Energy pricing and policies development for geothermal energy in Indonesia
Keywords:
Energy pricing, geothermal, externality, effect on production, multi criteria decision makingAbstract
The electricity needs in Indonesia is estimated to be increased per year in the next couple of years. The Indonesia State Electricity Company (PLN) mostly supplies electricity for Indonesia from fossil power plants. Stock of fossil raw material for energy is very limited and will be depleted within a certain period. On the other hand, the use of fossil fuels is also contributing to the greenhouse gas emissions in the world. Alternatively, Indonesia has several renewable energy resources that can provide sustainable reserve energy and more eco-friendly as well. However, presently, utilization of renewable energy is very low. Therefore, this research is conducted to estimate the energy pricing of geothermal, diesel, and coal power plant that has internalized its external cost using effect of production and benefit transfer method. A Multi Criteria Decision Making (MCDA) method is also used for policy analysing to encourage the development of geothermal power plant as a substitution alternative of diesel and coal energy. The results show that the estimated energy price of each source with internalizing the external cost are coal power plant (9,94 cents/KWh), diesel power plant (7,63 cents/KWh), and geothermal power plant (1,18 cents/KWh) respectively. Furthermore, based on MCDA for policy designing, after considering environmental, social, and economic criteria of power plant development, geothermal power plant has the highest score (business as usual and feed in tariff + internalization of external cost) compared to coal and diesel power plant. Based on the results, the power plant that should be prioritized to be developed is geothermal power plant in substituting diesel and coal power plant. This could be a solution to fossil resources depletion and environmental degradation caused by fossil power plants. Geothermal energy indeed cannot replace the whole coal and diesel energy supply due to its limited capacity. Technology and science development for geothermal energy are the important things to raise the use of this power plant source as well as to reduce emission and to arrange the stock of diesel and coal energy.References
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