State oil and gas company PT Pertamina wants the selling price of electricity from geothermal energy sources set at a minimum of US$.10 per kilowatt hour (kWh) to make geothermal development more attractive to investors.
Geothermal energy development was currently being hampered by the low selling price of electricity produced with geothermal energy, namely US$.05 to .07 per kWh, M Husen, Pertamina’s upstream affairs director, said here Wedensday.
“Many investors will be interested in geothermal energy development, if the electricity produced is priced at a minimum of US$.10 per kWh,” Husen said.
Ten US cents was only one-third of the price of electricity produced by oil-fired power plants or US$.30 per kWh, and therefore fair enough, he said.
Using geothermal energy to produce electricity would be cheaper than doing the same with oil and would eventually reduce the need to subsidise electricity production as geothermal was a renewable energy source and also environmentally friendly.
“It will be a shame if this strategic renewable energy source is not developed,” he said.
Husen said with the present low price of geothermal-based electricity , investors would not find geothermal energy development profitable enough and would be more inclined to invest in the oil and gas sectors, where the risks were the same as in geothermal development.
“The ratio between capital and selling price should be at least 1:10 if we want to see more investment in geothermal development,” Husen said.
Meanwhile, an energy and mineral resources ministry official said the government was planning to revise Energy and Mineral Resources Minister’s Regulation No. 2/2011 on the selling price of electricity from geothermal resources.
“Under the planned revision, the price of geothermal-based electricity will vary according to the conditions in the region where it was produced,” said Sugiharto Harsoprayinto, director general of geothermal energy at the Energy and Mineral Resources Ministry.
In determining the price of geothermal-based electricity in a given region, the government would use the fuel oil price as a reference, he said.
In Energy and Mineral Resources Minister’s Regulation No2/2011, the State Electricity Company (PLN) could buy electricity from geothermal power plants at a maximum price of US$.097 per kWh.
