The government has issued a regulation setting benchmarks for electricity production costs in 13 regions to guide state power firm PLN in its pricing of electricity generated by renewable energy sources.
Director general of electricity and energy utilization at the Energy and Mineral Resources Ministry J. Purwono said benchmarks would be calculated separately for each region based on production costs of their respective conventional fuel powered plants.
"The benchmarks will be used as a guideline for PLN to determine the selling price of electricity generated by geothermal and other renewable energy sources," Purwono said.
Previously, prices were calculated by PLN's internal management.
According to the regulation, the highest production cost among the 13 regions is in West Kalimantan at Rp 2,312 (25 U.S. cents) per kilowatt-hour (kWh) for high voltage, Rp 2,546 per kWh for medium voltage and Rp 3,143 per kWh for low voltage.
Last month, the ministry issued a regulation on pricing for electricity produced from geothermal sources, where the price per kWh produced by geothermal plants with capacity above 55 megawatts (MW) is set at 80 percent of the average production cost of conventional fuel-powered plants, while the price for plants with capacity between 10 and 55 MW is set at 85 percent.
Electricity produced from geothermal-fired power plants with capacities of less than 10 MW will be priced between 60 and 80 percent of conventional costs.
The government expects the issuance of the regulations to attract investment in the geothermal sector.
Indonesia has a potential geothermal capacity of 27,700 MW, or equal to 40 percent of the world's reserves.