Indonesia to Increase Production of Electricity from Geothermal 3 Times Fold

Kamojang geothermal

Indonesia to Increase Production of Electricity from Geothermal 3 Times Fold

If successful, Indonesia will follow the Philippines, where fuel geothermal meet a quarter of the electricity needs, thereby reducing pollution and fuel imports.

JAKARTA

The government has revealed ambitious targets to increase the production of electricity from geothermal to three-fold in the past decade, and announced a series of land reforms and rules to become the largest producer in the world for these alternative fuels.

"As more and more oil imports, coupled with the growing demand for electricity, it is important for Indonesia to diversify their base of power generation," said Chris de Lavigne from consultancy Frost & Sullivan.

"Indonesia has the potential to be the biggest geothermal producer in the world."

As the third largest geothermal energy producer in the world with a capacity of 1.4 gigawatts (GW), Indonesia lags of the Philippines and the United States each with a capacity of 1.9 GW and 3.4 GW. The government plans to increase its capacity to 4.9 GW in 2019.

But progress is slow due to bureaucracy, which is not competitive electricity rates and uncertainty about the ownership of assets. Period of 25 years required from the planning stage to establish the foundations for the latest project shows great obstacles facing the sector.

The government says the reforms to deter local governments power to disrupt these projects, and to facilitate development in forest areas, should be able to accelerate the construction of 25 projects to be tendered as early as 2015.

"There are no longer obstacles in this sector. It's time to work. This is a business opportunity," said Tisnaldi, geothermal director at the Directorate of Renewable Energy and Energy Conservation, Ministry of Energy and Mineral Resources.

The geothermal investors expect the government of President Joko Widodo will follow plans for mereforamsi electricity prices in the same way in reducing fuel subsidies (BBM) for transport, as well as tackling other constraints.

"If the constraints in acquiring land and licenses removed, will be very helpful," said Fazil Alfitri, president director of PT Medco Power Indonesia, a company active in the production of electricity from geothermal.

Geothermal projects generally take the heat under the earth's crust by pumping water into the well in hot places it is converted into steam to drive the turbines.

However, this sector bureaucracy hindered because geothermal projects usually require complex government policy commitments and long-term. The sector is also under the mining law, limiting developments in forest areas until the recent amendment.

The government's plan can make geothermal meet 10 percent of demand for electricity in 2020, up from 3 percent today. Today about half the electricity supply met coal, the fuel that was originally to be reduced to encourage exports. Gas covers about 20 percent and 12 percent oil.

Many countries with active geothermal plans to build new power plants, with soaring global capacity of 2 GW to 12 GW since 1980.

Lavigne of Frost and Sullivan said Indonesia's geothermal capacity can reach as high as 29 GW, nearly two-thirds of the country's overall electricity generation now.

"Game Changers"

Development Sarulla project worth US $ 1.6 billion in North Sumatra, which is the largest in the world, starting this year, 25 years since it was first planned, hampered financial constraints and bureaucratic.

Sarulla describe as a "game-changer" (modifier game), Shamim Razavi, attorneys energy sector of the multinational law firm Norton Rose Fulbright, said this could mean that investors may be ready to look for new projects.

Most of the large power plants that exist, such as Chevron's Salak, located on the island of Java.

Sarulla will connect national network, even though the capacity of some plants in remote places are limited to serving local regions. Twenty-five new sites that will be tendered in early 2015 mainly in forested areas in Java and Sumatra.

Sarulla will have a capacity of 330 MW, enough to power about 330,000 homes electricity.

If successful, Indonesia will follow the Philippines, where fuel geothermal meet a quarter of the electricity needs, reduce pollution and fuel imports. (Reuters)/VOA