Indonesia: New Tariff Regime for Renewable Energies Including Geothermal

Indonesia Introduces New Tariff Regime for Renewable Energies (Lexology)

(Courtesy CIA.gov)

The Indonesian government has introduced a new tariff regime for renewable energies [including geothermal]. The new regime gives the Indonesian state power company, PT Perusahaan Listrik Negara (PLN), greater control over tariffs in the sector through business-to-business negotiations and benchmarking against the applicable Electricity Generation Basic Cost (Biaya Pokok Penyediaan Pembangkitan or BPP).

The renewables covered by MEMR Reg. 50/2017 are solar, wind, hydro, biomass, biogas, waste, geothermal and ocean energy.

For Hydro, waste and geothermal energies, the tariff calculation is as follows: If the local BPP is greater than the national BPP from the previous year, the maximum benchmark tariff is the local BPP. If the local BPP is equal to or less than the national BPP from the previous year, the tariff shall be based on a mutual agreement between the Independent Power Producers (IPPs) and PLN.

Exceptions to New Tariff Regime are:

• Entities that have been appointed as winners of capacity quotas for solar projects, have obtained approval for the price of electricity from the MEMR, or have been appointed operators of hydropower, biomass, biogas or waste projects or been awarded a geothermal working area, and have signed a Power Purchase Agreement (“PPA”) with PLN;
• Entities that have been awarded a geothermal working area but have not signed a PPA;
• Any state-owned company that has been mandated with geothermal concession;
• Any holder of a geothermal concession that has signed any steam sale contract (perjanjian jual beli uap) and/or PPA which has been verified or is in the process of being verified by the Indonesian Financial and Development Supervisory Board (BPKP).

Read More.......