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The Jakarta Post
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Govt raises prices for geothermal power plants to lure investors

  • Rabby Pramudatama

    The Jakarta Post

The Jakarta Post, Jakarta | Wed, July 18 2012 | 09:44 am

The government has finally raised the feed-in-tariff for geothermal power plants to between 10 to 17 US cents per kilowatt-hour (kWh) from 9.7 cents per kWh to lure more investors enter the geothermal power business.

Energy and Mineral Resources Minister Jero Wacik said on Tuesday, the feed-in-tariff or the purchasing price of state electricity company PLN for geothermal power plants was increased in order to attract more investors to tap into the country’s rich geothermal resource.

 “If we set [the geothermal price] at only 9 cents it means the price is only one-fifth to the price of electricity from fuel-fired energy,” he told journalists after the opening of the Indonesia Renewable Energy and Energy Conservation Conference and Exhibition, which was held at the Jakarta Convention Center (JCC) on Tuesday.

For a comparison, the current price for fuel-fired power plants is between 35 to 45 cents per kWh.

“The new prices will vary from region to region, where the power plants are located. For example, the price in Sumatra would be 10 cents, Java would be 11 cents, while Papua 17 cents,” he said.

He said the government would also offer other incentives for investors such as tax holidays during their exploration activities.

On the same occasion, the ministry’s director general of renewable energy and energy conservation, Kardaya Warnika, said the government intened to generate an additional 4,000 to 5,000 megawatts (MW) from geothermal power plants between 2014 and 2015.

Kardaya said that the new prices were not negotiable, because the negotiation process could take a long time. “According to our experience, if it’s negotiable then it’s usually a long process.”

He said the new feed-in tariff would apply only to new projects or extension contracts between independent power producers (IPPs) and the PLN, nevertheless, it also possible to revise the existing contract through business-to-business negotiation.

PLN president director Nur Pamudji said that the PLN would abide to the new pricing regulation even though it would slightly increase the PLN’s costs in fulfilling the country’s electricity needs.

“We know it is much cheaper than the electricity generated from fuel-fired power plants,” he said.

Aside of setting the geothermal price, the government has also set electricity prices for city waste-fired power plants at around 12 to 14 cents per kWh, much higher than its initial plan.

During the Tuesday’s event, the government announced a plan to tender eight geothermal mining areas to investors. The projects include Matako area in East Nusa Tenggara province, Gunung Endut in Banten, Songa Wayaua in North Maluku, Bora Pulu in Central Sulawesi, Wai Ratai and Danau Ranau in Lampung, Simbolon Samosir in North Sumatera, and Candi Umbul Telomoyo in Central Java.

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