New geothermal legislation in Indonesia to focus on reducing risk
Indonesian government looking at attracting investment into geothermal development and reduce exploration risk with new geothermal regulations.
On a recent visit to the Lahendong geothermal power plant in North Sulawesi, the Director for Geothermal Energy of the Energy and Mineral Resources Ministry in Indonesia, Yunus Saifulhaq reported on new ministerial regulation that aims to attract investment into geothermal projects and reducing exploration risk.
Under the new regulation, the Indonesian government is planning to take over exploration activities to prove geothermal reserves. If the geothermal resource has been proven, the working area could then be offered to investors.
Under the Geothermal Law No. 21, 2015, the government is preparing the new regulation.
Under the new regulation the government focuses on three key elements:
- Government will assign a state-owned company to obtain working area without tender.
- Exploration work commitment tender with a set feed-in-tariff, and
- Limited auction, in which government offers freedom to investors or developers to choose location for preliminary survey and exploration. Under this option the company would be given a security of being remaining in control of the working area for future development.