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eothermal industry players have welcomed recent agreements on new electricity purchase deals involving electricity firm PLN and geothermal firm Pertamina Geothermal Energy (PGE) that will end an impasse in steam price negotiations between the two state-owned companies.

The companies signed agreements on Friday on various steam power plant projects, including the Lahendong project in North Sulawesi and the Kamojang project in West Java.

The two also agreed on new steam price adjustments, including for the Lahendong power plant unit I at six US cents per kilowatt hour (kWh), Kamojang power plant unit I to III at six cents per kWh and Kamojang unit IV at 9.4 cents per kWh.

The agreement came after a prolonged dispute, with PLN insisting the price not exceed 4 cents per kWh.

'€œI think this is a better figure for us. The geothermal developers can be more enthusiastic in developing geothermal energy from here on,'€ PGE president director Irfan Zainuddin said on Friday.

PGE and PLN had been at odds, the latter objecting to the price of steam supplied by the former to the three units at the Kamojang plant, which have a total capacity of 140 MW and are among the major suppliers of electricity to Java and Bali.

The dispute was considered by Energy and Mineral Resources Minister Sudirman Said to imperil the country'€™s effort to reach its target on new and renewable energy development.

On the same occasion, PLN also sealed a deal with PT Supreme Energy on the Muara Laboh project in West Sumatra.

PT Supreme Energy president director Supramu Santosa lauded the agreements, which he described as indicative of the government'€™s political will to boost the country'€™s geothermal industry.

'€œThe tariff adjustment is a kind of government accomodation of the uneconomical [energy] output,'€ he said, adding that the negotiations had gone on for more than a year.

With the long-term and risky investment needed for geothermal energy, a good tariff was significant, he said.

'€œAs long as the price is right, people will want to explore, as with oil. But the price should not just be determined by PLN, as the issues bears also on the government'€™s long-term energy sustainability plan,'€ he said.

Indonesia is believed to have abundant geothermal potential up to 28,000 MW thanks to its numerous volcanoes. However, with development sluggish, particularly as a result of low pricing and environmental issues, total installed capacity currently stands at just 1,400 MW.

Geothermal development is seen as costly, as it requires the application of advanced technology, and therefore developers have to seek an appropriate selling price to ensure returns on their investment. Despite their high risk and high cost, such clean and renewable projects are deemed necessary.

As part of its long-term plan, the country expects 23 percent of its total electricity output to be generated from renewable energy sources by 2025.

Energy and Mineral Resources Ministry director of geothermal energy Yunus Saifulhak said that PLN'€™s move was expected to push other industry players to carry out further exploration of potential geothermal spots.

Thirteen developers, Yunus added, were currently planning exploration in Indonesia.