PLN sets up unit to buy power from renewable-based power plants

State-owned electricity company PT PLN said it has set up a new unit that would buy electricity produced by power plants fueled by renewable sources of energy, Bisnis Indonesia reported on Saturday.

?We have prepared the subsidiary, the management and the team,? said PLN Director for Corporate Planning, Nicke Widyawati, but stopped short of providing further details.

PLN has declined to buy electricity from renewable-based power plant projects as the power price is considered too high compared to electricity from other type of power plants such as gas-fired and coal-fired. This has undermined the government?s program to boost the production of renewable sources of energy in the country.

To help resolve the problem, the government has said it would provide subsidy for PLN to buy the electricity from renewable-based power plants. Under the plan, PLN will buy the electricity at normal tariff, with the ?difference? to be covered by the PLN new unit.

Nicke said that financing for the PLN new unit can either come from the state budget, or the planned energy security fund. (*)