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| Indonesian geothermal crock of gold |
| Terry Lacey |
| In Ireland there are little people called Leprachauns (who are fairies) and a crock of gold at the end of the rainbow. And in Indonesia there’s a crock of gold hidden in the steamy volcanic mists of a geothermal power station. But how to find it?
My father was once lost on Dartmoor, a remote part of Devon in the UK, in a dense fog with a unit of Royal Marines.
Out of the mists emerged a little old lady about three feet high. She said nothing but pointed to the right way home. He took her advice and arrived where he was going.
I first understood the potential of geothermal energy when I worked in Iceland, where it is used to make electricity and for area heating.
I stood on the end of a giant pipe shaped so the blast of steam would go horizontally.
The steam geyser was regular as clockwork.
When it came I dropped a big piece of wood onto it and the plank flew about two hundred yards. If I had made a mistake I would not be here to write about it. Don’t try to do what I did!
Geothermal energy has tremendous power and the steam supply is free.
But mostly we don´t use it, and we buy oil and coal instead.
Indonesia has 27 gigawatts (GW or ´Gigs´) of identified steam reserves which could power 27,000 megawatts (MW) of installed electrical capacity, roughly the same size as the entire Indonesian national grid now, which deploys 30 Gigs, amidst an apparently never-ending power shortage.
Indonesia needs 5 Gigs of additional capacity installed per year for the foreseeable future. PLN is just completing the financing and building of the first 10,000 MW accelerated programme and setting up a second 10,000 MW programme which is supposed to be 48 percent based on geothermal energy.
The regulations require investors to tender for a Geothermal Working Area (WKP) to get a Geothermal Business Permit (UIP) and then sell the power via a Power Purchase Agreement (PPA) to state power utility PLN.
The problem is these regulations are new.
You have to negotiate these deals with regional or local government.
This assumes local authorities will learn how to manage preliminary geothermal surveys, issue bid documents, organize tenders and deal with land indemnification and environmental assessment.
The government and PLN aim to develop 4,733 MW of geothermal power this way during the next five years, to start delivering power by 2014.
This will need about $14.2 billion of investment assuming a total cost of at least $3 million per megawatt.
This is almost twice the $8.6 billion needed to finance 10,000 MW of coal-fired power stations, or nearly four times the cost per megawatt.
The big problem with geothermal is that the entire cost and risk of putting together the fuel supply for a power station for 30 years has to be deployed up-front.
The drilling risks, as with oil and gas, mean that you don’t know the volume and value of the steam you will develop until you have done the exploratory drilling.
And it will take two to three years to get through the exploratory stage and another three years or more to plan and build the power plant.
It looks like transaction costs and risks are disproportionately high for smaller one-off investments and it makes more sense to drill several holes on several sites at once and then go for plants over 100 MW, but this does not work with the Indonesian regulations.
The standard $9.7 cents per kilowatt PPA price now available in Indonesia is probably OK for bigger projects, but not enough for many smaller ones, depending on the costs of land, roads, links to the grid, infrastructure.
In Indonesia the gate-keeper state has made many gates that sometimes lead nowhere, and once you enter the maze of regulations you may never emerge!
Maybe it’s a good time to start looking for the little people to show us the way so we can find the crock of gold at the end of the Indonesian geothermal rainbow.
drterry@c4d-info.org |
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