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

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

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    Asia Clean Energy Forum
    429 views10 pages
    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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    Mike Crosetti - Policy, Financing and Institutional Innovations for Geothermal Energy Generation in Indonesia

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    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.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    429 views10 pages

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

    Uploaded by

    Asia Clean Energy Forum
    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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    The key takeaways are that Indonesia has the largest geothermal resources in the world and is the third largest producer of geothermal power. However, development has stagnated since regulations were put in place in 2003. Several initiatives are underway to revitalize the sector.

    The principal elements of sector reform discussed are: 1) Addressing exploration risks for new working areas, 2) Introducing feed-in tariffs, and 3) Rationalizing the tender process for new working areas.

    Issues that should be considered regarding tendering and exploration include: the benefits of tendering, the value of pre-tender exploration by the government, whether to maximize exploitation or minimize price in tender criteria, and whether to maximize speed or minimize price with feed-in tariffs.

    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
    2

    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

    10

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