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Low tariffs still hinder geothermal power growth in Indonesia
The recent launch of a state-funded well drilling program helps address the issue of high upstream investment costs, but the low tariffs remain a disincentive.
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Visitors tour Sikidang crater at Dieng Plateau in Banjarnegara, Central Java, on Nov. 27, 2021. In collaboration with private
company PT Geo Dipa Energi, the local administration is developing the area into an educational geothermal tourist destination. (Antara/Moch Asim)
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ow electricity offtake tariffs remain the unaddressed challenge to developing geothermal power plants in Indonesia, after the recent launch of a state-funded well-drilling program addressed the issue of high production costs, experts say.
Prevailing regulations peg electricity offtake prices for renewable energy power plants to that of coal-fired power plants (PLTU), which have much lower production costs owing to coal price caps, economies of scale and a lack of carbon taxes.
Specifically, Energy and Mineral Resources Ministry Regulation No. 50/2017 caps the selling price of green electricity at 85 percent of national electricity supply costs (BPP), which is calculated by state-owned electricity firm PLN based on prices from PLTU.
"The provision to lower geothermal electricity tariffs, in accordance with PLN’s request as the off-taker, remains the biggest obstacle," said Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa.
Indonesia, which holds the world’s largest geothermal reserves, is aiming to have a total of 3.35 gigawatts (GW) of geothermal power production capacity by 2030, according to the long-term electricity procurement plan (RUPTL).
Out of a potential total of 23.7 GW in geothermal resources, only 9.2 percent, 2.18 GW, has been utilized, while 1.33 GW has been allocated for expansion plans until 2035, energy ministry data show.
Read also: Geologic time: Indonesia’s geothermal dreams deferred for 5 years
