Government provides subsidy for micro-hydro electricity
Friday, September 16 2016 - 05:00 AM WIB
The government has decided to provide Rp 520 billion worth of subsidiary for state-owned electricity company PT PLN next year to purchase electricity to be produced by micro-hydro power plants.
Maritje Hutapea, a Director at the Directorate General of New and Renewable Energy of the Ministry of Energy and Mineral Resources, said on Thursday that the planned subsidy is expected to make sure that PLN will buy electricity to be produced by 84 new micro-hydro power plants that will start operation next year at feed-in tariff set under the Ministerial Regulation No 19/2015.
?As subsidy has been provided, there?s no more reason for PLN not to implement the ministerial regulation,? Maritje said, adding that the proposed subsidy has been approved by the House of Representatives Commission VII on energy.
PLN had been reluctant to buy electricity from new micro-hydro power plants at tariff set under the ministerial regulation because the tariff is considered higher than PLN?s production cost. The government deliberately sets a relatively higher tariff for electricity from micro-hydro power plants in a bid to attract investors into the sector.
According to the ministerial regulation, the feed-in tariff is set at US$10.8-$13 per kWh for the first nine years, and down to $6.7-$8 from the tenth year to the 20th year. The tariff is multiplied by an F factor, which increases when the plant is located farther and remote area. Meanwhile, PLN had insisted on tariff of between Rp 850-Rp 1,100 per kWh times F factor.
Maritjet said that of the government?s target to develop 122 micro-hydro power plants in the country, only 84 are expected to start operation next year.
So far, only six power purchase agreements (PPAs) have been signed by developers and PLN, of which only one has been signed in line with the Ministerial Regulation No 19/2015, namely the 7 MW micro-hydro power project in Aceh by PT Century Abadi Perkasa.
Editing by Reiner Simanjuntak