The government is planning to offer renewable energy producers a tax cut following lawmakers’ refusal to approve a proposed Rp 1.3 trillion (US$95.87 million) subsidy in the 2017 state budget, an official said on Wednesday.

The nergy and Mineral Resources Ministry's director for new and renewable energy, Maritje Hutapea, said without a subsidy, the selling price of electricity from renewable energy sources would be too high.

The average price of electricity generated from renewable power plants currently stands at 15 US cents per kilowatt hour (kWh), much lower than the price offered by state electricity company PLN to households of 8 cents per kWh.

"After the subsidy proposal was rejected, we have to find another way. A tax cut is the alternative but we must work with the Finance Ministry [to achieve it]," Maritje said on Wednesday.

The government aims to supply 23 percent of the nation’s energy from renewable sources by 2025 in order to cut down on carbon emissions and wean the country off fossil fuels.

To reach the target, the General Plan for National Energy (RUEN) stipulates that renewable energy must make up at least 11 percent of the energy mix by 2017, equal to 25.5 million tons of oil equivalent (mtoe). (hwa)