Structured Tariff to Promote Geothermal Electricity for Energy Security

Abstract

This paper analyzes the necessity of a structured tariff for geothermal electricity in Indonesia. Indonesia is blessed with abundant natural resources and choices of energy resources to generate electricity, among other are coal, gas, biomass, hydro to geothermal, creating a fierce competition in electricity tariffs. While geothermal is inline with energy security principle and green growth initiative, it requires a huge capital funding. Geothermal electricity development consists of phases of project, each having its own financial characteristics. The Indonesian government has set a support in the form of ceiling price of geothermal electricity tariff by 11 U.S cents / kWh. However, the government did not set a levelized cost of geothermal, as an indication of lower limit capacity class, to which support is given. The government should establish a levelized cost of geothermal energy to reflect its financial capability in supporting geothermal development. Aside of that, the government also needs to establish a structured tariff calculation to reflect a fair and transparent business cooperation.