| Title | IMPLEMENTATION OF THE “NEW TARIFF” FOR GEOTHERMAL ENERGY DEVELOPMENT IN INDONESIA |
|---|---|
| Authors | F.O. Purwaningsih, N.P. Hardiani |
| Year | 2015 |
| Conference | New Zealand Geothermal Workshop |
| Keywords | Ceiling Tariff, Feed-in Tariff, PLN, Indonesia, geothermal tariff, geothermal development. |
| Abstract | Having a huge potential of geothermal energy, does not make Indonesia lead in geothermal energy utilization. Until recently, the development of geothermal energy in Indonesia is relatively slow. To support the development of geothermal energy, as well as to keep up with the increasing energy demand in Indonesia, the Government of Indonesia offers an economic instrument for renewable energy project developers (including geothermal energy). The Ministry of Energy and Mineral Resource Regulation (MEMR) No. 17/2014 has set a new price for geothermal energy based on year of COD (Commercial Operation Date) and region. This tariff is a ceiling price and often misconstrued as Feed-in-Tariff (FIT). While, clearly it is very different between tariff set in MEMR and Feed-in-Tariff as widely known. The term Feed-in-Tariff (FiT) is used to describe an energy policy that promotes the development of renewable energy in order to increase the energy security by offering a guarantee of payments to renewable energy developers for the electricity they produce for a given period of time. The main goal of FiT is to provide investment security and market stability to the renewable energy investors; hence more and more people are going to invest in renewable energy market. By understanding the definition of FiT, therefore, there is no way to describe the price set in MEMR as Feed-in-Tariff. This also explains that the previous regulation in 2012 cannot also be classified as Feed-in-Tariff. Because both prices stated in 2012 and 2014 regulations do not represent the price guaranteed by the government since the lowest price offered by the developers still wins the tender. The regulation states that the developer offers the lowest price is the winner in which they can obtain the permit to develop the area. If the lowest price approach is used, the contract will be awarded to the cheapest bid. Unfortunately, no assessment is made of the quality of the bid. This leads to a condition where some developers asks for re-negotiation because they eventually realize they cannot run the business with the price they initially offered. However, the new ceiling price regulated in 2014 has to be seen as a forward initiative from government to boost geothermal utilization. In order to effectively make this works, there are things to consider, as follows: selection and award criteria, as well as evaluation criteria. This paper is written with aim to providing an insight related with the implementation of the new ceiling price. |