With high geothermal investment needs, Pertamina expects government incentives
Ulubelu geothermal area, Lampung, Indonesia (source: Pertamina Geothermal Energy)
Alexander Richter
23 Nov 2020
State-owned Pertamina is hoping for government incentives given expected high costs for drilling for often remote locations of geothermal working areas to be developed.
The remote location of a lot of the geothermal sites, requires costly road infrastructure investment for drilling activities and with that high investment cost. Therefore, state-owned Pertamina hopes that there will be government incentives to make geothermal investment more attractive, as reported by Kata Data.
The government promised incentives to boost the development of power generation geothermal energy or geothermal power plants. In the draft presidential regulation or Perpres regarding the price of renewable energy electricity , aka EBT, the stimulus will be in the form of reimbursement of exploration costs. PT Pertamina (Persero) Senior Vice President for Corporate Strategic Growth, Daniel Purba, is of the opinion that this incentive is not enough to boost geothermal investment . The developer also hopes that the government will provide reimbursement for road infrastructure development to the geothermal working area.
Project locations are usually difficult and remote. To start drilling, the developers were forced to build roads from scratch. The infrastructure must also have special specifications so that heavy vehicles and equipment can pass through it. “Imagine, we drilled in the mountains, valleys, the middle of the mountains, even to the top. We have to mobilize drilling equipment and power plants, ”he said in a virtual discussion on Tempo Energy Day.
Energy observer Fahmi Radhi admits that the challenge in the drilling process in the geothermal sector is road infrastructure to enter the location. So far, the funds have been charged to investors so that the economy of the project has increased. “The government needs to provide incentives for this infrastructure,” he said. Aspermigas Executive Director Moshe Rizal Husin also agrees with this. The chain effect of this infrastructure is that local people can use it to boost the economy. “I will give you an example of why massive toll roads are (built) in Indonesia? Because there is a land acquisition scheme replaced by the government,” he said. Previously, ESDM Ministry’s Geothermal Director Ida Nuryatin Finahari also said that investors need additional incentives to be interested in developing geothermal projects. “So far, the development of access to the location is borne by the developer. This affects the tariff and the project’s economy,” he said some time ago.
On its data service databoks, Kata Data shares details on the “Distribution of Geothermal Exploration Area & Capacity 2020-2024”
The Job Creation Law Trims Geothermal Project Licensing The government continues to boost renewable energy investment in Indonesia. One of them is by simplifying the licensing for geothermal or geothermal development listed in the Omnibus Law on Job Creation. Chairman of the Indonesian Geothermal Association (API), Priyandaru Effendi, said simplification of licensing will have an impact on reducing the working time of geothermal development. The development fund can be reduced. This condition is predicted to increase geothermal investment.
“The end is to reduce the price of geothermal electricity,” he said on October 8. However, so far the main problem of developing renewable energy is the electricity tariff. “What we are waiting for is a tariff that is in accordance with the economics of the project. Hopefully, this can be accommodated in the presidential regulation (Perpres),” he said.
Minister of Energy and Mineral Resources Arifin Tasrif said that the simplification of geothermal regulations in the Job Creation Law aims to boost investment. All permits in the form of direct use will later refer to the standard procedures and criteria norms (NSPK) established by the central government. The government and the DPR have also agreed to decide on removing geothermal permits in the marine conservation area in the Saput Universe Law. “The geothermal licensing simplification arrangement is carried out by the central, regional and city governments,” said Arifin.
Source: Katadata
