While many believe that Indonesian energy policy is on the right path with the development of geothermal alternatives, Deputy Finance Minister Bambang Brodjonegoro says there are risks.
The decision to introduce a feed-in-tariff policy for geothermal energy would put an extra burden on the country’s electricity subsidy costs, according to Bambang.
Bambang refered to a pricing scheme in which the state electricity firm, Perusahaan Listrik Negara (PLN), will pay a set price for electricity produced from geothermal power plants owned and operated by independent power producers.
The government has set aside Rp 71.36 trillion ($618 million) for electricity subsidies in this year’s budget, down by about Rp 28 trillion from last year.
Depending on the location, the tariff ranges from 10 cents to 18.5 cents per kilowatt hour (KwH), with the Energy and Mineral Resources Ministry planning to raise it further to 11.5 cents to 29 cents per KwH.
“Feed-in-tariffs are not suitable for Indonesia, not when the government still subsidizes the electricity,” Bambang added.