Indonesian government ready to increase incentives to encourage geothermal exploration
Despite the challenges of COVID-19 and the lower price for fossil fuels, the Indonesian government expects an increase in incentives for geothermal exploration to encourage investment into development in the country.
To encourage geothermal exploration in Indonesia , the country’s government is ready to increase the relevant budget by up to 6 times so local news from Jakarta.
The government plans to increase the intensity of geothermal energy exploration. The plan is carried out to increase the national renewable energy mix (EBT). Secretary General of the National Energy Council (DEN) Djoko Siswanto said, in order to be able to realize the target of the EBT mix of 23 percent by 2025, it needed more efforts from various related parties. “We this year and next year will promote geothermal exploration,” he said this week in Jakarta.
Djoko admitted, in the midst of the Covid-19 pandemic, financing programs related to EBT development became more difficult. Because the price of crude oil has fallen due to the Covid-19 pandemic, fossil energy is more desirable than EBT. Nevertheless, Djoko ensured the government would continue to support program financing related to EBT. “We don’t give up and continue to finance it too,” he said. In fact, in order to boost the EBT mix through the development of geothermal energy, the government plans to increase the mining budget up to 6 times.
“We are increasing the budget 6 times from the beginning for geothermal exploration,” said Djoko. The increase in the exploration budget is expected to not only come from the State Revenue and Expenditure Budget (APBN). The private sector was also asked to participate actively to boost geothermal exploration.
“Also funding from abroad,” he said. In addition to increasing the exploration budget, the government plans to provide incentives to EBT businesses in the form of payment of geothermal exploration costs.
The incentives are planned to be arranged in the Draft Presidential Regulation (Perpres) which regulates the price of EBT electricity.
“This is in order to work, the government gives incentives. In order to reduce prices, for example geothermal, exploration costs are compensated by the government,” said Director General of Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources, FX Sutjiastoto, this week.
Under the draft regulation, developers of geothermal-based power plants will get a number of incentives. The provisions are being discussed in the Draft Presidential Regulation (Perpres) concerning the Purchase of Electricity for New and Renewable Energy (EBT). One of the support measures highlighted is the provision of incentives in the form of compensation for geothermal exploration costs.
Note: There are conflicting news from Indonesia with regards to the availability of funds for geothermal exploration under the drilling program funded by the World Bank, so this piece of news should be taken with a grain of salt.