GEOTHERMAL IN INDONESIA

Indonesia’s geothermal development
Hanan Nugroho, November 30, 2009 (Jakarta Post)

"Indonesia, which lies on the Pacific Ring of Fire, holds approximately 40 percent of the world’s geothermal reserves, equivalent to about 27,000 megawatts of electrical power. Most of the geothermal potential is found in Sumatra (13,800 MW), Java and Bali (9,250 MW), and Sulawesi (2,000 MW), while smaller pockets are found scattered across the archipelago.

"Geothermal energy…[has a stable price, making it less risky than fossil fuels]…[It is] clean and renewable…[and] has a very reliable supply…in Java and Sumatra [near] large numbers of consumers…[but] has Indonesia’s geothermal potential not been adequately developed…The installed capacity of our geothermal power plants (Kamojang, Salak, Dieng, Lahendong, etc.) is still about 1,189 MW, lagging behind that of the Philippines and the United States."

Already a world leader. (click to enlarge)

"The government plans to implement its second 10,000-MW power development program, where about 48 percent (4,733 MW) of the power generated will come from geothermal…[starting] by 2014…However, the program is challenged by several constraints: a weak tendering process, lack of sufficient and reliable data, lack of human resources, inadequate financial support, and – the most basic – the weak power purchase agreements (PPA) process.

"The current capacity of our geothermal power plants is actually a result of planning and developing done in the 1970s and 1980s, when oil prices skyrocketed. Presidential decrees…instructed state-owned oil and gas company PT Pertamina to explore Indonesia’s geothermal potential, and ordered state electricity company PT PLN to buy its electricity production…The Decrees were significant in reducing exploration risks and providing a guaranteed buyer…"

Expected to be a market driver. (click to enlarge)

"…[C]urrent geothermal development efforts face different regulations and challenges…Geothermal Law…[gives authority to] regional administrations…Unlike oil and coal, which can be sold worldwide, or natural gas, which has wider consumer potential…geothermal energy in Indonesia is still limited to [domestic] power generation…As a monopoly, PLN is the only buyer of geothermal power…[and the] selling prices for PLN’s electricity are regulated by the government…[but] how the rate and the subsidy will directly affect the making of PPA between PLN and geothermal exploration companies is not well defined. PLN tends to pass through its perceived low rate…to the exploration companies…

"…[T]he making of PPA will take a very long time or be difficult…[and Government] claims [that] Indonesia’s geothermal potential is 27 GW…must be more detailed and more technical, as well as verified and certified…[before the] second-stage 10,000-MW program attempts to get 4,733 MW from geothermal…four times the current installed capacity that has taken three decades to develop…The acceleration program will certainly need a large number of [hard-to-find] specialists, project managers, researchers, etc…[so] building human resources capacity to support the acceleration program will also [challenging]…Finance…could be a relatively easy problem to solve…[once there are PPAs and high quality project concepts, because of the high demand for low-emissions power sources]…Without addressing those constraints seriously, it will hard to achieve the target; instead, our geothermal potential will remain buried in the ground."