New feed-in tariff of renewable-based electricity expected next year

By Nova Farida

Petromindo|Lucky

The Ministry of Energy and Mineral Resources is currently revising existing regulations on feed-in tariff of renewable-based power plants in a bid to help lure more investment into the sector.

Director General of New and Renewable Energy at the ministry Rida Mulyana said on Tuesday that the new feed-in tariff policy is expected to be implemented next year.

He said that the move is expected to boost investment in the renewables sector as the government has set a target that by 2025, renewables should account for 23 percent of the country?s energy mix. As per October of this year, the ratio stood at only about 5 percent, compared to full-year target of 7 percent, and 11 percent for next year.

Existing feed-in tariff policy for electricity from renewable-based power plants have been difficult to be implemented by state-owned electricity firm PT PLN, which buys electricity from power plants operated by private firms, due the absence of government subsidy as the tariffs are considered much higher than the selling price of electricity by PLN to consumers. The higher feed-in tariff was meant to attract investment in the sector.

For instance, the feed-in tariff of solar power plant has been set at about Rp 1,800 per kWh. But PLN sells electricity to consumers subscribing power capacity of 1,300 VA at only Rp 1,400 per kWh.

Rida said that the revision of the feed-in tariff policy is expected to create new tariffs that are deemed fair both to the investors and PLN.

He said that the ministry would look again into components of the feed-in tariff including operational expenditure, internal rate of return, and technology used.

Editing by Reiner Simanjuntak