Minister revises regulation on hydro power tariff formula
Thursday, July 20 2017 - 01:07 AM WIB
Petromindo|Lucky
Minister of Energy and Mineral Resources Ignasius Jonan has revised the much-protested Ministerial Regulation No 12/2017 on formula of electricity tariff from renewable-based power plants with new Ministerial Regulation No 43/2017.
But the new regulation only revises the tariff formula of electricity from hydro power plant, while tariff formula of electricity from other renewable technologies such as solar, geothermal, wind, and waste-based are maintained as set under the previous regulation.
Industry players have previously protested the renewables tariff formula set in Ministerial Regulation No 12, which limits the electricity tariff at 85 percent of regional electricity supply cost (BPP) of state-owned electricity firm PT PLN. They argued that the formula will make investment in the renewables sector much less attractive particularly in regions with BPP lower than national average. They urged the government to re-apply the feed-in tariff mechanism.
Director General of New and Renewables Energy at the ministry Rida Mulyana was quoted by Kontan as saying that the new regulation is aimed at helping to lure investment into the hydro power plant sector.
Prior to the introduction of Ministerial Regulation No 12, selling price of electricity from hydro power plants to PLN can reach around Rp 1,100 per kWh. But with the introduction of Ministerial Regulation No 12, the selling price drops to around Rp 700 per kWh. Under the new ministerial regulation, hydro power plant producers can now negotiate the selling price of the electricity with PLN.
Riza Husni, Head of Hydro Power Plant Developers Association, feared that tariff negotiation with PLN could lead to lengthy process. He suggested for the tariff formula to be returned to the previous feed-in tariff mechanism particularly for hydro power plant project with capacity of less than 10 MW.
He added that small hydro power plant developers have also protested the build, operate, own, and transfer (BOOT) scheme, under which the developer must transfer the plant in 20 years after signing of the power purchase agreement with PLN. (*)