Govt opens bidding for 3 geothermal power plants

The government has opened tender processes for the development contracts of geothermal power plants in three provinces as part of efforts to boost the country’s electricity supply amid an increasing power deficit.

The Energy and Mineral Resources Ministry announced on Friday the geothermal power plant contracts for Way Ratai, Lampung; Marana, Central Sulawesi and Gunung Talang Bukit Kili, West Sumatra.

According to bidding documents published on the website of the ministry’s new-renewable energy and energy conservation directorate general, the Way Ratai site covers 70,710 hectares (ha) and has an estimated 105 megawatts (MW) of reserves. Under the plan, the power plant in Way Ratai will produce an estimated 55 MW of capacity.

The Marana project, sitting on 48,300 ha, has an estimated 36 MW in reserves and will support a power plant with a 20-MW capacity.

Meanwhile, Gunung Talang Bukit Kili has a 27,000-ha site with estimated power reserves of 65 MW and the planned power plant there has a 20-MW capacity.

“The bidding process is expected to be completed in April or May next year,” said Yunus Saifulhak, the director of geothermal energy at the new-renewable energy and energy conservation office.

Exploration is estimated to take around five years before construction of the power plants can start. Thus, the three geothermal sites are expected to start producing electricity in 2022.

Yunus said geothermal power plant development in Indonesia usually costs US$4 million per megawatt. Thus, the total investment for the three developments is estimated at around $380 million.

The open bids follow this year’s two previous bids for a Danau Ranau project in South Sulawesi and a Gunung Lawu project in East Java. An open tender for Danau Ranau needs to be re-launched as only one proposal was received for it.

Under the new tender, the Danau Ranau geothermal plant’s capacity estimation has been lowered to 40 MW from 110 MW due to different temperature calculation, according to Yunus. 

Meanwhile, the tender for the Gunung Lawu plant has entered its second stage with three companies in the running.

Due to its geological location in the ring of fire, where numerous volcanoes exist, Indonesia is thought to have abundance of geothermal resources, amounting to around 28,000 MW. However, utilization is less than 5 percent thus far as there is only around 1,400 MW of installed geothermal capacity.

Environmental issues and high investment costs — which eventually translates to higher power prices — are among the main factors hampering Indonesia’s geothermal development.

Late last year, a new law on geothermal energy was passed, eliminating a legal barrier that previously prevented companies from using protected forests for development. Under the new law, geothermal development is not considered a mining activity so can use protected forest areas. However, realization of the new law remains a challenge.

Regarding pricing, the government has set a relative ceiling price for electricity produced at geothermal power plants. The price limit depends on the amount of potential reserves at a given site and the level of difficulty of developing the site.

For Way Ratai and Gunung Talang Bukit Kili, the ceiling price is set at 14.6 US cents per kilowatt hour. Meanwhile for Marana, the price is set at 21.3 cents per kilowatt hour.

The ceiling price is a government incentive, according to new renewable energy and energy conservation director general Rida Mulyana.

“We want to accelerate the projects so that we can meet geothermal-plant capacity targets under the government’s energy mix policy,” Rida said.

The five geothermal development tendered this year are part of 27 planned developments planned to be offered gradually.

Source: www.thejakartapost, 19/12/15
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