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Indonesia creating $215 million loan program for geothermal development

Sibayak, geothermal plant, Lampung/ Indonesia (source: arthaliwa.wordpress)
Alexander Richter 18 May 2012

The Indonesian government is prepared to spend up to $215million to finance the construction of geothermal power plants in a loan program for developers in the country.

Reported by the Jakarta Globe, the Indonesian government “is prepared to spend Rp 3.4 trillion ($366 million) to finance the construction of geothermal and micro-hydro power plants.

The money will come from the State Investment Agency (PIP), which has been tasked with funding major infrastructure projects.

Soritaon Siregar, the chairman of the PIP, said on Wednesday that the agency would provide loans of Rp 2 trillion ($215m) to companies to build geothermal power plants and another Rp 1.4 trillion ($151 million) to firms building micro-hydropower plants.

“We will sign three power projects in the immediate term,” Saritaon said in Jakarta after the signing of a memorandum of understanding with state utility company Perusahaan Listrik Negara on Wednesday.

The government has been encouraging PLN and independent power producers to invest in “clean” power.

Soritaon said his office had received several proposals from companies seeking loans from the PIP for such projects.

Pertamina Geothermal Energy, the geothermal unit of state oil and gas company Pertamina, plans to build two geothermal power plants with a combined capacity of 110 megawatts in Ulubelu, Lampung, this year. The construction of the plants, which started earlier this year, is due to be completed by 2014, said Slamet Riadhy, the president director of PGE. The two plants will cost $270 million combined.

The company’s planned geothermal power plants form a model that will be rolled out across the country. PGE runs a geothermal power project in Muara Enim, South Sumatra. Its other projects include a plan to build a geothermal power plant in Karaha Bodas, West Java.

Indonesia is an archipelago of more than 17,000 islands and has many volcanoes, which makes it desirable to tap these geothermal sources.

Renewable power also includes production of electricity from water, wind and solar sources.

Indonesia had power-generation capacity of 28,462 MW as of the end of last year, according to PLN data. Coal-powered plants account for around 42.2 percent of that capacity, diesel-fired plants 23.7 percent, natural gas 22 percent, hydropower plants 6.7 percent and geothermal and other renewable energy 5.4 percent.”

Source: The Jakarta Globe