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Today's Headlines Geothermal Exploration
Geothermal energy is a (relatively) environmentally friendly power source that is derived from Earth's inner heat (the Earth’s core is estimated to carry temperatures around 5,500 degrees centigrade, which in fact equals the temperatures found at the surface of the Sun).
In an attempt to attract investment in geothermal exploration in Indonesia, the central government decided to remove a land tax for companies that explore geothermal energy resources through a new decree. In 2017 this land tax will be scrapped for all companies that hold a geothermal business permit and are still in the exploration stage. According to information released on the website of Indonesia's Finance Ministry companies are entitled to a 100 percent tax reduction in land tax each year, for up to seven years.
The government of Indonesia plans to offer 19 geothermal blocks to investors in 2016 through tenders and direct assignment. Yunus Saifulhak, Chief of Geothermal Power at the Energy Ministry's Directorate General, said eight blocks will be offered through open tenders, while the 11 remaining geothermal power blocks will be given to state-owned enterprises. These 19 blocks are part of a larger package consisting of 27 geothermal blocks with a total combined power capacity of 1,535 megawatt (MW) that is to be offered to private and state-owned investors in the 2016-2017 period.
The government of Indonesia will offer 21 geothermal blocks to investors over the next two years. Combined these 21 blocks, which are estimated to require USD $4.2 billion in investment, have a power generation capacity of 1,065 megawatt (MW). An official of Indonesia's Ministry of Energy and Mineral Resources said most of the geothermal power blocks will be offered through an open auction. The first auction is expected to take place in March 2016.
Indonesia’s House of Representatives (DPR) passed an important geothermal bill in a plenary session on Tuesday (26/08). This new bill is expected to be a great leap in the development of geothermal power in Southeast Asia’s largest economy. Indonesia contains the world's largest geothermal energy reserves. However the country only uses a small fraction of this geothermal potential. Meanwhile, amid robust economic growth, the country is in serious need to provide more electricity and power to its people and businesses.
Indonesian President Susilo Bambang Yudhoyono will be present at the official launch of four geothermal power plants (the Ulumbu, Ropa, Ndunga and Mataloko plants) on 11 September 2014 on Flores (East Nusa Tenggara). These plants will supply 20 megawatts of electricity to eight regencies on the island (West Manggarai, Manggarai, East Manggarai, Ngada, Nagekeo, Ende, Sikka and East Flores). Indonesia is estimated to have the world's largest geothermal energy reserves. However, the country only uses a fraction of its geothermal potential.
Good news for Indonesia's geothermal power potential. The Indonesian government is getting closer to issuing a new law that will make it easier for investors to tap the country's huge geothermal energy potential. A committee of Indonesia's House of Representatives (DPR) supports a bill that was proposed by the government, which aims to spur investments in the country's geothermal energy sector through providing a better legal framework. Indonesia is estimated to contain the world's largest geothermal energy reserves.
Bloomberg reported that the investment agency of Indonesia's finance ministry will start a fund of IDR 3 trillion (USD $302 million) to finance the exploration of geothermal energy resources in Indonesia this year. Saritaon Siregar, the agency’s chairman, said this in an interview at a conference in Jakarta this week. The investment fund is in line with Indonesia's intention of lowering its dependency on expensive and environmentally unfriendly fossil fuels as a source for energy and electricity.
Latest Columns Geothermal Exploration
Indonesian Vice President Jusuf Kalla has high hopes for the development of renewable energy, such as geothermal energy, in Indonesia. Given that fossil fuels are exhaustive and dirty, clean and renewable energy sources are the future. Therefore, Indonesia should make more use of its huge geothermal energy potential. Southeast Asia's largest economy is estimated to contain 40 percent of the world's total geothermal reserves. However, it only utilizes 5 percent of its geothermal energy capacity.
Inpex Corporation, a leading Japanese oil & gas exploration and production firm, announced today that it agreed to take part in the 330-megawatt Sarulla Geothermal Power Project in North Sumatra (Indonesia), the world’s largest single-contract geothermal power project. Inpex Corp acquired a 49 percent stake in a local unit of Medco Power Indonesia. As such, Inpex Corp’s participation in the project is indirect. Parent company Medco Power Indonesia owns a 37.5 percent stake in the Sarulla project.
The Indonesian government plans to tender 25 new geothermal development sites with a total combined capacity of 1,225 megawatt (MW). These 25 projects will require a total of USD $4.6 billion worth of investments and help to achieve the government’s target to raise the portion of geothermal energy in the country’s energy mix to 7.1 percent by 2025. These 25 projects are in addition to the 31 geothermal development projects that are currently being constructed and which should be operational by 2020.
The new Joko Widodo-led government aims to triple domestic geothermal power production within the next five years in an effort to meet ever-increasing power demand in the world’s fourth-most populous country and to shift to more environment friendly energy sources (rather than the over-reliance on fossil fuels such as oil and coal). Although Indonesia is estimated to contain the world's largest geothermal energy reserves, the country only uses about four percent of its geothermal capacity potential.
After a long delay, Indonesia will finally start construction of the world's largest geothermal power plant, the USD $1.6 billion Sarulla project, in June 2014. Coordinating Minister for Economic Affairs Chairul Tanjung said earlier this week that the groundbreaking of the Sarulla project will start very soon as the government had settled the financial framework. The project was already initiated in 1990 but shelved due to various issues, including the Asian financial crisis in the late 1990s. The first phase of the project is expected to be completed in 2016.
In an attempt to attract investments in Indonesia's geothermal power sector, the Ministry of Energy and Mineral Resources plans to offer higher prices for geothermal-based electricity. Based on a recommendation from the World Bank, the new proposed geothermal-produced electricity price will range between 11.5 and 29 cents per KwH and will be effective until 2025. Currently, state-owned Perusahaan Listrik Negara pays between 10 and 18.5 cents per KwH to independent geothermal power producers (feed-in tariff).
Asep Sugiharta, an official at the Ministry of Forestry, said that a new bill has been submitted to Indonesia's parliament (DPR) which is expected to open up the potential for geothermal power development in Indonesia. Currently, geothermal exploitation is lawfully defined as a 'mining activity' (Law No. 27 2003) and therefore prohibited to be conducted in protected forest and conservation areas (Law No. 41 1999), even though geothermal mining activities have a relatively small impact on the environment (compared to other mining activities).
