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Indonesia signs deals worth US$5 billion at WGC in Bali

Indonesia welcome staff at World Geothermal Congress in Bali
Alexander Richter 30 Apr 2010

Indonesia signs deals worth US$5 billion at the World Geothermal Congress in Bali.

Reported from Indonesia, the country “on Monday took a small step toward its ambitious new goal of becoming the world’s top user of geothermal energy by signing $5 billion worth of development deals and power-purchase agreements at the World Geothermal Conference in Bali, the country’s top economics minister said.

Central and local governments signed a total of 12 agreements as part of a national plan to add nearly 4,000 megawatts of electricity-generating capacity from geothermal power during the second phase of the “fast-track” geothermal development program, scheduled for completion in 2014, said Hatta Rajasa, coordinating minister for the economy.

The agreements were signed as President Susilo Bambang Yudhoyono announced a new national goal of becoming the world’s top user of geothermal energy by 2025, with 9,000 megawatts of geothermal capacity.

The United States currently leads the world in use of geothermal energy, with about 4,000 megawatts of capacity. The Philippines ranks second with about 2,000 megawatts.

If realized, the new agreements would effectively put the country on track to double the amount of electricity generated from geothermal sources, adding 1,340 megawatts to the existing capacity of 1,198 megawatts and bringing the country about halfway to its goal of 5,000 megawatts by 2014.

But given the time needed to attract investment and develop geothermal power plants, the deals announced on Monday were less than a spectacular success.

Pri Agung Rakhmanto, an energy analyst at Reforminer Institute, said the government fell short of its target because the target itself was too ambitious and its power-purchase price generally too low.

Agung said investors also wanted more certainty regarding the length of contracts to be sure they would recoup their investments. Until that happens, he said, development of the geothermal sector will remain sluggish.

In Bali, state electricity utility PT PLN signed five contracts worth $1.53 billion, while local governments in Flores, West Sumatra, Central Java and North Lampung signed a total of four contracts worth a combined $1.68 billion.

PLN signed a power-purchase agreement with oil and gas company PT Medco Energi International for the long-delayed Sarulla geothermal project in North Sumatra. The Sarulla plant is estimated to cost $990 million and is expected to generate up to 330 megawatts.

The utility also signed agreements with PT Pertamina Geothermal Energy for plants in North Sulawesi, Bengkulu and Jambi, due to go online by 2014.”

Source: The Jakarta Globe