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http://en.indonesiafinancetoday.com/read/24914/PLN-Studies-Effects-of-Geothermal-Power-Tariff-on-Power-Subsidy

04 Sep 2012 | Energy & Renewable Energy
PLN Studies Effects of Geothermal Power Tariff on Power Subsidy

BY Ignasius Laya & Nurseffi Dwi Wahyuni

JAKARTRA (IFT) – State-owned power company PT PLN (Persero) is studying the impact of the implementation of geothermal power feed-in tariff towards the subsidy that PLN must receive from the government. PLN must purchase geothermal power with higher prices compared to the previous power purchase price that was set at a maximum of US$ 9.7 per kilowatt hour (kWh). M Sofyan, Head of Renewable Energy at PLN, said that the setting of a higher tariff will increase the power subsidy that the government must provide to PLN.

“In principal, PLN—as a state-owned company—will be ready to conduct the mandate to purchase power with prices already set by the government. However, we are ask the government to pass a regulation that regulates the mechanism in the adjusting of subsidy,” Sofyan said.

Sofyan said that PLN is detailing and calculating the changes in subsidy that the government must pay to PLN after the passing of Minister of Energy and Mineral Resources regulation Number 22 Year 2012. This regulation requires PLN to purchase geothermal power through feed-in tariff with a higher benchmark price of around US$ 10 to US$ 17 per kWh.

The government set the geothermal power purchase benchmark price for high voltage power in Sumatra area of US$ 10 per kWh, US$ 11 per kWh in Java, Madura and Bali, US$ 12 per kWh in South Sulawesi, West Sulawesi and Southeast Sulawesi, US$ 13 per kWh in North Sulawesi, Central Sulawesi and Gorontalo, US$ 15 per kWh in West Nusa Tenggara and East Nusa Tenggara, and US$ 17 in Maluku and Papua.

For mid voltage power, the geothermal power purchase benchmark price in Sumatra is at US$ 11.5 per kWh, US$ 12.5 per kWh in Java, Madura and Bali, US$ 13.5 in South Sulawesi, West Sulawesi and Southeast Sulawesi, US$ 14.5 per kWh in North Sulawesi, Central Sulawesi and Gorontalo, US$ 16.5 per kWh in West Nusa Tenggara and East Nusa Tenggara, and US$ 18.5 per kWh in Maluku and Papua.

PT Pertamina Geothermal Energy (PGE), subsidiary of PT Pertamina (Persero) in the geothermal sector, stated that it is ready to renegotiate its geothermal power selling price to PLN. PGE’s highest power selling price reaches US$ 8.25 per kWh, below the new price set by the government.

Ali Herman Ibrahim, President Director of PT Bakrie Power, sees that the new tariff for geothermal energy would be more attractive for investors. Many geothermal power plant projects have been hampered by tariffs for geothermal energy that deter investors from investing in the sector. “They have not been interested in investing in geothermal power plants,“ he said. (*)