Indonesia preparing new electricity tariff scheme for geothermal projects

Indonesia preparing new electricity tariff scheme for geothermal projects

With the current pricing and tariff scheme for electricity generated by
geothermal power plants, the Indonesian government has explored ways to
improve the scheme how it prices geothermal over the past few months.

The country's Ministry of Energy and Mineral Resources (ESDM) is now
preparing a new pricing scheme for geothermal electricity. Once a Government
Regulation on the Indirect Use of Geothermal is signed, the new rates could
be legalised, said Director of Geothermal Yunus Saefulhak.

According to Yunus, the prices will be set using a sliding scale scheme. The
tariffs are based on the potential of each work area, ranging from 5 MW to
250 MW, with the selling price starting at $0.14/ kWh.

"The Minister of Energy and Mineral Resources' Regulation No.2014 (on the
Purchase of Electricity Geothermal and Steam Power Plans) is quite
effective. We have the best rates in the world," said Yunus.

He estimated that until 2019, Indonesia's geothermal power of about 1,600 MW
could be sold at the new rate.

Initially the new feed-in-tariff was expected to be set to a fixed-rate
scheme, aimed at avoiding protracted negotiation problems with post-
tendering adjustments.

Under an early proposal predicted PPA Tariffs were to be selected after
completion of a post-exploration Feasibility Study. In this way, issues
related to pre- exploration tariff selection can be avoided (such as
extended negotiation periods and impacts of less than anticipated resource
size).

There have been two schemes so far . from 2012 (which has been quite
unsuccessful) and a new 2014 regulation based on competitive tender process
with ceiling price. Competitive tendering is based on pre-exploration
resource data which led to prolonged tariff negotiations and often stalled
development.

We have to see if the new scheme will take into account a variety of
factors, including type of developer, project size, infrastructure cost,
resource enthalpy, region, COD, cost assumptions etc. In an initial
proposal the new tariff was to be constrained by Ceiling tariffs as defined
by regulation of 2014 (and based on ADB/ World Bank methods).

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Ref:
http://www.thinkgeoenergy.com/indonesia-preparing-new-electricity-tariff-sch
eme-for-geothermal-projects/?utm_source=ThinkGeoEnergy+List&utm_campaign=ea0
9de409c-TGE_Newsletter_RSS1_12_2015&utm_medium=email&utm_term=0_657e42f767-e
a09de409c-415237525

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com