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T Trinergy Mandiri International plans to invest US$1 billion to develop a geothermal project in Baturaden, Central Java, amid state electricity company PT PLN’s skepticism about targets to boost electricity production from geothermal power plants.

Trinergy chairman Herman Afif Kusumo said that the geothermal power plant in the Baturaden project would have a capacity of up to 220 megawatts (MW).

“Reserves in Baturaden can reach up to 280 MW. However, we will work in line with the Electricity Procurement Business Plans [RUPTL],” Herman said last week as quoted by business portal kontan.co.id.

He said Trinergy would spend about $7 million to drill one well for the project.

Trinergy will run the Baturaden project as soon as it obtains covering and permission letters respectively from the Energy and Mineral Resources Ministry and the Forestry Ministry.

Trinergy needs the Energy and Mineral Resources Ministry to issue a covering letter, which is a requirement for a power purchase agreement (PPA) with PLN. Trinergy is offering electricity at a price of Rp 9.47 per kilowatt hour.

Trinergy is also waiting for a reply from the Forestry Ministry on its request for permission to use the Baturaden area, which is located on the slope of Mount Slamet, for the geothermal project.

Herman hoped that the ministries would issue the letters soon so that Trinergy could sign the PPA and begin its geothermal exploration this year.

Besides the geothermal project in Baturaden, Trinergy also plans to construct a geothermal power plant with a total capacity of 2x30 MW in Tangkuban Perahu, West Java.

Trinergy’s plans to invest in geothermal projects in Baturaden and Tangkuban Perahu might be an optimistic move as PLN recently predicted that the country would miss the target of producing 3,970 MW of electricity from geothermal in the second phase of the 10,000 MW fast-track program.

Last week, PLN’s president director Dahlan Iskan predicted that as of 2014, only 1,200 MW would be produced. Dahlan said that the low production was because many private investors were reluctant to continue their exploration activities due to the high cost of drilling and uncertainty about the results.

To encourage investors, Dahlan said that he had proposed that the House of Representatives Commission allow PLN to use Rp 1.2 trillion of revolving funds from the state budget for geothermal development.

In the proposal, Dahlan said, part of the funds would be used to fund early drilling, either by the private sector, the Energy and Mineral Resources Ministry or regional administrations. The private sector would have to pay back the money if they found steam.