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Jakarta Post
The Jakarta Post
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Pertamina wins bid for Mt. Lawu geothermal power plant

  • Raras Cahyafitri

    The Jakarta Post

Jakarta | Thu, March 3 2016 | 08:51 am

State-owned oil and gas giant Pertamina has secured rights to build power plants in Gunung Lawu, East Java, amid the government'€™s push to speed up electricity production capacity from renewable resources.

Pertamina came in first in the open bid, ahead of the only rival, PT Star Energy Geothermal Indonesia, according to an announcement made by the Energy and Mineral Resources Ministry'€™s new renewable energy and energy conservation directorate general.

Pertamina is offering a low electricity rate of 10 US cents per kilowatt hour (kWh) for power produced from the future geothermal plant, compared to 14 cents per kWh offered by Star Energy'€™s, the announcement shows.

The Gunung Lawu geothermal power plant will be developed by Pertamina'€™s geothermal subsidiary, PT Pertamina Geothermal Energy (PGE), said PGE president director Irfan Zainuddin.

'€œPGE plans to follow up with an exploration survey, evaluation of moves to determine drilling coordinates and preparations for exploration drilling, including obtaining permits, which will take some time,'€ Irfan said. '€œResults of explorations will determine the next steps.'€

Gunung Lawu geothermal working area, estimated to support up to 165 megawatt (MW) in capacity, stretches through two provinces and several regencies '€” Karanganyar, Sragen and Wonogiri in Central Java, as well as Ngawi and Magetan in East Java.

The open bid for the Gunung Lawu geothermal working area is part of a number of offerings held by the new-renewable energy office to speed up electricity production capacity from renewable resources.

Apart from Gunung Lawu, a number of open bids are still running, including for the Danau Ranau working area in South Sulawesi, Way Ratai site in Lampung, Marana in Central Sulawesi and Gunung Talang Bukit Kili in West Sumatra. Tenders for the projects are still ongoing.

The new renewable energy office expects the open bids to be completed by April or May to allow winning companies to quickly progress on the projects.

Geothermal power plant developments are considered time consuming, with the exploration stage alone possibly taking around five years before construction of a power plant can begin.

'€œIt is also expensive as geothermal power plant development in Indonesia usually needs US$4 million per megawatt in investment,'€ Yunus Saifulhak, the geothermal director at the ministry, previously said.

The country is estimated to have potential geothermal capacity of more than 28 gigawatts, thanks to its location in the ring of fire where numerous volcanoes lie. However, geothermal projects are frequently hampered by environmental and financing issues.

To date, the electricity generation capacity from volcano power is only around 1,400 MW, or around 5 percent of the total potentials.

Under its long-term electricity procurement target, the government aims to see at least 25 percent of total power generation by 2025 supported by renewable energy, including the utilization of geothermal power plants.

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