Sumitomo named to build new PLN geothermal power plant

State power firm PLN has appointed Japan’s Sumitomo Corporation to construct a geothermal power plant in Lampung representing a total investment of US$156.7 million.

The Ulubelu geothermal plant located in the province’s Tenggamus regency will have two power generation units each with a capacity of 55 megawatts (MW).

“The power plant is expected to begin commercial operations by 2012,” PLN’s president director Dahlan Iskan said during a contract signing ceremony with Sumitomo on Wednesday.

The project will be financed with a loan from Japan International Cooperation Agency (JICA). “It’s a soft loan with an interest rate of only about 0.7 percent,” Dahlan said. The loan will also cover the funding for the construction of a 150 kilowatt (kW) power grid and substations.

PLN’s director for planning and technology Nasri Sebayang said the power plant would supply power to the PLN grid in Lampung and South Sumatra.

The power plant will receive steam from the geothermal field in Ulubelu district, which is operated by PT Pertamina Geothermal Energy (PGE), a subsidiary of state oil and gas company PT Pertamina.

PGE currently has so far produced geothermal energy for the generation of 272 megawatts (MW) coming from its three geothermal fields in Kamojang in West Java, Lahendong in North Sulawesi, and Sibayak in North Sumatra. The company expects to increase its geothermal energy production to 800 MW during the next five years.

As for the Ulubelu geothermal power plant, PGE has agreed to sell the geothermal energy to PLN at 4.2 US cents per kilowatt hour (KwH).

Dahlan said the price was relatively low. “But, the price cannot be used as a basis for all geothermal projects, because the Ulubelu project is being developed with a very soft loan,” said Dahlan, adding price had always been the most difficult issue in geothermal steam sales and related power purchase agreements.

Aside for the Ulubelu project, PLN and PGE have also signed a heads of agreement for steam sales and power purchase from 11 other geothermal fields. “The development of the 11 fields is part of the second 10,000 MW power program,” Nasri said. He added that PLN and Pertamina had not agreed yet on the steam prices for the 11 projects. “We expect to reach agreement on this by October,” he said.

Indonesia has geothermal reserves equivalent to 27,000 MW of electricity, equal to about 40 percent of the world’s reported reserves. Currently, about 1,050 MW of Indonesian reserves have been tapped. The latest report is that geothermal energy will account for about 39 percent of the total 10,153 MW of power supply to be produced under the second 10,000 MW program.