Govt orders PLN to buy geothermal power at ceiling price of 9.7 cents

The government said it would issue a ministerial decree ordering state electricity monopoly PT PLN to buy power produced by geothermal plants, a move that would restart many geothermal power projects that have been delayed due to price uncertainty, The Jakarta Post reported on Friday.

The alternative and renewable energy and energy conservation director general at the Energy and Mineral Resources Ministry, Luluk Sumiarso, said the Coordinating Minister?s Office for the Economy, the Finance Ministry; the State-Owned Enterprises Ministry and PLN had given a green light to the planned decree.

He said the decree would provide details on PLN?s purchases from geothermal producers, including a clause ordering the company to buy geothermal power based on a ceiling price of 9.7 US cents per kilowatt-hour set by the government.

?The price can be lower, but if it exceeds this level, PLN can hold direct business talks with geothermal power producers,? Luluk said, adding that such a mechanism would not hurt PLN.

The decree would also pave the way for the resumption of several geothermal projects that have long been delayed due to selling price uncertainties. The projects are part of the second phase of a 10,000 megawatt fast-track program.

PLN planning and technology director Nasri Sebayang said the company supported all efforts by the government to promote the utilization of renewable energy, including geothermal. ?We?re ready to implement the planned decree,? he said via text message.

Indonesian Geothermal Association (API) chairman Suryadarma called the planned decree an encouraging improvement, saying it would provide clear grounds for trading geothermal energy.

?The decree will benefit long-delayed geothermal projects. We?ve been waiting for clear regulations since early 2010? he said.

Investors have said the economic price of geothermal power should be within the range of between 8 and 9 US cents depending on their locations. (*)