Red Tape Holding Geothermal Back in Race to Replace Coal in Indonesia

November 8, 2013 Leave a comment

Red Tape Holding Geothermal Back in Race to Replace Coal

By Dion Bisara on 1:34 pm November 7, 2013.
The government needs to streamline regulations and provide financial incentives for investors to boost development of geothermal energy, an industry expert has said. “Government is the single prime mover to accelerate geothermal progress,” said deputy chairman of the Indonesia Geothermal Association Sanusi Satar to reporters on Wednesday.Sanusi noted that the government, through state utility Perusahaan Listrik Negara, is the single largest purchaser of electricity generated by private companies in the country, and has the power to set purchase price.

“The problem is that there is a six-to-seven year period between the tender and start of geothermal operations. A lot can happen within that period, except our cost going down,” he said.

Sanusi said geothermal developers have to bear many risks, including clearing land, building infrastructure in remote areas where much of the resources are situated as well as exploration risks.

Sanusi also noted that geothermal projects have to clear permits from all levels of government, which presents many potholes for geothermal projects. “It would be ideal if companies could get all the permits under one roof,” he said.

Yunus Saefulhak, the head of the sub-directorate of geothermal services at the Energy and Mineral Resources Ministry, said that the government and the House of Representatives is now revising geothermal law to accommodate a more profitable pricing scheme for developers and to streamline the permits process. “There’s optimism that this law can be resolved by April,” Yunus said.

Geothermal sources now contribute 1.4 percent of the country’s total energy supply.

Projections from the Indonesian Institute of Sciences (LIPI) indicate the country will not have enough oil, gas and coal to sate its energy demand by 2019, making the need for new sources pressing.

Filed under Macro Trends

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