GEOTHERMAL ENERGY
Despite some regulatory difficulties, Indonesia's private companies involved in geothermal are helping the country make sure it reaches its renewable energy targets.
Our Turkish partner, Hitay, after it studied a number of different geothermal blocks in Indonesia, asked us to be its local partner due to our excellent track record, relationships, capabilities, and experience here in the sector. Our contribution to the partnership is that we bring the technical experience and meet the pre-qualification requirements, while Hitay brings the finance. Hitay has calculated a great price at which we can provide electricity to the government under this project. Things are moving well right now. We have already conducted the survey for the mapping and topographic survey. We should be drilling by 2018. Fortunately for us, given what has happened to oil and gas prices over the last four years, we have been geothermal experts from the outset. Plus, when oil and gas prices fall, geothermal activity goes up. We have a future plan with Hitay to acquire more geothermal blocks in Indonesia. Unfortunately, there are new regulations from the Ministry of Energy and Mineral Resources that are not investor friendly. Nevertheless, investment is not really slowing down; people are still waiting to see if the regulations will change the situation. The great thing is that the minister is pushing geothermal growth, whereas there was not much activity happening in this segment before.
We made a conscious decision in 2012 to focus on geothermal projects. Back then, it was impossible to project that oil would dip so low. However, we looked at the regulatory structure that was more flexible for bidding, and there was an opportunity to negotiate directly with operators. We made that decision and have been exclusively geothermal since 2013. We started with six wells for Supreme Energy Rantau Dedap in South Sumatra and then moved to Star Energy Geothermal (Wayang Windu) in West Java, where we drilled six wells. That same rig 253 has now mobilized to North Sumatra to drill for Sorik Marapi Geothermal Power (SMGP). Rig 231 is already there and has drilled seven wells for SMGP. Thus far, we have made the right decision and the operators have been fantastic to work with. It is a different kind of drilling from that of oil and gas. When a geothermal operator comes in and bids for a block, they are bidding based on relatively incomplete information because often no wells have been drilled there yet. After conducting seismic studies and estimating potential, the company negotiates a power purchase agreement with PLN based on the expected geothermal production. Indonesia is number one in terms of potential for geothermal in the world and third in current capacity.
In October 2017, Sarulla commenced the second unit at its geothermal power plant, after the first unit opened in March 2017. The second phase generates 110MW. Each unit of the three phases consists of seven generators: one steam turbine generator from Toshiba (Japan) producing about 60MW and the remaining six manufactured by ORMAT Technologies (US). With those six units, we produce another 50MW. The third unit is scheduled to be operational by May 2018. It will add another 110MW to the total capacity. The Sarulla area is brine dominated, and the energy coming out is high-pressure steam and high-pressure brine (hot water). In other parts of Indonesia, most of the areas are steam dominated. For brine-dominated resources, the ORMAT equipment is suitable for energy extraction. For geothermal development, the challenge is that, in this country, there is not much reliable subsurface data. The government has not invested enough to find resources by itself and has been relying on private investors to do so. The regulations have become more reasonable than those in the past, and there are some successful examples, including Sarulla, with many keen investors and interests from banks. However, the basic scheme has not changed much, which is one of the remaining challenges.
GEOTHERMAL ENERGY
TABLE OF CONTENTS
Interview
Dr. Bambang Brodjonegoro, Minister , National Development Planning (Bappenas)
TBY talks to Dr. Bambang Brodjonegoro, Minister of National Development Planning (Bappenas), on acquiring financing for infrastructure projects and boosting private sector involvement in the country.
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Thomas Trikasih Lembong, Chairman, Investment Coordinating Board (BKPM)
Thomas Trikasih Lembong is the Chairman of BKPM. He was a former Minister of Trade of Indonesia from 2015-2016. Prior his appointment in the cabinet, he had a long professional career. He was a Co-Founder, Chief Executive Officer, Managing Partner, and Partner at Quvat Management Pte Ltd and also served as President Commissioner at PT Graha Layar Prima Tbk (BlitzMegaplex) since 2012. He was previously employed with Principia Management Group and the Equity Division of Morgan Stanley (Singapore) Pte. Ltd, among others. He received a bachelor's degree in architecture and urban design from Harvard. He also was elected Young Global Leader by the World Economic Forum in 2008.
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Tevita Lavemaau, Former Minister of Finance and National Planning , Tonga
TBY talks to Tevita Lavemaau, Former Minister of Finance and National Planning of Tonga, on the effect of climate change on the country, its work to combat inequality, and further areas of cooperation with Indonesia.
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Dr. Tito Sulistio, President Director, Indonesia Stock Exchange (IDX)
TBY talks to Dr. Tito Sulistio, President Director of Indonesia Stock Exchange (IDX), on the strong performance of the capital markets, its goals to increase the number of listed companies, and the growing importance of digital innovation.
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Amien Sunaryadi, Chairman, Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas)
TBY talks to Amien Sunaryadi, Chairman of Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), on preparing new block offerings, attracting greater investment into the sector, and pushing for exploration.
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Ronald Walla, President Director, PT Wismilak Inti Makmur
TBY talks to Ronald Walla, President Director of PT Wismilak Inti Makmur, on offering the public a more relevant value proposition, strengthening the ideology of Indonesia's founding fathers, and forging bigger profit margins.
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Teddy Tjokrosaputro, President Director, PT Rimo International Lestari (RIMO)
TBY talks to Teddy Tjokrosaputro, President Director of PT Rimo International Lestari (RIMO), on stepping back forcefully from the brink, using affordable housing as a springboard, and laying the groundwork for the country's future.
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In the House
As strong economic growth, an optimistic political outlook, and a partially successful tax amnesty to repatriate offshore wealth continue to drive up housing prices in Indonesia's major urban centers, demand for new housing and shares in developers plummeted in 2017.
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