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Indonesian government to conduct drilling in 20 geothermal areas up to 2024

Drilling rig on site of Sokoria geothermal project, Indonesia (source: KS Orka)
Alexander Richter 12 Aug 2020

Indonesian government to conduct early exploration at 20 geothermal areas 2020-2024 to derisk and prepare them for auctioning to investors at a later stage.

As reported by Kontan in Indonesia last week, the country’s government expects to conduct government-led drilling in 20 geothermal areas through the Ministry of Energy and Mineral Resources (ESDM). Preparations and exploration will start in 2020 and are expected to be conducted until 2024.

ESDM Ministry’s Geothermal Director Ida Nuryatin Finahari said the geothermal exploration carried out by the government would be carried out by the Geological Agency. This year is still in the preparation stage and exploration activities are planned to start in 2021. “Exploration is carried out by the government in 2020-2024, a total of 20 (geothermal areas),” Ida told Kontan.co.id.

The exploration is carried out in open areas and in the Geothermal Working Area (WKP). Although he has not detailed which areas, Ida stated that the potential of the 20 geothermal areas reaches 683 Megawatts (MW).

As an illustration, the potential of 683 MW from 20 geothermal areas is spread across the island of Java as much as 365 MW, Bali and Nusa Tenggara (110 MW), Sulawesi (85 MW), Maluku (70 MW), Sumatra (40 MW) and Kalimantan (13 MW).

Ida said that after the exploration was carried out and the data was complete, the Ministry of Energy and Mineral Resources would start bidding in stages, which is planned to start in 2022. The offer could be in the form of an assignment to a BUMN or an open auction to business actors. This is the in line with us reporting on no auctions to be held until there has been some derisking of the projects with some exploration drilling conducted by the government in those fields.

“The WKP bid is carried out through an auction or an assignment to a BUMN. After the geothermal exploration is completed, the government will do it,” said Ida.

It’s just that, Ida has not been able to disclose how many regions will be offered in 2022. “Not sure, waiting for the results of exploration,” he added.

Ida previously stated that the ESDM Ministry would not hold an auction for Geothermal Working Areas (WKP) for the past two years. He said there were a number of considerations why this year and 2021 his party chose not to conduct WKP auctions.

According to Ida, this was done so that the next WKP auction could attract more developers to invest. The reason is, currently his party is waiting for a presidential regulation (Perpres) on the purchase of renewable energy (EBT) electricity by PT PLN (Persero) which is expected to be issued this August.

Through the Perpres, he continued, the government provides a number of incentives for the development of EBT electricity, including those from geothermal energy. Ida said, the government will provide incentives to reduce developer risk so that rates can be reduced.

Source: Kontan