Tapping into Indonesia’s geothermal resources and its untapped potential

Drill site at Muara Laboh project, West Java/ Indonesia (source: ENGIE)
Alexander Richter 1 May 2018

In an interview in French media, Christophe Comte, Head of Engie Indonesia in charge of renewable energies, provides insights on his company's geothermal development activities in Indonesia.

An article in French publication Le Petit Journal discusses the strong potential for geothermal in Indonesia and it remaining to be exploited.

Producing 23% of its electricity with renewable energy sources by 2025 is a large challenge for Indonesia. With 140 active volcanoes, the country has 40% of the world’s geothermal energy resources. Currently, only 5% of the electricity produced on the archipelago comes from geothermal energy.

The strong potential of the country attracts many foreign companies specialized in this exploitation. Engie, one of France’s leading energy companies, launched the first phase of a geothermal power plant project in Muara Labohet a year ago. The company is preparing to start work on a second project at Rantau Dedap in Sumatra. Christophe Comte, head of Engie Indonesia in charge of renewable energies, brings us his insights on this activity.

Can you explain to us how we produce geothermal energy?

To produce electricity with deep geothermal energy at high temperatures, of 150 to 250 °C, it is necessary to drill to depths of an average 2,500 meters. The steam thus extracted under pressure drives turbines that produce electricity.

There are more than 299 potential geothermal sites in Indonesia, how are licenses awarded and the first phases of plant construction?

As with oil and gas, the government defines geothermal working areas and we respond to calls for tenders. Engie first obtained a permit in 2010 for the Muara Laboh site in Sumatra, 220 km from the city of Palembang. Located in the mountains, often in the middle of the forest, the sites are difficult to access. The first job is to build roads to get the equipment and people. Then the drilling can begin: we drill an average of 6 wells to study the feasibility of the project. With our subsidiary Storengy and our partners, we have the expertise of drilling and knowledge of the subsurface required for this type of project. The construction of the plant began in early 2017. Its commissioning is scheduled for September 2019, 30 months after the start of of the project. During this period around 1,200 jobs were created.

What are the benefits of these energies? And the planned production?

This energy has the advantage of being renewable, non-intermittent and environmentally friendly. The Muara Laboh power station is expected to generate 80 MW without CO2 emissions, corresponding to the electricity needs of 120,000 homes.

What is the cost of these projects and how are they funded?

The cost for the first phase of Muara Laboh’s drilling is about $100 million and the project’s funding is $440 million. A financing agreement was secured through the PT Supreme Energy consortium, with the Japan Development Bank and the Asian Development Bank.

Do you have other projects in progress?

We have two other projects underway. One at Rantau Dedap, 225 kilometers from Palembang, home to one of the largest high-temperature geothermal explorations in Indonesia. The site is located between 1,000 and 2,600 meters above sea level on an area of 35,000 hectares in the middle of a volcanic complex. The completion of the plant is planned for 2020. The expected production for the first phase is 100 MW, which will supply 130,000 households over 30 years and reduce carbon dioxide emissions by 500,000 tons per year. .

The second project, Rajabasa is located south of Lampung and work on the project is expected to start this year.

What is the future of geothermal energy in Indonesia?

Indonesia has made a commitment at COP 21 in Paris to reduce its greenhouse gas emissions by 29% by 2030. Today, 88% of the country’s electricity is produced by fossil fuels . Only 12% comes from renewable energies such as geothermal energy, hydroelectricity, wind and solar energy. The country’s important geothermal resources should enable it to achieve this goal. But the current cost of production, twice as high as that of fossil fuels, can be an obstacle to development. Nevertheless, since 2014, the government has passed a law that states that geothermal energy no longer depends on the binding framework of the mining sector. Another law stipulates that local governments can collect 0.5 to 1% of revenues from geothermal plants in their area.

Source: Le Petit Journal