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also has local content requirements that vary based on the size of the project.139 Other countries have higher entry barriers; still others allow entry, but not at certain stages of the project. In Kenya’s case, it is difficult to enter at the initial development stage, but once the steam field development is complete, then the barriers to entry are reportedly low.140 Regional Profiles Southeast Asia (Indonesia and the Philippines) Indonesia has enormous geothermal potential, as noted above, and has instituted an ambitious plan to expand geothermal power production by 2,000 to 3,000 MW by 2020. However, it is unlikely that the country will be able to meet those targets. There has been no new geothermal power development in Indonesia since 2003, even though a number of blocks were opened to exploration through a tender process (the second Fast Track Program or FTP2), beginning in 2010, following the promulgation of the 2009 Electricity Law.141 Industry observers cite several problems inhibiting new development: Confusion over the FIT rates that will be paid to project developers, and the government’s reverse auction system that requires project developers to bid for the lowest acceptable tariff, and may force prices below viable rates; A tender process that awards exploration blocks to the lowest bidder, even though that bidder may not be qualified to carry out the work, or be able to obtain financing; A new geothermal regulation widely expected to be introduced in the second half of 2013, encouraging project developers to delay breaking ground for new projects; Regulatory conflict between government agencies. For example, projects licensed by the Ministry of Energy and Mineral Resources may have difficulty obtaining permits from the Forestry Ministry to build on forest land, or projects that were planned to rely on loan guarantees may not be able to meet requirements from the Ministry of Finance; Local protests may prevent developers from beginning construction.142 The Philippines will likely add new capacity as well, although less than 1,000 MW by 2020. The overall additions will depend on the respective governments’ ability to 139 For projects up to 5 MW, local content must be a minimum of 31.30 percent for goods and 89.18 percent for services, or 42.00 percent combined. This is gradually reduced for larger projects with projects rated at greater than 110 MW required to have 16.00 percent local content for goods and 58.40 percent for services, with a combined rate of 28.95 percent. PWC, Power in Indonesia, 2013, 17. 140 Industry representative, interview with USITC staff, December 19, 2012. 141 Electricity Law No. 30/2009. PWC, Power in Indonesia, 2013, 9, 13. 142 Industry and government representatives, interviews with USITC staff, Jakarta, July 3 and 4, 2013. 5-35PDF Image | Renewable Energy and Related Services: Recent Developments
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