Feed-in tariff to promote solar power plants

JAKARTA: In an attempt to attract more private investors in the development of solar energy, the government will set a feed-in tariff for electricity produced by solar power plants.

"The tariff will be as high as 25 cents per kilowatt hour," Finance Minister Agus Martowardojo said after a meeting with several other ministers last Tuesday.

A feed-in tariff is the rate that state utility firm Perusahaan Listrik Negara must pay for electricity generated from privately owned power plants.

The development of solar power facilities would still be conducted through a competitive bidding process and the electricity generated will be purchased by PLN, Agus said. "Should the investors decide to use more locally made components, then the price would be higher."

Agus said the tariff was expected to encourage private investors to develop solar power plants in remote areas of Indonesia.

The nation's remote areas are concentrated in the less-developed eastern part of Indonesia, including on Flores island in East Nusa Tenggara and some parts of Papua.

"The electricity solution for remote areas is independent power plants and it cannot be [powered] by diesel fuel," Agus said.

He added that the government, with the assistance of PLN, had identified several regions where the feed-in tariff would be applied.

Rida Mulyana, the director general of renewable energy at the Energy and Mineral Resources Ministry, said the tariff was in line with the ministry's proposal.

"The ministerial regulation will be issued soon," he said.

As the development is still being handled through competitive bidding, the price level could be lower than the 25 cents per Kw/h quoted by Agus, Rida said.