Search posts by:

Search posts by:

Newsletter successfully sent
Failed to send newletter

AlwaysFree: Indonesia's Geothermal Plants Billow With Foreign Investments

Author: SSESSMENTS

  • Japan's Inpex, Singapore's Start Energy join rush to develop renewable energy source

According to Nikkei Asia article published on January 25, 2023, Geothermal projects are taking off in Indonesia, drawing investments from Japan's Inpex, Singapore's Start Energy and other players, as the Southeast Asian country pushes the renewable energy source in a quest for carbon neutrality.

The Inpex-backed Muara Laboh geothermal power plan is a five-hour drive from Minangkabau International Airport in West Sumatra. A green power station billowing steam can be seen on a plateau at an altitude of 1,400 meters. There is a constant grumble from towers cooling steam that emits from wells pumping hot underground water.

Inpex plans to begin an expansion project this year to double the plant's maximum capacity of 85 megawatts.

"We will probably build another building of the same size next to the current power plant," said a director at Inpex Geothermal Development.

Inpex's total geothermal capacity in the country was 110 MW as of the end of 2022, up about 20% from the end of 2021. With the planned expansion at the Muara Laboh plant, Inpex will likely surpass major Philippine conglomerate Ayala Group.

Pertamina Geothermal Energy (PGE), a subsidiary of Indonesian-state-backed Pertamina, ranks first in capacity with 700 MW, followed by energy producer Star Energy with approximately 500 MW. Inpex is expected to rank third overall.

"We want to focus on geothermal development in areas with high potential," said Inpex Executive Vice President Kenji Kawano at the end of last year.

The company announced on Jan. 4 that it would conduct a survey of geothermal resources with Japanese trading house Sumitomo Corp. and others in the southeastern part of Sumatra Island this year. The aim is to start power generation toward the end of the decade.

Competitors are not standing idly by. PGE plans to increase current total output of about 700 MW to about 1,300 MW by 2027, with funding being secured through an IPO this year.

Alliances with strategic partners, such as United Arab Emirates companies, are being considered. PGE seeks to advance its geothermal projects by tapping know-how from the world's leaders in oil reserves.

Mitsubishi Corporation has a 20% stake in Star Energy, which has a Wayang Windu Geothermal Power Plant on Java Island with a maximum output of 230 MW. There are plans to increase the total output to 420 MW this decade.

Abundant resources are the main attraction. Indonesia's geothermal resources are estimated at 27,790 MW, which ranks second in the world only behind the U.S., according to the Japan Oil, Gas and Metals National Corporation.

However, the share of resources that have been developed is said to be lower than that of the U.S. and the Philippines, giving the country's geothermal sector significant growth potential.

Global decarbonization efforts are also providing tailwinds.

"How much work we put into renewable energy, including geothermal, is directly linked to our competitiveness as a resource company," said the director at Inpex Geothermal Development.

By around 2030, Inpex plans to double or quadruple power generation capacity from renewable energy sources to 1,000 MW to 2,000 MW, centered on geothermal power and offshore wind power

As of the end of 2021, coal-fired power accounted for about half Indonesia's power supply, while renewable energy accounted for only 15%, according to a survey by Indonesia's National Energy Council.

Hydropower accounts for most of the country's current renewable energy production, followed by geothermal at 20% and biomass. With the country's goal of achieving net-zero greenhouse gas emissions by 2060, the government is encouraging the use of geothermal power, which can generate electricity without emitting carbon dioxide.

"Indonesia's geothermal potential reaches 24 gigawatts and currently only 2.4 gigawatts are being used," said Erick Thohir, the state-owned enterprises minister, in December.

There are risks as well.

Many sites suitable for geothermal power generation are located in mountainous areas, and a considerable initial investment is required before excavation can begin. Since the exact amount of resources cannot be known without digging a well, it is necessary to dig repeatedly, with each well potentially costing $1 million or more.

Furthermore, many exploratory wells don't lead to production. It takes about 15 years from the start of research to power generaion, and the cost of commercialization is also high.

In order to stably increase the amount of geothermal power generation, refining drilling technology and knowledge on underground resources is be the key.

Tags: All Chemicals,All Feedstocks,All Products,AlwaysFree,Asia Pacific,English,Indonesia,SEA

Published on January 27, 2023 10:11 AM (GMT+8)
Last Updated on January 27, 2023 10:11 AM (GMT+8)