Industry players protest new tariff formula for renewables energy
Monday, February 13 2017 - 01:57 AM WIB
Industry players have protested a new formula to be used in determining electricity tariff from renewables-based power plants saying it would not encourage fresh investment in the sector.
The Indonesia Renewables Energy Society (or METI) urged Minister of Energy and Mineral Resources Ignasius Jonan to revoke the newly introduced Ministerial Regulation No 12/2017, which limits tariff of electricity from renewables-based power plants at 85 percent of production cost base (or BPP) of state-owned electricity firm PT PLN.
METI Chairman Surya Darma said in a statement over the weekend that the industry association has sent a letter to the minister explaining that the new ministerial regulation would not encourage the development renewables energy in the country.
He added that the new ministerial regulation moves against Law No 30/207 on energy, and Government Regulation No 79/2014 on national energy policy. He said that the law stipulates that the price of energy must be based on fair economic value that reflects production costs including environmental and conservation.
Jaya Wahono, President Director of private power firm PT Charta Putera Indonesia, was quoted by Kontan as saying Monday that the company is currently developing biomass power plants in Siberut and Bali. He said that the new tariff formula would not undermine its project in Siberut as the BPP in the region is Rp 3,000 per kWh, but the new policy would undermine its project in Bali as the local BPP is only Rp 1,600 per kWh. ?In general, renewables tariff linked to BPP of PLN will cause losses (to renewables companies). The government must provide lots of incentives so that the Bali project can proceed,? he told the paper.
Meanwhile, Aria Witoelar, CEO of PT Arya Watala Capital, which develops a photovoltaic power plant in East Nusa Tenggara, expressed similar comments, saying that the new tariff formula would discourage fresh investment in the renewables sector.
Arthur Simatupan, Executive Chairman of the Indonesia Independent Power Producers Association (APLSI), said that the new tariff formula policy would hamper the government?s ambitious target of renewables to account for 23 percent of the country?s energy mix by 2025.
He said that the new tariff formula will only be attracted for investors in regions where the PLN BPP is quite high.
Herman Darnel Ibrahi, Senior Advisor of PT Kaltimex Energy, was quoted by Bisnis Indonesia as also saying on Monday that the new tariff formula would not encourage fresh investment in the renewables sector, thus he is worried that the government?s energy mix target in 2025 would be undermined. (*)