| Abstract |
The objective of this study includes identification and assessment of some Key Sustainability Indicators (KSI) that may impact the pricing structure and potential revenues from integrated utilization of geothermal resources in the WW Power Project, West Java, Indonesia. The KSI are directly associated with on-going issues in business, economic, ecological and social activities observed from of Indonesia’s richest geothermal regions. More than 45% of Indonesia’s ‘most prospective geothermal’ resources are situated within protected natural reserves and conserved tropical rainforest areas (under international and regional statutory requirements). With strictly conserved vegetation protecting endangered species and natural sanctuary becoming a nexus of such a ‘renewable’ electricity generation, KSI must incorporate all sensitive ecological, environmental and social issues surrounding the geothermal projects. Based on a series of cursory field activities (2011-2013) to develop a forestry-based sustainability indicators matrix, this particular study probes a focus on statistical models incorporating some selected KSI such as PRES (underground reservoir pressure), BIO (local biodiversity index), REC (subsurface recharging potential by water), GHG (greenhouse gas emission reduction), LIP (local stakeholders’ involvement in the projects). Selection of such indicators has been verified with earlier references in 2002 which indicated that in terms of expenditures, the issues of BIO, REC, GHG and LIP have become part of the Average Incremental Costs (AIC) and Cost of Externalities (COE) in most renewable energy projects. The tests of hypotheses concerning impacts of such KSI on energy and non-energy pricing have benefited from a hypothetic-deductive methods using standard tools of Statistical Package for Social Science (SPSS) and Structural Equation Modelling (SEM). In an initial process of Cost Benefit Assessment (CBA) for the basic economic sustainability model (ESM), three cases have been defined: (1) Business-As-Usual (BAU), (2) Feed-in-Tariff (FIT) and (3) Hypothetically-Fair-Market (HFM). Applying the actual parameters in the Malabar Project’s database – covering the range of the existing 227 to the targeted 400 MegaWatts of Electrical Supplies over a span of contract period of 40 years – the model’s results suggest some best-practices or guidance for an Internal-Rate-of-Return (IRR)-based policies leading to a range of 6-7% (BAU) to 20-22% (FHM). The SEM modeling also results in a simple linear relationship for the project lifecycle governing energy pricing as a function of LIP (positive), BIO (positive), REC (positive), GHG (negative) and PRES (negative). These modeling activities have been proven to be able to help secure a positive pricing structure and are likely to prevent further price distortion and market inefficiencies in the future developments of geothermal resources in Indonesia. |