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Indonesia's Renewable Energy Electricity Prices: Cheap or Expensive?

Adi Ahdiat 15/09/2022 17:00 WIB

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The Indonesian government has set a benchmark price for electricity from renewable energy sources. Is this price considered cheap, or expensive?

Global Average Renewable Energy Power Generation Costs and Indonesian Price Benchmarks* (2021-2022)

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Indonesia's Renewable Energy Electricity Prices: Cheap or Expensive?

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Global Average Renewable Energy Power Generation Costs and Indonesian Price Benchmarks* (2021-2022)

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The Indonesian government recently issued Presidential Regulation (Perpres) No. 112 of 2022 concerning the Acceleration of Renewable Energy Development for Electricity Provision on Tuesday (13/9/2022).

This Perpres regulates many things, one of which concerns the purchase price of electricity by PT PLN from various types of renewable energy power plants.

The price of renewable energy electricity in this Perpres is set at varying amounts, depending on the type of energy source, the location of the power plant, and the ownership status of the power plant.

The following are the highest price benchmarks for the purchase of electricity from renewable energy power plants fully built by the government (including from grant funds):

* Hydroelectric Power Plants (PLTA): US$3.76 cents/kWh
* Photovoltaic Solar Power Plants (PLTS): US$5.63 cents/kWh
* Wind Power Plants (PLTB): US$5.63 cents/kWh

Globally, these benchmark prices tend to be above the average cost of electricity generation or levelized cost of electricity (LCOE) for renewable energy worldwide.

LCOE is a common metric used to compare the cost of electricity generation from various power generation technologies.

According to the report *Renewable Power Generation Costs in 2021* released by the International Renewable Energy Agency (IRENA) in July 2022, throughout last year, the average global LCOE for PLTA was US$4.8 cents/kWh. This figure is higher than the Indonesian benchmark price.

Then, the average global LCOE for Photovoltaic PLTS is US$4.8 cents/kWh, lower than the Indonesian benchmark price. Meanwhile, the average global LCOE for onshore PLTB is only US$3.3 cents/kWh, lower than the Indonesian benchmark price.

However, this does not mean that the Indonesian benchmark price is expensive. IRENA estimates that the average cost of renewable energy electricity generation in 2022 has tended to increase compared to last year, influenced by the Russia-Ukraine conflict situation, which has driven up commodity prices.

"The energy sector is among the major consumers of materials. The increase in the price of steel, aluminum, cement, polysilicon, and other materials will certainly impact the cost of developing energy projects," explained IRENA in its report.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."