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Mike Crosetti - Policy, Financing and Institutional Innovations For Geothermal Energy Generation in Indonesia

This document discusses policy, financing, and institutional innovations for geothermal power generation in Indonesia. It provides an overview of Indonesia's large geothermal resources and industry structure. Progress in developing geothermal power has been limited, with only 260 MW of new capacity added in the past decade. Several initiatives are underway to revitalize the sector, including addressing exploration risks, introducing feed-in tariffs, and rationalizing the tender process for new working areas. Regulations from the Ministry of Finance provide government guarantees and subsidies, while the Ministry of Energy and Mineral Resources sets policies and regulations around pricing, business activities, and tender processes. Possible institutional arrangements are outlined to accommodate the proposed changes within existing laws.

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497 views10 pages

Mike Crosetti - Policy, Financing and Institutional Innovations For Geothermal Energy Generation in Indonesia

This document discusses policy, financing, and institutional innovations for geothermal power generation in Indonesia. It provides an overview of Indonesia's large geothermal resources and industry structure. Progress in developing geothermal power has been limited, with only 260 MW of new capacity added in the past decade. Several initiatives are underway to revitalize the sector, including addressing exploration risks, introducing feed-in tariffs, and rationalizing the tender process for new working areas. Regulations from the Ministry of Finance provide government guarantees and subsidies, while the Ministry of Energy and Mineral Resources sets policies and regulations around pricing, business activities, and tender processes. Possible institutional arrangements are outlined to accommodate the proposed changes within existing laws.

Uploaded by

Asia Clean Energy Forum
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Policy, Financing & Institutional Innovations for Geothermal Power Generation in Indonesia

Asia Clean Energy Forum


8 June 2012
Mike Crosetti Director

Overview of the Indonesian Geothermal Sector


Largest geothermal resource base in the world Third largest producer of geothermal power in the world ~ 1,200 MW installed Geothermal Law in 2003 and numerous implementing regulations since
Licenses awarded prior to Geothermal Law remain under legacy arrangements
After Geothermal Law, licenses awarded by regional governments though price-based tender

The Government targets an additional 3,967 MW of geothermal capacity additions by end of 2014 Geothermal power to help Indonesia achieve GHG reduction targets
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Industry Structure
MSOE
Serves as Government shareholder

MEMR
Sets policy & regulates Chevron PLN 67% 33% PLNG GeoDipa
Producing WKP - Dieng WKP under dev. - Patuha

Legacy Geothermal Working Areas

Star Energy
Producing WKP - Wayang Windu 1&2

Pertamina

Producing WKP - Salak 1-6 - Drajat 1-3 - Lahendong 3

Sarulla
PGE
Producing WKP - Kamojan 1-3 - Lahendong 1-4 - Sibayak WKP not yet operating - Ulubelu - Kotamubagu - Sungai Penuh - Hulu Lais - Lumut Balai

Joint venture of Itochu, Ormat, Kyushu, Saratoga (under development)

WKP not yet operating - Tulehu - Ulumbu - Mataloko - Cibuni (under dispute)

New Geothermal Working Areas


Numerous Companies Provides guarantees

M o F

State-owned enterprises Subsidiaries of state-owned enterprises Private geothermal companies

Progress has been limited


Development has stagnated since passage of Geothermal Law
Only ~260 MW of new capacity additions over past decade

New capacity additions likely to reach only


< 600 MW by 2014 < 1,400 MW by 2016

Several initiatives underway to revitalize the sector

Principal elements of sector reform


3. Rationalize the tender process for new working areas

1. Address exploration risks for new working areas

2. Introduce Feed-in Tariffs

MoF
Regulations in place; Insitutional preparation underway

MEMR
New regulations under consideration

MEMR
New regulations under consideration

Regulations under MoF auspices


Law 17/2003 State Finance Law Risk mitigation
Min Reg 139/2011: Government guarantee for PLN payment risk Min Reg 3/2012: Procedures for Geothermal Fund

Law 19/2003 State Enterprise Law Incremental cost coverage


Min Reg 111/2007: Procedures for the Electricity Subsidy

Min Reg 21/2010 Tax Exemptions for Geothermal Incentives

Regulations under MEMR auspices


Law 27/2003 Geothermal Law
Gov Reg 59/2007: Geothermal Business Activities Pricing
Min Reg 2/2011: Pricing for Geothermal Power

Transaction process
Min Reg 11/2008: Definition of Working Areas Min Reg 2/2009: Preliminary Assignment Min Reg 11/2009: Management Guidelines for Geothermal Business Activities

Revision of these regulations under consideration

Possible institutional arrangements


~ USD 220 million for Geothermal Fund as of 2012

APBN PSO MEMR AUSPICES

These changes can be accommodated under Law 27/2003

MoF AUSPICES MOF


KMK 286/2011 PMK 1/2012 PMK 3/2012

PLN
Exploration repayment 1 Loans

Sales Revenue

Feed-in tariff 3 Geothermal Developer Taxes National Government Regional funding

Geothermal Advisor

PIP Data

Exploration data
Data Agreement
(provided for tenders)

Tender package & license 2

Exploration Contractor

Existing data New data

Geological Agency

Owns all data

Local Government
Information, Agreements, Licences Funds

Some issues to consider


The benefits of tendering
Minimizes second-guessing The greater the resources or larger the government support, the more important it becomes

The value of pre-tender exploration by the government


Pay me now, or pay me more later

Maximize exploitation or minimize price? tender criteria Maximize speed or minimize price? value of feed-in tariffs The challenge of prioritizing government support
Coordination of licensing with government exploration

THANK YOU !
www.castlerockasia.com

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