Evaluating feed-in tariff policies on enhancing geothermal development in Indonesia

Uncertainty Analysis of Geothermal Development Projects Using Exploratory System Dynamics Modelling and Analysis Method

“…This study shows the advantages of the ESDMA method. Compared to a recent reports by Setiawan et al (2022) and (Dewi, Setiawan, and Latief, 2020), which only used SD method to evaluate geothermal development target achievement and offered a conceptual model to analyze uncertainty factors, respectively, ESDMA proved more useful. Projects developer was more anticipative to the identified uncertainty factors.…”

“…Currently, the company manages 13 sites scattered across Indonesia, with a total installed capacity of 1.877 MW consisting of 672 and 1.205 MW through standalone and joint operations, respectively. This study build upon previous investigation on geothermal development by (Setiawan et al, 2022), with modifications to the conceptual model. 2022), the enlarged picture of geothermal development system is shown in Figure 4)…”

“…A key contributor to hindrances in geothermal energy development in Indonesia is the prevalence of uncertainty factors, including drilling success ratio, delay due to bureaucracy or social factors, electricity pricing, and other non-technical variables. Recent studies have explored aspects of geothermal development, such as investment cost and risk (Dewi et al, 2022), the impact of feed-in tariff on installed capacity (Setiawan et al, 2022), geothermal exergy analysis (Qurrahman et al, 2021), and the risk allocation scheme (Nur, Burton, and Bergmann, 2023). However, there remains a gap in reports addressing the identification and analysis of uncertainty and their significance in achieving the objective of geothermal development.…”

Evidence on optimal risk allocation models for Indonesian geothermal projects under PPP contracts

“…As the feed-in tariff for geothermal energy may not be economically attractive for private investment (Yuliani, 2016) the possibility of the government bearing some of the risks normally faced by the private sector through a PPP contract can be critical in encouraging corporate involvement in such investments. In this context, the PPP financing model can effectively buttress the economic viability of geothermal projects via appropriate upstream cost and risk sharing, until the economic value of the feed-in tariff -typically between US$ 11 cents and 17.7 cents/kWh, dependent on field characteristics (Setiawan et al, 2022) -can be achieved. In practice such levels are likely to prove challenging to achieve given the current structure of feed-in tariffs on the ground (Darma, 2016;Setiawan et al, 2022), suggesting that state support may be required over the longer-term.…”

“…In this context, the PPP financing model can effectively buttress the economic viability of geothermal projects via appropriate upstream cost and risk sharing, until the economic value of the feed-in tariff -typically between US$ 11 cents and 17.7 cents/kWh, dependent on field characteristics (Setiawan et al, 2022) -can be achieved. In practice such levels are likely to prove challenging to achieve given the current structure of feed-in tariffs on the ground (Darma, 2016;Setiawan et al, 2022), suggesting that state support may be required over the longer-term.…”