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Businesses hold back on geothermal projects as PLN return deemed unattractive
Indonesian Geothermal Association (INAGA) secretary-general Riza Pasikki deemed PLN’s terms and conditions “were not attractive enough” to bring in prospective investors to develop geothermal working areas in the country.
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A motorcyclist drives near a geothermal power station operated by PT Geo Dipa Energi in the Dieng mountains in Banjarnegara, Central Java, on Nov. 15, 2020. Businesses across the world have been championing renewable energy in response to climate change. (Reuters/Willy Kurniawan)
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usinesses have been reluctant to participate in geothermal projects auctioned by state electricity company PT PLN, with analysts pointing to the projects’ unattractive returns that may not sufficiently compensate for the risks faced during development.
PLN began offering nine geothermal projects with a total capacity of around 260 megawatts (MW) in March last year, including the Tulehu project in Central Maluku, Atadei in East Nusa Tenggara, Songa Wayaua in North Maluku, Tangkuban Perahu in West Java, Ungaran in Central Java and Kepahiang in South Sumatra.
Those looking to participate are required to collaborate with PLN by forming a joint company and signing a contract with PLN through the Geothermal Exploration and Energy Conversion Agreement (GEECA) cooperation scheme.
Among those interested was publicly listed Barito Renewables through its subsidiary Star Energy. The company had expressed interest in the Kepahiang geothermal project, which boasts 180 MW electricity potential, but later it decided to pull out of the bid.
PLN geothermal executive vice president Christyono said on June 27 that the company could not go through with the partnership because “Star Energy’s proposal did not meet what PLN was asking for.”
“[PLN] is reauctioning the geothermal working area,” he said, as reported by Bisnis, stressing that Star Energy had yet to be announced as the official winner of the geothermal project’s auction.
Barito Renewables did not immediately respond to a request for comment.
