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he government needs to subsidize PT PLN as much as 3.7 US cents for every kilowatt hour (kWh) of geothermal power purchased by the state owned utility from independent power producers (IPPs), a Japanese engineering consultant firm has recommended.
Citing a study the by Japan International Cooperation Agency (JICA), Masahiko Kaneko, executive director at West Japan Engineering Consultants Inc, said the Indonesian government should set the price of geothermal power to be purchased by PLN from IPPs at 11.9 cents.
“In JICA’s study, we calculated the model for the geothermal selling price and for coal-fired thermal power. As a result, we proposed 11.9 cents/kWh purchase price as the Feed in Tariff [the price paid by PLN to IPPs] for the first 15 years [of a project] to promote green field development,”
“As the average power selling price for coal-fired power plants is now at 8.2 cents, we also recommend the government to provide PLN with a subsidy for as much as 3.7 cents per kWh to fill the price gap between geothermal power and coal thermal power,” Kaneko said during the World Geothermal Congress 2010 in Nusa Dua, Bali.
Kaneko said the proposal was made to attract investors to develop geothermal resources in Indonesia. He added that currently the investors still felt that geothermal development was expensive due to its huge needs for up-front investment.
Indonesia has already regulated the price of geothermal power paid by PLN to IPPs. The Energy and Mineral Resources Ministry regulation set the maximum price paid by PLN to IPPs for geothermal power at 9.7 cents per kWh.
“The 9.7 cent price is the ceiling price. It’s not that good. The 11.9 cents we propose is the general selling price,” he said.
Bambang Setiawan, a director general for minerals, coal, and geothermal, said the government would stick with the ceiling price policy.
Indonesia has so far generated about 1,196 megawatts (MW) from geothermal power, or only about 4 percent of the total estimated geothermal potential of 28,000 MW.
The utilized capacity is expected to increase by 4,000 MW by 2014, Energy and Mineral Resources Ministry geology division head R. Sukhyar.
