PT Indonesia Power (IP) and PT Wijaya Karya (WIKA) have secured three geothermal power plant projects in West Java with a total capacity of 285 megawatts (MW).
Director of geothermal utilization at the Energy and Mineral Resources Ministry Sugiharto Harsoprayitno said Monday IP would exploit geothermal reserves in Cisolok Sukarame and Tangkuban Perahu concessions, which have capacities of 45 and 220 MW respectively.
WIKA won the bidding for the Tampomas concession, which has a capacity 20 MW.
"The two companies won tenders for the lowest geothermal electricity price they offered to state power firm PT PLN. They are the first companies to win geothermal tenders held by the regional government," Sugiharto said.
WIKA and IP, which is a unit of state power utility company PT PLN, are now waiting for the regents of the concessions' respective areas to issue permits to manage the geothermal for 35 years, which includes a five-year exploration period.
Sugiharto refused to cite the exact investment for the plants, although he said a 55 MW geothermal plant would need about US$3 million per MW to construct.
Geothermal operators are required to pay royalties up to 2.5 percent of their revenue from electricity sales. The regional government will receive 80 percent of the royalties and the central government 20 percent.
Sugiharto said the North Maluku administration would open a bidding for a 75 MW geothermal site in Jailolo this month.
Indonesia boasts the world's largest geothermal reserves, with an estimated capacity of up to 27,000 MW of electricity, or equal to around 40 percent of the world's geothermal reserves.
However, Indonesia's 18 operational geothermal plants only produce a combined 1,050 MW.
The government has said geothermal power will contribute 30 percent to its second 10,000 MW power plant construction program. However, investors have demanded a revision of the government's policy on pricing.
The East Java administration is slated to open a bidding for the Ngebel concession in Ponorogo regency, which is among 11 untapped sites with a combined potential of 850 MW.
The government plans to start construction at the Ngebel site in 2009.
Although geothermal energy is a clean energy source, electricity produced at geothermal plants is only slightly less expensive than that produced through burning fossil fuels.
An energy expert at Surabaya's Institute of Technology (ITS), Syarifuddin Mahmudsyah, said the cost of producing electricity at a geothermal plant with a capacity of less than 1 MW would be between $3,000 and $5,000 per kilowatt (kW)
A larger capacity plant would require between $1,500 and $2,000 per kW.
"Maintenance and drilling costs are expensive too," Syarifuddin said.
"Most geothermal sites are left idle because power demand in the nearby areas remains low, rendering it uneconomical to explore and utilize geothermal sources -- especially since regions outside Java are yet to be connected to a powergrid," he said.
Investors developing geothermal sites in Indonesia must sell all electricity produced to PLN.
Under regulations issued recently by the Energy and Mineral Resources Ministry, the ceiling price for geothermal power is based on the average cost PLN spends producing one kilowatt of electricity at its oil, gas, coal and hydro-electrical plants.
| 
|
|
|
|
|
|
|