Indonesia cuts capacity of planned geothermal plants

Muklis Ali Reuters 26 Jan 10;

JAKARTA (Reuters) - Indonesia has cut the planned capacity of geothermal power plants it will start building this year by 18 percent to 3,900 megawatts (MW), an official at the mines and energy ministry said on Tuesday.

Indonesia has established two programmes to increase power generation by 10,000 MW in a bid to resolve chronic power shortages in the country.

One of these "crash programmes" originally had nearly half or 4,733 MW of its power slated to come from geothermal sources across Indonesia.

"After we examined it carefully, we can only build 3,900 MW of the geothermal projects for the second crash programme. We expect those projects to be concluded in 2014," J. Purwono, director general of electricity at the ministry, told reporters.

He said state electricity company PT Perusahaan Listrik Negara (PLN) is expected to build a combined total of 880 MW of geothermal power plants in the second crash programme and the rest are expected to be built by the private sector.

"PLN will build the geothermal power plants and it will buy the steam from geothermal operated by state oil firm Pertamina's unit," he said.

He also said the government may allow PLN to amend an agreement it made with Sarulla geothermal developer on electricity prices from the project.

PLN awarded a contract in 2006 to a consortium of PT Medco Energi Internasional, Ormat Technologies, and Itochu Corp to build a 330-megawatt geothermal power plant in Sarulla, North Sumatra province.

The Sarulla developer asked for an electricity price revision but the talks have stalled in recent years, holding up the project.

"The government has allowed PLN to settle the Sarulla project. But PLN has to ask state audit agency opinion first. If the audit agency say the project is okay then PLN can amend its contract and revise the price," Purwono said.

Indonesia is tapping alternative sources of energy to meet rising power demand and cut consumption of expensive crude oil as its own reserves dwindle.

It also has rising greenhouse gas emissions, but the clean energy source projects are not expected to generate carbon credits. Indonesia has pledged to cut emissions by 26 percent from business as usual levels by 2020.

The vast archipelago, with hundreds of active and extinct volcanoes, has the potential to produce an estimated 27,000 MW of electricity from geothermal sources.

However, that potential remains largely untapped because the high cost of geothermal energy makes the price of electricity generated this way expensive.

PLN has 25,000 MW of generating capacity but daily output is far less because most of its plants are old and inefficient.

(Editing by Neil Chatterjee)