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Indonesia: Indonesia: Higher prices set for power from renewable sources

Published at: Nov 4, 2011
source: Rangga D. Fadillah, The Jakarta Post, Jakarta

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The government, state electricity firm PT PLN and businesses have agreed to raise the tariffs for power produced from biomass, biogas and city waste, a senior official said on Thursday.The director general for new, renewable energy and energy conservation at the Energy and Mineral Resources Ministry, Kardaya Warnika, said that he hoped the breakthrough could make investment in the sector more appealing.

A 2009 ministerial decree on electricity tariffs stipulates that PLN is obliged to buy power produced from biomass, biogas and city waste connected to the medium voltage network at Rp 656 (7 US cents) per kilowatt-hour (kWh) in Java and Bali, Rp 787 in Sumatra and Sulawesi, Rp 853 in Kalimantan, West and East Nusa Tenggara and Rp 984 in Maluku and Papua.

For electricity connected to the low-voltage network, the prices are Rp 1,004 per kWh in Java and Bali, Rp 1,205 in Sumatera and Sulawesi, Rp 1,305 in Kalimantan, West Nusa Tenggara and East Nusa Tenggara and Rp 1,506 in Maluku and Papua.

PLN defines low voltage as up to 1 kilo Volt (kV) and medium voltage between 1 kV and 35 kV.

Following the agreement, PLN will buy the power at a price of Rp 945 per kWh from biomass and biogas in Java and Bali, Rp 1,050 from city waste using zero waste technology and Rp 850 using landfill.

In Kalimantan, Sulawesi, West Nusa Tenggara and East Nusa Tenggara the prices are Rp 1,170, Rp 1,260 and Rp 1,020. In Maluku and Papua, the prices are Rp 1,267.5, Rp 1,365 and Rp 1,105 respectively.

“The price change will be included in a revision of the 2009 ministerial decree on electricity tariffs,” Kardaya said during a discussion at his office in Jakarta.

Maritje Hutapea, the director for bioenergy at the directorate general said that the existing capacity of electricity produced from biomass across the country had reached 1,100 megawatts (MW).

For power from city waste, the Bantar Gebang landfill in Bekasi, West Java, has a capacity of 15 MW and another waste-based power plant at the Suwung landfill in Bali has a capacity of 4 MW.

The Indonesian Renewable Energy Society (METI) executive director Erwin Susanto Sadirsan, who also attended the discussion, told reporters that the new prices were still around 10 percent lower than prices demanded by suppliers.

“However, the agreed prices are fair enough and we hope that PLN is committed to purchasing the electricity,” he said.

Waste-based power producer PT Navigat Organik Energi Indonesia (NOEI) president director Agus Nugroho Susanto, said that with higher prices, his company would find it easier getting credit facilities from banks.

“Currently banks request an internal rate of return [IRR] of 15 percent while our rate is only 13 percent,” he said, referring to a measure of the profitability of investments.

Agus said that if the company could easily access credit facilities, it could expand the construction of waste-based power plants in other locations. NOEI currently operates the Bantar Gebang and Suwung waste-based power plants.

“We plan to increase the capacity of Bantar Gebang to 26 MW and Suwung to 10 MW,” he said.

Indonesia’s largest private energy firm PT Medco Energi Internasional also announced its plans to build waste-based power plants in East Java and Karawang, West Java, with a capacity of 20 MW and 15 MW respectively.

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