Cost Recovery for Geothermal Projects
The government plans to revise the geothermal contract scheme from the base tariff or the selling price of electricity from the operator to PT PLN to a cost recovery system. The Director-General of New Renewable Energy and Energy Conservation of the Ministry of Energy and Mineral Resources, FX Sutijastoto, said the scheme is expected to attract investors because it could reduce project risks.
So far, geothermal field operators must explore with considerable risk, since they do not necessarily find geothermal reserves and there is no certainty of sales, thus causing the lack of investor interest or forcing investors to sell electricity at high prices to cover the risk. With the cost recovery, the government will reimburse exploration costs, thereby reducing investors’ burden.