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The government has set the benchmark selling price for
geothermal power generated by independent power producers at between
5.9 U.S. cents to 10 cents per kilowatt hour (kwh).
Director General of Electricity and Energy Utilization Purwono told The
Jakarta Post on Tuesday the calculation of the prices was based on the
formula generally used by state power firm PT PLN.
"We have agreed the tariff is equal to 80 percent of the total costs
PLN usually spends to produce power," Purwono said.
Based on the prices already set by the government, the power producers
can only sell the electricity to PLN, as the sole power distributor for
households and most businesses.
However, prices for the geothermal power vary between regions, with
power plants located in remote areas getting higher prices due to
higher production costs, Purwono said.
"Based on our calculation, the power produced in Java will get the
lowest price of 5.9 cents, while those located in remote areas (outside
Java) will get the highest ceiling of 10 cents," he said.
Purwono said the calculation of the prices excluded potential proceeds
geothermal developers could tap from global carbon trading.
Energy and Mineral Resources Minister Purnomo Yusgiantoro has called on
geothermal energy companies to take benefit from the global carbon
credit program in order to compensate for their huge investment costs.
By taking part in the program, the producers can eventually sell the
power at reasonable prices to PLN.
PLN, which usually sells electricity to consumers at an average price
of 6 U.S. cents per kwh, has opposed benchmark prices of between 7
cents and 8 cents per kwh proposed by geothermal developers.
Purwono said PLN had already agreed with the prices set out by the
government.
"They (PLN) won't mind with the prices as they are relatively feasible,
even for (geothermal) development in remote areas," he said.
The Indonesian Geothermal Association, however, says the benchmark
prices are too low and are unfeasible for investment in geothermal
sector to gain the maximum result.
"The system used by the government to determine the prices based on PLN
production costs can create uncertainty as the costs can fluctuate,"
Alimin Ginting, the association's chairman, told the Post.
Power production costs can change overnight based on the fluctuation of
global oil prices.
Indonesia, Southeast Asia's largest economy, holds 40 percent of the
world's geothermal reserves.
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