High Economic Cost Hampers Geothermal Development

KOMPAS/IWAN SETIYAWAN

Workers perform maintenance at the turbine house of the Kamojang Geothermal Power Plant (PLTP) in Bandung Regency, Wednesday (29/9/2021).

JAKARTA, KOMPAS — High economic costs have hampered the development of geothermal energy in Indonesia. Of the country’s estimated geothermal energy potential of about 23,900 megawatts (MW) only about 2,175 MW have so far been developed to produce electricity.

Regarding the non-optimal development of geothermal power plants (PLTP) in Indonesia, the president director of the Indonesian Geothermal Association, Prijandaru Effendi, said that there were two main reasons that hampered their development. First, there is a gap between the selling price of electricity offered by the developers based on their economic viability, and the purchasing power of state electricity company PLN . Second, the existing regulations have not supported the acceleration of geothermal development.

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"The solution that we expect is that the government will provide incentives or subsidies to cover the price gap. Developers, of course, will implement efficiency measures and innovate by applying advanced technology to reduce operating costs," Prijandaru said in Jakarta on Sunday (10/10/2021).

Prijandaru said the development of geothermal power projects in Indonesia generally took an average of 10 years. If the completion of the project can be accelerated, for example to seven years, the economic viability would be better and the selling price of geothermal power will be more competitive. One of the factors that cause a geothermal power plant to take a long time to complete is the prolonged negotiations on power purchase agreements.

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Meanwhile, the director of geothermal energy at the Energy and Mineral Resources Ministry, Harris Yahya, said in a webinar titled the Future of Geothermal Development Amid the Glorification of Renewable Energy on Wednesday (6/10) that the problem related to power purchase agreements was one of the most challenging issues. Therefore, the operation of geothermal power plants should be efficient, he added.

Kompas/Wawan H Prabowo

Rows of windmills from the Wind Power Plant (PLTB) in Tanarara Hamlet, Maubokul Village, Pandawai District, East Sumba, East Nusa Tenggara, Wednesday (3/2/2021).

“There are several scenarios prepared by the government to support the financing of the operations of geothermal plants so that their economic viability will be better. One of them is to assign the Geological Agency to carry out drilling works using state funds in 20 geothermal working areas until 2024 with a capacity of 683 MW," said Harris.

Another scenario, said Harris, is to use the infrastructure funding scheme for the geothermal sector and geothermal resource risk mitigation (GREM) to finance geothermal development in Indonesia. There should be cooperation between state owned enterprises (SOE), such as PLN and PT Geo Dipa Energi (Persero), and PT Pertamina Geothermal Energy, a subsidiary of PT Pertamina (Persero), in developing geothermal energy projects so that the operating costs can be reduced.

Cheap and clean

The basic cost of providing electricity (BPP) for PLTPs that have just operated can reach above 10 US cents per kilowatt hour (kWh), while for plants that have been operating for a long time, such as PLTP Lahendong in Tomohon, North Sulawesi, the BPP is 8.6 US cents per kWh or equivalent to Rp 1,227 per kWh. With such a low BPP, the geothermal power plants are one of the most efficient in the world.

It indicates that efficiency in the operation and maintenance of PLTPs in Indonesia has been relatively low.

The manager of PLN’s Power Generation Control Unit (UPDK) in Minahasa, Andreas Arthur Napitupulu, said PLTP Lahendong’s BPP was the lowest in the world, except if compared to a PLTP in New Zealand. It indicates that efficiency in the operation and maintenance of PLTPs in Indonesia has been relatively low.

“We are also optimizing the workforce and make maintenance more predictive. The most important thing is to run the power plants consistently,” said Andreas.

The low BPP has encouraged the Minahasa UPDK to optimize the operation of PLTP Lahendong up to 24 hours a day. This plant is also proven to be environmentally friendly with a low carbon emission of 75 grams per kWh.

KOMPAS/P RADITYA MAHENDRA YASA

The control room activity of the Tonsealama Hydroelectric Power Plant in Tonsealama Village, North Tondano District, North Minahasa Regency, North Sulawesi, Tuesday (28/9/2021).

Geothermal, compared to other renewable energy sources, such as hydro, wind and solar, is more reliable and stable. The utilization of PLTPs can reach 90-95 percent capacity. In addition, the price of electricity produced by PLTPs is not affected by the price fluctuation of primary energy commodities, such as natural gas, oil and coal. Weather factors also do not affect the operations of PLTPs. (APO/OKA)

(This article was translated by Hendarsyah Tarmizi).