T

he development of two major geothermal power plant projects has been progressing well in recent months, and one of the projects is expected to begin commercial operations before the end of this year, says an official.

The Energy and Mineral Resources Ministry'€™s renewable energy director general, Rida Mulyana, said among a number of geothermal projects, most of which are stalled for various reasons, the first unit of the Patuha geothermal power plant was expected to start delivering electricity before the end of this year.

The other giant geothermal power plant project, Sarulla, located in North Tapanuli, North Sumatra, would begin its well-drilling operations later this month, he added.

'€œPatuha is now in the process of synchronization with PLN [state-owned company PT Perusahaan Listrik Negara] electricity systems. Synchronization takes around a month before it can reach a COD [commercial operations date],'€ Rida said.

The plant is expected to start operations in October.

The Patuha geothermal plant'€™s development was started in 2012. The first of three units of the Patuha plant, which is located in West Java, will have 55 megawatts (MW) in capacity.

For the Sarulla geothermal plant, the recommencement of drilling is scheduled to begin on Sept. 15, according to Rida.

'€œThe first spudding in will be performed on Sept. 15 and the second on Sept. 20. We are waking up a sleeping giant. The project has been idle for 23 years and this is a good start,'€ Rida said.

The development plan for the Sarulla 3x110 MW plant was initiated in 1990. Following the 1998 economic crisis that hit the country, the project was abandoned. The government tried to resume the project in the early 2000s, but no deals were ever reached.

In 2007, a deal was reached resulting in the project now being developed by a consortium named Sarulla Operations Ltd., consisting of PT Medco Power, Itochu Corp., Kyushu Electric Power Co. and American company Ormat International Inc. The Sarulla project is estimated to be worth US$1.5 billion.

Sarulla'€™s first phase of development of 110 MW is expected to be completed by the middle of 2016.

This year, two wells will be drilled, Medco Power president director Fazil Alfitri said.

'€œWe will need to drill 30 wells in total. As many as 13 of them have been drilled before [by previous developers]. Most of the 13 wells are for the first phase of development,'€ Fazil said.

Given its geographical position on the so-called Ring of Fire '€” a series of fault lines and volcanoes encircling the Pacific Basin '€” Indonesia is estimated to have abundant geothermal potential resources of up to 29,000 MW. The government is also trying to encourage renewable energy potential, as part of attempts to reduce the country'€™s dependency on fossil fuel.

However, development of geothermal plants is a sensitive issue, particularly in relation to environmental concerns. Most geothermal resources lie in protected mountain and forest areas, where mining activities are not allowed.

The government has been drafting a new bill on geothermal development in which geothermal activities would no longer be included as mining activities, so that such works could be carried out in the areas.

Apart from the environmental issue, pricing and financing issues have also put several geothermal plants on hold. Recently, the Energy and Mineral Resources Ministry issued a new regulation regarding the use of a price ceiling for new geothermal projects, ranging from 11.8 US cents to 29.6 US cents, as
part of attempts to make the industry more attractive. Under the regulation, the price ceiling would be applicable to new projects while existing development could also have adjustments with certain requirements.