Abstract:
Evaluation of the economic feasibility of a geothermal development project for electricity in Indonesia is, at present, subject to the requirement that its cost should not be more than the least possible generation cost acceptable to the Indonesian state power company, i.e. coal generation cost. This thesis initially provides an overview on energy and electricity utilisation in Indonesia - including geothermal developments. It then presents the theoretical economic criteria for energy project development evaluation, and on this basis, an economic concept of energy pricing is developed. It assesses financial geothermal steam pricing and electricity generation costs for geothermal, and coal - with and without internalising externalities. The benefit cost analysis, is presented to analyse whether, the development of geothermal power plants to replace proposed coal power plants is justified or not from economic point of view. Before reaching conclusions, an economic justification for the need for internalising externalities is presented. A literature review on pollution economics : how pollution control instruments internalise externalities, is also presented.
