Interview – Riki F Ibrahim, President Director of PT Geo Dipa Energi

President Director of Geo Dipa Riki Ibrahim, center (source: Geo Dipa)

Alexander Richter 7 Nov 2018

Dunia Energi in Indonesia has published an interesting interview with Riki F. Ibrahim, President Director of PT Geo Dipa Energi, a key company in the development of geothermal power projects in Indonesia.

PT Geo Dipa Energi (Perseo) is a state-owned enterprise (BUMN) under the management of the Ministry of Finance. Initially Geo Dipa was a joint venture company of PT Pertamina (Persero) and PT PLN (Persero) which was founded in 2002. Geo Dipa Energi is a company that operates geothermal power plants (PLTP). The company’s main activities include all phases in geothermal power plants – from exploration and exploitation, to the construction of power plants and energy distribution.

Riki F Ibrahim, Director of Geo Dipa Energi, said that when comparing the Ministry of Energy and Mineral Resources Road Map , the prospect of geothermal energy in Indonesia is lagging behind. One obstacle is that the government (Ministry of Energy and Mineral Resources) has not been able to reduce the risk of geothermal exploration and increase the Domestic Component Level (TKDN) inviting turbine / generator manufacturing located in Indonesia. “The majority of countries that have geothermal potential, exploration risks are borne by non-private governments because the output from exploration cannot be sold according to market prices, such as oil and gas prices and minerals,” Riki said.

If the government wants cheap electricity prices, the risk is actually not given / transferred to the private sector. Turkey, whose potential is not as large as Indonesia alone, in the context of national energy security, they can invite turbine manufacturers / generators to their countries to increase the Domestic Component level (TKDN).

To reduce risk, the government takes / does. Three (3) slimhole wells and one (1) standard well can conclude “proven reserves” of geothermal mining work areas. Independent parties and financiers (financing) who will assess so with certainty that exploration risk can be mitigated. The price of geothermal steam is not a commodity that can be sold far from the WKP site (Geothermal site specific), unlike oil and gas prices based on the market, only by means of government exploration that can reduce the risk of cost recovery is not recommended because it is difficult to control) .

To find out more about the prospects and developments in the business of Geo Dipa Energi, World- Energy journalist Dudi Rahman, Alfian Tandjung, and Yurika Indah Prasetianti interviewed Riki F Ibrahim in his office in Recapital Building, Blok M Region, Jakarta, recently. Here’s the excerpt.

Currently Geo Dipa operates two PLTP units, namely the Dieng Unit I PLTP and the Patuha PLTP unit I, each of which is installed with a PLTP of 60 MW. What is the performance of the electricity operation or production of the two units of the PLTP? 

For the Patuha unit, the operating performance is very good and electricity production is as expected. While the Dieng unit, even though it is now better, has not been maximally operational because there are still many shortcomings that must be corrected, both from the steam field side and those that are quite old.

What is the price of electricity paid by PLN for the two PLTPs? 

The price of electricity by GeoDipa is very competitive compared to the same power plant, Patuha is US $ 7.2 cents per kWh and US $ 7 cents per kWh. The price of a new project is certainly above this price because the benchmark price has increased. While the prices of PLTU and Diesel are very dependent on market prices, which until today the graph has increased compared to the price of geothermal electricity.

What are the common problems for the development of geothermal power plants?

Problems in the development of geothermal renewable energy in Indonesia include the availability of factors that are often found in protected forest areas, cost efficiency to achieve economic electricity prices, social issues and geothermal reserves that are not in accordance with planning. In addition, for the Economic Price of Electricity Geothermal Renewable Energy is currently using as stated in the ESDM Regulation No. 50 of 2017 concerning the Utilization of Renewable Energy Sources for the Supply of Electricity. The selling price of Geothermal electricity is equal to the price of the national production cost. In the event that the BPP Generation in the local electricity system is above the average BPP Pembangkitan national, the purchase price of electricity from the PLTP is at the highest amounting to the BPP Generation in the local electricity system.

On the other hand, BPP Generation in the electricity system in the Sumatra, Java, and Bali regions or other local electricity systems are the same or below the national BPP Pembangkitan average, the purchase price of electricity from PLTP is based on the agreement of the parties. In the latter implementation, PT PLN (Persero) requires policy from the Technical Ministry.

Energy, electricity and fuel are political commodities so it is very difficult for EBT to reach economically feasible prices. Geothermal Power Plant (BPP) Cost is higher than the cost of production of coal power plant and gas power plant. This happens because of exploration costs which in addition to certainty of success and high risk. Apart from that, the use of Local Content or the Level of Domestic Content (TKDN) of the Power Plant Machinery sector which is still below 40% must be prioritized in reducing the rate of imports. Small-scale power plant manufacturing can be a priority because efforts to increase TKDN generator manufacturing still do not have attractive incentives, for example if a guarantee is to be used / bought by all geothermal developers / developers.

Some information about the management and price of electricity today: The Rantau Dedap PLTP which was carried out by the IPP for the 80MW project was an Amendment of the Power Purchase Agreement (PPA) with PT PLN (Persero) on November 6, 2017 which was originally US $ 8.86 cents / kWh which could change to US $ 11.76 cents / kWh; Pertamina Geothermal Energi (PGE) sells geothermal steam in the amount of US $ 7 cents / kWh and the price of the component of electricity generation by PLN is around US $ 4 cents / kWh so that the total price becomes US $ 11 cents / kWh. PT Pertamina Geothermal Energi previously PERTAMINA has developed Geothermal Renewable Energy since 1970 to quickly build PLTP (+ 600MW) compared to Private IPP (+ 1,000MW) because Pertamina is a large organization, bureaucracy and many types of business (not focused on Geothermal only). The new Coal PLTU on the island of Java for 1000 MW is 5, 8 cent (such as Batang and PLTU Cirebon PLTU) where the price of installation components is below US $ 3 cents per month. The price of New Renewable Energy (PLTP) electricity is below 100MW, there will not be around ± US $ 6-7 cents / kWh if you do not receive renewable energy subsidies. PT PLN (Persero) should not take the risk of drilling and exploration.

The company is currently developing units 2 and 3 of the PLTP Dieng and Patuha. How is the progress? 

Positive, because legal issues can be resolved with the supervision of Government shareholders, KPK, and JPN Attorney General’s Office. For funding, GeoDipa is now needing only the approval of the Asian Development Bank (ADB).

Is it optimistic that the target of 120 MW capacity can be achieved? 

We will drill an exploration well next year and if it misses, it will mean a capacity of 120 MW by 2024.

What are the obstacles faced by Geo Dipa?

In developing the Candradimuka PLTP, PT Geo Dipa Energi (Persero) has not yet obtained the approval of the price mechanism from PLN. Candradimuka development is an application from PMK No. 62 of 2017 with PT. SMI and urgently need the support of PT PLN (Persero) to understand the priority of buying the price of electricity from the Geothermal Energy Company PT Geo Dipa Energi (Persero) targeted by the COD / Commercial On Date in 2023 (US $ 10 cents / kWh is not now). The application of ESDM Regulation No. 50 of 2017 with the System of Open Book mechanism, PT Geo Dipa Energi (Persero) proposed the development of a Candidate for capacity of 2 × 20 MW with an IRR of 10%. However, PT PLN (Persero) has not agreed because the results of price modeling are based on the System of Open Book mechanism, which was carried out by PT Geo Dipa (Persero) with PT PLN (Persero) with a JICA consultant,

Does the Dieng and Patuha projects already have electricity purchase agreements with PLN? What is the price of electricity?

It should be borne in mind that Dieng and Patuha are Phase II MW heritage projects, so the price of electricity already has PPA up to 4 units in Patuha and 7 units in the future in Dieng. Considering that drilling prices are still unpredictable and also the price of plants that are still managed / controlled by foreign parties, the economic price for this project cannot be ascertained as the sales price of GeoDipa today. Electric sales Renewable energy new projects still require direct government renewable energy subsidies (Minister of Finance); Therefore, PT Geo Dipa (Persero) which is directly under the guidance and supervision of the Ministry of Finance will be much easier to control, than those that are not directly under the Ministry of Finance of the Republic of Indonesia. But for the electricity prices of Geothermal Renewable Energy that have been running,

How much funding does GeoDipa allocate to develop these projects?

At present there is one multilateral bank that is conducting an assessment and study for this funding of USD 300 million and State Capital Addition (PMN) as a portion of the company that has existed since 2012. In addition to multilateral banks, PT Geo Dipa Energi (Persero) conducts the synergy with PT Sarana Multi Infrastruktur, both of which are BUMNs under the Ministry of Finance’s Coaching & Supervision) are competent to receive funding allocation processes through Multilateral Bank and financing through the Green Climate Fund of the World Climate Change mechanism. Funds for subsidizing renewable energy and PMN electricity as a capital expenditure portion, PT Geo Dipa Energi (Persero) are easily overseen by the Ministry of Finance.

Where are the funding sources for these projects?

To ensure cheap electricity prices, Multilateral Bank is the main choice, besides PMN. To get the electricity price from Geothermal / Geothermal the most economical is to use a soft loan from multilateral banks that provide loans through the G to G scheme, but the bank loan model must receive state guarantees through the Ministry of Finance. Another way to reduce electricity prices from Geothermal is by sharing exploration risks between developers and the Government by using the Geothermal Fund (PSPI) where this mechanism is regulated through the Ministry of Finance (PMK No. 62 of 2017 concerning Management of Geothermal Sector Infrastructure Financing Funds PT Sarana Multi Infrastruktur Company (Persero).

How much is the funding contribution from ADB and the World Bank in the geothermal project developed by GeoDipa? 

Actually, at this stage, it is still in the exploration stage for funding of USD 300 million and is expected to reach commitment for both parties. The same thing is also expected by other Multilateral Banks.

How much is the absorption of investment in the Geo Dipa geothermal power plant project until September 2018? 

Preferably, the size is not a measure because it is GeoDipa’s ability to return the size.

Besides Dieng and Patuha, which other projects are being developed by GeoDipa? 

The assignment was given by the Government through the Ministry of Energy and Mineral Resources for WKP Umbul Telomoyo and WKP Arjuno Welirang. The government has a policy of assigning management of Geothermal Work Areas (WKP) to BUMNs that focus on Geothermal Energy as agreed by the Ministry of Finance.

Until now, which WKP has been targeted by companies to be managed? 

We leave it to the Government through the Ministry of Energy and Mineral Resources alone, as what is enacted in Law No. 21 of 2017 concerning Geothermal Energy.

What was the company’s financial performance last year and the 2018 target? How was the realization until September? 

GeoDipa has no financial problems because it provides ‘Revenue’ of around Rp. 800 billion per year. In addition to the Ministry of Finance having Non-Bank Financial BUMNs, such as SMI and PII as sources of funding and infrastructure guarantees, PT Geo Dipa Energi (Persero) is a strategic partner in developing Geothermal Renewable Energy projects as the basis for Infrastructure developers in one supervisory control in the Ministry of Finance.

Does the development of PLTP have to be done by BUMN? What about the IPP? 

To achieve cheap electricity prices, it must be done by SOEs such as exploration and exploitation drilling, after which it can be cooperated with IPP.
The sale of new renewable energy electricity projects still require direct Government renewable energy incentives through the Ministry of Finance. But for the electricity prices of geothermal renewable energy that are already running, it does not require renewable energy incentives anymore because the price of Fossil electricity (Coal PLTU and PLTGas) follows market prices, will be more expensive than the electricity price of renewable energy.

The price of long-term geothermal energy renewable energy will be cheaper than fossil electricity prices (Coal PLTU and PLTGas) because it does not follow market prices like coal prices. It is recommended for all stakeholders to encourage turbine companies to be willing to make their factories in Indonesia so that the seriousness of this new product proves that it is not only selling turbine works in Indonesia;

PT Geo Dipa Energi (Persero) as the only SOE focused on geothermal energy operations and development, as information, has also invited two geothermal turbine manufacturers, namely KS and Ormat, to collaborate with their commitment to immediately make their factories in Indonesia.

It is expected that the increase in TKDN for PLTPs so that the high price of geothermal renewable energy compared to the BPP PLN can be a separate justification. It is expected that the increase in TKDN for PLTPs so that the high price of geothermal renewable energy compared to the BPP PLN can be a separate justification.

Source: Dunia Energi