Renewable Energy Gathers Power as Indonesia Mulls Fixed Price Increases


DECEMBER 09, 2015

Jakarta. The Indonesian government is mulling a regulation which would guarantee annual price increases for renewable power producers, as part of its attempt to boost renewable power development and reduce dependency on fossil fuels.

The government targets renewable energy — from geothermal, wind, solar, ocean wave and hydro — to account for about a fourth of its energy mix in the next four years, as part of the country's commitment to cut greenhouse gases.

However, a recent decline in global oil price means that the renewable sources may become less economical than the fossil fuels, stunting development in the sector.

Jarman, director general of electricity at Energy and Mineral Resources Ministry, said the ministry is considering a formula for guaranteed annual price increases in order to ensure profitability and boost attractiveness of renewable energy projects for developers.

"We have such a formula for conventional power producers,  so we would find a solution for the renewable energy sector," Jarman said.

Indonesia plans to add 35,000 megawatts of power-generating capacity by 2019, half of which would be fired by coal and the remainder by gas and renewable sources.

Sofyan Basir, president director of state utility company Perusahaan Listrik Negara, said the deal effectively subsidizes the development of renewable energy by buying power from independent producers at above market prices.