Minister issues new regulation on tariff of electricity from renewables
Friday, February 3 2017 - 02:18 AM WIB
Minister of Energy and Mineral Resources Ignasius Jonan has issued new Ministerial Regulation No 12/2017 on utilization of renewables for electricity provision, setting up a new formula to determine price of electricity produced from renewables-based power plants. Some, however, said that the new tariff formula is not attractive to lure fresh investment into the renewable sector.
The new regulation also stipulates that state-owned electricity firm PT PLN is now obliged to purchase electricity produced from renewables-based power plants. PLN in the past has declined to purchase electricity from renewables-based power plants because the feed-in tariff was higher than the utility?s electricity production base cost (or better known as BPP).
According to the new regulation, if the BPP of a particular region where the renewables-based power plant will be located is higher than the national BPP of PLN, the tariff will be set at maximum 85 percent of the regional BPP. If the regional BPP is lower than the national BPP, then the tariff will be equal to the regional BPP.
The PLN national BPP currently stands at US$7.5 per kWh. Tariff of electricity from solar power plant to be built in Papua, where the regional BPP stands at $13.67 per kWh, will be set at $11.61 per kWh. But a similar power plant developed in Jakarta, for instance, where the BPP is $5.37, then the tariff will be set at equal to the regional BPP in Jakarta.
The new tariff formula applies for all renewable-based power plants except geothermal and waste-based power plants, Bisnis Indonesia said on Friday. The tariff of the two-type of power plants will be set equal to the BPP of the particular region where the plants will be built. If the regional BPP is lower than the national BPP, then PLN will negotiate with the developers to determine the tariff.
Director General of New and Renewables Energy Rida Mulyana said that the new tariff formula is aimed at creating a more competitive tariff of renewables which in turn would help lure fresh investment.
Chairman of the Indonesia Geothermal Association Abadi Purnomo, however, was quoted by Bisnis Indonesia as saying that the new tariff formula is not attractive for investors because the electricity price based on the formula is considered not bankable, as such would not attract fresh investment. He said that renewables-based power plants require huge investment, as such the tariff must be attractive enough.
Syamsi Abduh, a member of the National Energy Council (DEN), expressed similar opinion, saying that the new tariff formula is not attractive to investors. (*)