Pertamina asks for minimum price for electricity to be set at US$10cents/ kWh
Lahendong Unit 2 plant Sulawesi, Indonesia (source: aecom.com)
Alexander Richter
11 Nov 2011
Indonesian Pertamina asks for the selling price of electricity from geothermal to be set at a minimum price of US$10 cents/ kWh to make geothermal development more attractive to investors.
Reported from Indonesia, “State oil and gas company PT Pertamina wants the selling price of electricity from geothermal energy sources set at a minimum of 10 US dollar cents per KiloWatt Hour (kWh) to make geothermal development more attractive to investors.
Geothermal energy development was currently being hampered by the low selling price of electricity produced with geothermal energy, namely 5 to 7 US dollar cents per kWh, M Husen, Pertamina`s upstream affairs director, said here Wedensday.
“Many investors will become interested in geothermal energy development, if the electricity produced is priced at a minimum of 10 US dollar cents per kWh,” Husen said.
Ten US dollar cents was only one-third of the price of electricity produced by oil-fired power plants or 30 US dollar cents per kWh, and therefore fair enough, he said.
Using geothermal energy to produce electricity would be cheaper than doing the same with oil and would eventually reduce the need to subsidize electricity production as geothermal was a renewable energy source and also environmentally friendly.
“It will be a shame if this strategic renewable energy source is not developed,” he said.
Husen said with the present low price of geothermal-based electricity , investors would find geothermal energy development not profitable enough and be more inclined to invest in the oil and gas sectors where the risks were the same as in geothermal development. .
“The ratio between capital and selling price should be at least 1:10, if we want to see more investment in geothermal development,” Husen said.
Meanwhile, an energy and mineral resources ministry official said the government was planning to revise Energy and Mineral Resoruces Minister`s Regulation No. 2/2011 on the selling price of electricity from geothermal resorources.
“Under the planned revision, the price of geothermal-based electricity will vary according to the conditions in the region where it was produced,” said Sugiharto harsoprayinto, director general of geothermal anergy the energy and mineral resources ministry.
In determining the price of geothermal-based electricity in a given region, the governement would use the fuel oil price as a reference, he said.
In Energy and Mineral Resources Minister`s Regulation No2/2011 , the State Electricity Company (PLN) could buy electricity from geothermal power plants at a maximum price of 9.7 US dollar cents per kWh.
