Sarulla Geothermal (Credit: PT Medco Energi Indonesia).

JAKARTA (TheInsiderStories)—Geothermal Sarulla, Ltd announced on Wednesday that it has started the commercial operation of the third unit of Sarulla geothermal power plant in North Sumatra, adding another 110 megawatts to the geothermal project’s total generation capacity.

Geothermal Sarulla Ltd is a joint venture company which is 27.5 percent owned by PT Medco Energi International, 12.75 percent by  US-based Ormat Technologies, 25 percent by Japan-based Itochu, and 25 percent Kyushu Electric, which are both subsidiaries of Inpex Corporation, the operator of Masela Block in Maluku.

The joint venture company started the construction of the Sarulla geothermal power plant, the world’s largest single-contract geothermal power project, in 2014. It started the commercial operations of the first and second unit on March 18, 2017, and October 2, 2017,  respectively.

The geothermal power plant is located in Pahae Jae and Pahae Julu districts of North Tapanuli regency in North Sumatra, Indonesia.  The company claimed its generated power is sufficient to meet the power need of 2.1 million households.

It has a joint operating contract (JOC) with the concession holder Pertamina Geothermal Energy (PGE), a subsidiary of state-owned oil and gas company PT Pertamina.

The company said that power generated from the third unit is scheduled to be sold under contract of 30 years to PLN, which has been expected to diversify away from fossil fuels to renewable energy in its efforts to meet the rising power need in the country.

This commercial operation will contribute to the existing generation capacity of the geothermal power plant in Indonesia that already reached 1,808 Megawatt, which is derived from 13 geothermal projects already in operation so far across the country.

The 13 geothermal projects include the Wayang Windu Geothermal power plant which is operated by Star Energy in Bandung, West Java, at the generation capacity of 227 MW. The others include Kamojang, Gunung Salak and Darajat (all in West Java), PLTP Ulubelu in Lampung, and Lahendong in North Sulawesi. Their total generation capacity of 1,808 MW is extremely low compared to the potential of Indonesia at more than 29,000 Megawatt. Indonesia is ranked 2nd in the world in the use of geothermal, after the United States.

INCENTIVES

Chairman of the Indonesian Geothermal Association (API) Prijandaru Effendi earlier said despite the government already provides an incentive for the geothermal development such as deduction in import taxes, but it is not enough to attract investment. He revealed the government needs to give more tax incentive to attract investments.

Effendi said geothermal companies need the low-interest loan for the initial exploration activities. He expected the financial institution to understand this problem and give the low-interest loan.

Currently, most of the developers use the corporate fund to conduct the exploration activities. This becomes a burden for the company as investments for the geothermal explorations are high risk investments.

President and CEO of PT Supreme Energy Supramu Santosa have made a similar request. Acknowledging that the government is under pressure to make electricity tariff cheap, Santosa said the government should provide tax incentives and better infrastructure.

In addition, Santosa asked the government to seriously examine the geothermal fund. He expected both private and state-owned companies could access this geothermal fund.

Email: fauzulmuna@theinsiderstories.com