Indonesia to purchase geothermal energy

State utility firm PT PLN has signed agreements with two geothermal power producers, PT Pertamina Geothermal Energy (PGE) and PT Westindo Utama Karya (WUK), to buy a total of 435 megawatts of electricity.

PLN president director Dahlan Iskan said Friday that the signing was a “significant breakthrough” that would help the company boost the country’s electrification ratio, which currently stands at 66 percent.

“We still have to settle many issues with the geothermal project developers, but this signing is a step forward. We signed agreements to buy power from six geothermal projects. Five of them are operated by PGE,” he said.

The agreement followed a new government regulation ordering PLN to purchase power from geothermal producers at a ceiling price of 9.7 US cents per kilowatt-hour, he said. The regulation aimed to provide certainty about the future of many long-delayed geothermal projects in Indonesia.

PLN data shows that PGE, a subsidiary of state-owned oil and gas firm PT Pertamina, will supply electricity from five geothermal-fired power plants: Lumut Balai in South Sumatra, Ulubelu in Lampung, Lahendong in North Sulawesi and Karaha and Kamojang in West Java. WUK will channel power from the Atedei plant in East Nusa Tenggara.

Coordinating Minister for the Economy Hatta Rajasa said the agreement was evidence of how serious the government was in increasing the supply of alternative and renewable energy sources for electricity.

“The government hopes that besides boosting the utilization of alternative and renewable energy, PLN can also reach the target set by the government of installing 3,000 megawatts of new capacity per year,” Hatta said in a statement read by State-Owned Enterprises Minister Mustafa Abubakar.

Hatta said in order to reduce the central government’s role in developing energy infrastructure, the government expected PLN to improve partnerships with the private sector, regional administrations and foreign investors.

Mustafa said in a bid to curb the country’s dependence on oil-based energy, the government had set up a renewable energy company concentrating on geothermal projects, PT Geo Dipa, jointly-owned by Pertamina and PLN.

Energy and Mineral Resources Minister Darwin Zahedy Saleh, who witnessed the agreement signing, agreed with Hatta that the private sector should participate more in the development of energy infrastructure.

“We hope that in the near future the involvement of private companies can reach 30 percent of the total available projects,” Darwin told a press conference after the ceremony.

Dahlan affirmed PLN’s commitment to utilizing more renewable and alternative energy to fire its power plants, particularly in remote areas.

“This year, we plan to set up solar power plants on 100 small islands across the country. Next year, 1,000 islands will follow,” he said.

Dahlan said PLN had conducted successful tests on five islands: Bunaken in North Sulawesi, Wakatobi in Southeast Sulawesi, Banda in Maluku, Raja Ampat in Papua and Derawan in East Kalimantan. He said 100 percent of the electricity on those islands came from solar power.