The government will raise the price of electricity produced by geothermal power plants to promote business certainty, and resolve a number of geothermal projects that have stalled due to financial problems, Energy and Mineral Resources Minister Jero Wacik said on Wednesday.
The minister said that with the revised pricing plan, investors involved in the operation of geothermal power plants would be given more certainty in running their businesses.
“The prices will be determined through a tender. Those with the lowest bid will win the geothermal projects being auctioned,” Jero said during the opening of the first Indonesia International Geothermal Convention and Exhibition.
Separately, the ministry’s director general for renewable energy and energy conservation Rida Mulyana said that the decree on the new pricing, which would be based on power plant capacity, as well as based on enthalpy, or heat content, would be issued next week.
There will be five groups based on power plant potency, namely over 55 Megawatt (MW), 20 MW-55 MW, 10 MW-20 MW, 5 MW-10 MW, and under 5 MW.
A low-medium enthalpy lower than 225 degrees Celsius, depending on the capacity of the power plant, will have a ceiling price range from 17 and 30 US cents per kilowatt-hour (kWh), while a high enthalpy will have a ceiling price range from 11 and 28 cents.
“It will apply to new contracts, but also will regulate a little of the 12 stalled projects,” he said.
He said that the ceiling price tariff structure concept are in its “final stages” and is expected to be signed by the Minister Jero Wacik soon.
In July, last year, the government raised the feed-in-tariff for geothermal power plants to between 10 to 17 cents per kWh from 9.7 cents per kWh, depending on their locations to lure more investors to enter the geothermal power business.
The prices vary from region to region, where the power plants are located. For example, the price in Sumatra is 10 cents per kWh, Java 11 cents and Papua 17 cents.
According to data from the ministry’s geothermal directorate, the government has issued permits for the development of seven geothermal power plants in 2013 across
Sulawesi, Java and Sumatera with a total potency of 787 MW spread across Sulawesi, Java and Sumatera.
The biggest geothermal power plant among them would be the Arjuno Welirang plant in East Java, which can produce up to 280 MW.
In addition, there are three geothermal fields currently under survey by private companies in 2013, notably Gunung Geureudong in Central Aceh by Chevron.
Data from Center of Geological Resources, Indonesia has 299 geothermal fields, with an approximate potential energy of 28,835 MW, mostly concentrated in Sumatera, Java and Sulawesi.
Vice President Boediono in his speech called for a fundamental fix to remove bottle-necking related to Indonesia’s geothermal industry. “Regulating the ceiling price, I say is good, as long as the motivating spirit is for the interest of the public, which includes the investors as well,” he said.
According to Boediono, there are two main issues that need to be improved, namely the coordination between stakeholders and developing a sound, sustainable business model.
“Indonesia sits over volcanic mountain ranges. On the one hand it is prone to natural disasters, but on the other hand there is a silver lining, that is, if we are able to manage that potential,” he said.