WB, ADB recommend use of ceiling price in setting geothermal power tariff

The World Bank (WB) and Asian Development Bank (ADB), as independent consultants for the government, have recommended for the use of ceiling price in determining the price of geothermal electricity.

Director General of New and Renewable Energy and Energy Conservation, Rida Mulyana said that the ceiling price is recommended to be applied with a change in the tender mechanism for geothermal power plant development. The government has applied a tender mechanism based on certain capacity, while the World Bank and ADB have suggested for not limiting the capacity. ?They don?t limit the capacity. Once a single price is determined, let the tender participants later decide on the capacity of the plants,? Rida said.

He, however, added the government has yet to decide on whether to follow the recommendations made by the World Bank and ADB as the two have yet to submit a full report.

Under the National Energy Policy, tarrifs of new and rewable energy are based on the concept of Feed in Tariff (FIT) mechanism. Before asking ADB and World Bank to become consultants, the government has three geothermal electricity tariff alternatives including FIT, ceiling price, and combination of both.

The combination of FIT and ceiling price concept is possible with demographic division based on existing potential. Areas within volcanic lines such as in Sumatra, Java, and Maluku can use the ceiling price concept, while projects outside the regions used the FIT mechanism.

Editing Reiner Simanjuntak