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Indonesia – new geothermal regulation on tariffs and exploration targeted by year-end

Unit 1 of Sorik Marapi geothermal plant, North Sumatra, Indonesia (source: KS Orka Renewables)
Alexander Richter 3 Jun 2020

Indonesia's Ministry of Energy and Mineral Resources (ESDM) has accelerated work on new regulation targeting electricity tariffs and geothermal exploration cost to help increase investments into geothermal development.

The Indonesian Ministry of Energy and Mineral Resources (ESDM) is targeting new regulation on electricity tariffs and geothermal exploration costs to be completed this year. With this regulation, the government expects investors to be interested in investing in geothermal projects.

Therefore, the Ministry of Energy and Mineral Resources has accelerated the drafting of the regulation even in the midst of a corona pandemic. ESDM Ministry’s Geothermal Director Ida Nuryatin Finahari hopes that the regulation can make the investment climate in the geothermal sector more vibrant. Because the development in the geothermal sector has a high level of risk and the costs are quite large. “This is what we hope can encourage the acceleration of geothermal investment in Indonesia. The target is to finish this year,” Ida told local news today.

Even so, Ida has not been able to explain in detail the rules that are being compiled. She only mentioned that the regulation on exploration costs is a direct direction from the Minister of Energy and Mineral Resources, Arifin Tasrif. Through this policy, the government hopes that the selling price of electricity from Geothermal Power Plants (PLTP) is more affordable. This policy will later be contained in special rules governing the development of the geothermal sector in Indonesia.

In addition, the auction of Geothermal Working Areas (WK) this year has not yet been carried out. Because the activity is waiting for the latest regulations related to geothermal energy. The Ministry of Energy and Mineral Resources plans to offer five WKP through auction and assignment schemes to State-Owned Enterprises (BUMN). However, the government is still keeping WKP a secret that will be offered by the government this year. In the previous auction, the government offered three WKPs, namely Lainea WKP, Gunung Galunggung WKP, Gunung Wilis WKP. But the auction had not seen the expected interest.

In fact, geothermal is one type of renewable energy that can be used directly or converted into electricity. Even so, Indonesia has not yet utilized energy from geothermal energy. Though this country has the second largest geothermal reserves in the world or about 40 percent of global reserves. According to the Ministry of Energy and Mineral Resources, Indonesia has only developed 2.1 GW of geothermal power generation capacity having the second largest geothermal reserves in the world or about 40 percent of global reserves.

Source: Katadata