P

ertamina Geothermal Energy (PGE), a wholly owned subsidiary of state-owned oil and gas firm PT Pertamina, will spend up to US$2.29 billion to finance the development of eight geothermal power plants, the company'€™s senior executive says.

PGE president director Adriansyah said the company would need to spend about $3.5 million per megawatt (MW) of electricity to be produced by the eight new geothermal power plants. Thus, the total investment in the eight projects would reach $2.29 billion.

'€œMost of the funding will come from Pertamina. Only three of the projects, which are Ulubelu, Lumut Balai [unit one and two] and Lahendong, are financed by soft loans,'€ Adriansyah said on Friday.

The eight power plant projects will give an additional capacity of 655 MW to Pertamina Geothermal, which at present produces 402 MW at its existing plants.

The projects include the development of 110 MW Ulubelu units three and four, 110 MW Lumut Balai units one and two, 110 MW Lumut Balai unit three, 440 MW Lahendong units five and six, 30 MW Karaha unit one, 35 MW Kamojang unit five, 110 MW Hululais units one and two as well as 110 MW Sunga Penuh units one and two.

The Lumut Balai unit one and two project, located in South Sumatra, is financially backed by Japan International Cooperation Agency (JICA). Meanwhile, the Ulubelu and Lahendong projects have obtained funding from the World Bank.

The development of the geothermal projects, according to Ardiansyah, would need between five to eight years to complete because the job also included the development of the geothermal field for the power generator.

The company started construction in August on Kamojang unit five, which is located in Garut, East Java. The project is expected to be completed by August 2015.

Meanwhile, the Ulubelu unit three project is now in the tender process for its engineering, procurement and construction contracts, Adriansyah said.

PGE is aiming to increase its power generation capacity to 2.3 gigawatts (GW) by 2025, or about 27 percent of the government'€™s planned 2025 national geothermal energy capacity of 8.6 GW.

Despite abundant resources of geothermal energy, the country remains heavily dependent on fossil fuels. Around 46 percent of electricity in the country is generated from coal-fired power plants, 25 percent from gas, 17 percent from oil, 7 percent from hydropower and only 5 percent from geothermal energy. The country is estimated to contain the potential for 28 GW in geothermal energy.

However, developing geothermal resources and power plants is not easy for several reasons, particularly the location of the resources '€“ which are mostly in wildlife sanctuary areas '€” and the low price of electricity.