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| A geothermal power plant in Wayang Windu, West Java. (GA Photo/M. Defrizal) |
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s debate
rages on the legacy likely to be left by President Susilo Bambang Yudhoyono
when he leaves office, one contender is his efforts to encourage Indonesians to
embrace a lower-carbon economy.
The
president is aiming to bring the contribution of renewables to the national
energy mix to 25 percent by 2025 and 35 percent by 2050.
Those
renewables are likely to be sourced largely from the country’s vast geothermal
potential, which some estimates put at 40 percent of the world’s reserves, and
hydropower.
State
funding alone will not be enough to achieve such an energy mix, so private
investors must be lured to participate.
Energy and
Mineral Resources Minister Jero Wacik said on Wednesday that he had signed a
decree that will increase the tariff for electricity generated from geothermal
power plants. The decree will soon be made official in the form of regulation,
probably this week, the minister added.
He said
that the decree will set the minimum tariff for geothermal electricity at 10
cents per kilowatt hour in Sumatra; 11 cents per kWh in Java and Bali; 12 cents
per kWh in Central, Southeast and North Sulawesi; 13 cents per kWh in North
Sulawesi and Gorontalo; 14 cents per kWh for East and West Nusa Tenggara; and
18 cents per kWh for Papua.
Jero said
the government realized there was a need to massively develop the nation’s
geothermal potential and that investors had shown excitement toward the sector
when the plan to raise the tariff was announced.
“We only
utilize around 5 percent of geothermal potential. I estimate that around 6,000
megawatts of electricity can be generated [from geothermal],” Jero said.
While a
more attractive tariff will increase private investor interest in geothermal
projects, investment returns are just one of the limitations curbing activity.
Motofumi
Kohara from the Japan International Cooperation Agency, a government body
involved in Indonesia’s infrastructure development, said the issue of
complicated permits and the risk that investors must carry acted as constraints
on the development of geothermal projects.
Speaking at
the Indonesia International Infrastructure Conference and Exhibition 2012
currently taking place in Jakarta, Kohara said the government needed to
mitigate the risk borne by independent power producers during the exploration
stage of geothermal projects.
Furthermore,
he noted, half the geothermal projects in the second phase of a government
program to fast-track the development of electricity generators require
permission to use forests, another concerning issues.
While investors
in geothermal projects may soon enjoy a higher return, a cautious approach is
still evident in the hydropower sector.
Josef M.
Ullmer, the president director of Andritz Hydro, an equipment distributor for
hydropower plants, called on the government to show more commitment in its push
for hydropower projects.
“Hydropower
is the cheapest of all energy sources and has a 90 percent efficiency rate,” he
said.
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