Indonesia to Offer PPP Projects Worth $52b

Jakarta Globe, Eko Adityo Nugroho, Nov 06, 2014

Jakarta's government has set the capital's Decent Living Index at Rp 2.5 million
 ($206) for 2015, a strong signal to workers that minimum wages are unlikely
to increase substantially. (Reuters Photo/Beawiharta)

Jakarta. The Indonesian government plans to offer 43 infrastructure projects worth $52 billion to private investors next year, according to an official of the National Development Planning Ministry.

Bastari Panji Indra, a director at the ministry, said the projects will be offered under public-private partnership (PPP) schemes.

The projects offered include airports, monorail and, light rail transits, toll roads, coal transportation trains, ports, and water supply.

The government has published details regarding the projects in the Public Private Partnership Book 2015, which guides infrastructure development in the country.

Speaking on the sideline of Indonesia Infrastructure Week late on Wednesday, Bastari said of the 43 projects, eight are classified as “ready” to be offered, 11 are   “prospective” and 24 are marked as “potential.”

Bastari said the government will offer 10 major airport projects to private investors, including Juwata in North Kalimantan, Tjilik Riwut in Central Kalimantan and Fatmawati Soekarno in Bengkulu.

“Apart from airports, there are also a monorail project, coal transportation by train, water supply and six ports,” Bastari said.

Citing the Public Private Partnership Book 2015, he said the government plans to build an express train line connecting the Halim Perdanakusuma Airport in East Jakarta to the Soekarno-Hatta International Airport in Tangerang, Banten, in order to ease passenger commuting.

The director also announced a light rail transit system in Bandung, West Java, new train networks for South Sumatra, three water supply projects in Semarang, Central Java; Pekanbaru in Riau, and Pondok Gede in Bekasi.

Bastari also flagged a project for waste disposal processing in Bogor and Depok.

Deputy Minister Dedy Supriadi Priatna, who is charged with infrastructure affairs, said the government plans to revise the PPP scheme to attract investors, including with the introduction of a performance-based annuity scheme.

Under such a scheme, private investors contribute to development, financing and the operation of a project with a given concession time.

Once the project is open for commercial use, investors will receive regular payments for providing the service to the public, with a performance standard agreed to by both parties.

The new government under President Joko Widodo has a lot of research to do into the infrastructure sector.

Poor road and toll road conditions, over-crowded airports, over-capacity ports, and a lack of train networks have been cited as the main stumbling blocks to strong and sustained economic growth.

The previous administration under Susilo Bambang Yudhoyono repeatedly offered infrastructure projects to tender, but only a few have been completed.

Poor preparation of projects, complex bureaucracy and low return in investment for the private sector remain major factors that deter investor interest.

Indonesia Allocates $302 Million to Back Geothermal Exploration

Jakarta Globe, Fitri Wulandari,  June 18, 2013.

Indonesia started a fund to finance the exploration of geothermal energy resources as the nation seeks to reduce its dependence on fossil fuels for electricity.

The finance ministry’s investment agency will manage Rp 3 trillion ($302 million) this year for geothermal exploration, Saritaon Siregar, the agency’s chairman, said in an interview at a conference in Jakarta on Tuesday.

Local governments that have geothermal areas can use the fund to determine their potential, he said.

“If exploration shows good results, the local government can put the area for bidding and investors that win can repay the exploration funds to us,” Siregar said.

The energy source produces 1,341 megawatts, or less than 5 percent of Indonesia’s potential geothermal generating capacity of 29,038 megawatts, according to data from the energy and mineral resources ministry.

Private investors can also apply for loans for geothermal exploration, Siregar said. The agency hasn’t started distributing funds, he said.

Bloomberg

Indonesia tank deal raises moral questions

Deutsche Welle, 5 November 2012

With Indonesia set to invest in a major tank deal with German suppliers, concerns over human rights abuses refuse to go away. There are also questions as to whether the archipelago nation needs such equipment.

The Indonesian foreign ministry has announced that the country's armed forces will buy 103 Leopard and 50 smaller Marder tanks from Germany. The orders were placed with the company Rheinmetall in Dusseldorf, Germany.

"The tanks will be delivered in stages - at the end of 2012, in 2013 and in the first half of 2014," Deputy Defense Minister Sjafrie Syamsuddin told journalists in Jakarta.

The deal is thought to be worth some 210 million euros (270 US dollars). The Indonesian Defense Ministry has said it will buy 40 Leopard 2A4 vehicles and 63 Leopard Revolution tanks.

A contract was due to be signed between Jakarta and Rheinmetall on Wednesday. The deal coincides with Rheinmetall's participation in an Indonesian military trade fair, the Indo Defense Expo and Forum, from November 7 to 12.

Syamsuddin made the announcement,
 saying the tanks would come in stages

Previously, the defense ministry had named the armaments company Krauss Maffei Wegmann in Munich as its supplier - something the firm had denied.

Despite those denials, the news was enough to trigger a storm of protest. Human rights organizations have sharply criticized the fact that the tanks are being procured from Germany. Valeska Ebeling of the rights group Survival International explained that her organization had strong concerns about the human rights situation in Indonesia - particularly in the region of West Papua. Survival International claims the indigenous people of the resource rich area have been suppressed since 1963.

"The German tanks could be used against by the government against its own people," said Ebeling. "We want Germany to address the issue of responsibility and human rights with Indonesia."

The opposition in Jakarta is also unhappy. Indonesian parliament representative and member of the defense commission, Helmi Fauzi, explained to DW that the Leopard tanks were not appropriate for Indonesia, being too heavy for the country's road system. In addition, he claimed, the Indonesian navy did not have ships suitable for carrying the tanks.

"Indonesia needs many more light and small tanks," explained Fauzi, who is a member of the largest opposition party the PDI-P. But while the defense commission initially saw a heated debate about the tank deal, Fauzi said, the majority were eventually in favor.

Rheinmetall is due to exhibit its wares
at a military trade fair in Indonesia

He said they were persuaded by the obsolescence of the army's existing equipment.

'A matter of status'

According to security experts, the Indonesian army was keen to buy heavy battle tanks because neighboring countries such as Malaysia and Singapore already possessed such weapons. For the army, the possession of such weapons was important, even if only for prestige.

The Indonesian human rights organization Imparsial criticized the project. Poengky Indarti, the group's executive director, described it as a pure waste of money adding that any deal should be based on objective rather than political criteria. Transparency, said Indarti, remained paramount to prevent corruption.

Dutch rejection, change of plan

The deal is also for a number of
light German "Marder" tanks

Originally, Indonesia had planned to buy used Leopard tanks from the Dutch army. However, the Dutch parliament rejected the deal earlier this year over concerns about human rights abuses. An Indonesian army spokesperson said that there were other possibilities - namely Germany.

Opponents of the weapons deal are now relying on the German government.

"Even if the weapons deal is not negotiated directly with the German government, but with a company instead, the government still needs to give its permission," stressed Survival International's Ebeling, hoping the government would carefully consider the situation of human rights in Indonesia.

LEN, Pertamina to Develop Solar Panel Plant

Jakarta Globe, October 29, 2012

LEN Industri and Pertamina will join forces to build a solar cell production
plant. (AFP Photo)

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State-owned companies LEN Industri and Pertamina are collaborating together to build a solar cell production plant in Rancaekek, Bandung, according LEN Insdustri President Abraham Mose.

Abraham, speaking to Antara news agency on Monday, said that the groundbreaking for the plant's construction is expected to take place in December.

"This an asignment project and at the same time an investment, so that we do have a renewable energy inustry in Indonesia," Abraham said. He gave no further details on the plant, but that it could produce solar cells with a total capacity of 60 MWatts.

"This is a venture and an investment. [It will be done] so that we can have a renewable energy industry in Indonesia," Abraham said. He gave no further details about the plant, but mentioned that it could produce solar cells with a capacity of 60 megawatts.

A presidential regulation issued in 2006 states that solar energy should account for between 0.2 and 0.3 precent of national energy usage by 2025, or the equivalent of 1,000 megawatts per hour.

Abraham also noted that LEN was planning on investing in airport navigation equipment.

"We will make a proposal for the airport navigation project since it is in line with LEN's focus. We will do this in the next five years," he said.

Abraham mentioned that on Nov. 28 the company would introduce products made in conjunction with the Research and Technology Ministry.

 LEN Industri's expertise, according to to the company's president, lies in railway signage, marine navigation, renewable energy, military communication equipment and control systems.

Abraham noted that LEN has a strategic corporate division devoted to mapping industrial trends.

"Basically, we are always monitoring development and looking for opportunities for growth," he said.

Indonesia Geothermal Sector Attracts Panax, Mitsubishi, BP, Chevron

Renewable Energy World, Leslie Blodgett, GEA, October 18, 2012

WASHINGTON, D.C. -- Indonesia has had the lowest volatility in economic growth of any OECD or BRIC economy over the past decade, while its economy in the short term is conjectured at close to 7% growth per year, according to Proactiveinvestors.com.au.

Concurrently, recent efforts by the Indonesian government to attract geothermal companies seem to be having an effect. At a September meeting in Washington DC on Renewable Energy Opportunities in Indonesia, hosted by the US-ASEAN Business Council, speaker Joel Kopp (U.S. Embassy Jakarta) recounted the efforts of Indonesian leaders, who have set a separate feed-in tariff for geothermal at between 10 and 18.5 cents-per-kWh. Also, projects under 10 MW are required to be purchased by state-owned utility Perusahaan Listrik Negara (PLN). Kopp added that PLN has made improvements to their reliability, as well.

Australian Panax Geothermal is making strides in Indonesia. With three key geothermal projects scheduled to begin production in Indonesia over the next three to four years, Kerry Parker, managing director, commented to press on the company’s growth in Indonesia: “Panax has long recognized the investment potential in Indonesia, having launched several projects within the region and with plans to expand on our current interests,” Parker said. Projects for Panax include the recently negotiated power purchase agreements for its Sokoria and Dairi Prime geothermal projects, each with a planned initial capacity to generate 30 MW. Agreements are with Indonesian electricity regulator PT PLN and the Indonesian Government.

One company with increasing interest is Mitsubishi Corporation, which has agreed to acquire 20% shares of Star Energy Geothermal Pte Ltd ("SEGPL"). SEGPL manages operation of the 420-MW Wayang Windu Geothermal Power Project Plant in Java Island, one of the world's largest geothermal resources. This acquisition is the country’s “first entry into the Indonesian power industry and its first operation of a geothermal power plant,” according to the release. Mitsubishi could develop and operate multiple geothermal power plants in Indonesia in the future, including an expansion of Wayang Windu.

Additionally, oil and gas giant BP (UK) could expand its business in Indonesia, it said recently. Energy and Mineral Resources Minister Jero Wacik told The Jakarta Post the government was curious as to whether BP would enter the geothermal energy sector after US-based Chevron “had successfully become the world’s largest geothermal power producer after years of operating in Indonesia.”

Chevron Geothermal’s policy, government and public affairs manager, Ida Bagus Wibatsya was quoted that the development could create healthy competition among geothermal energy developers: “It will be very positive for the development of the geothermal energy industry as well as supporting the government’s programs on renewable energy resources.”

This article was originally published in GEA's Geothermal Energy Weekly and was republished with permission.

A geothermal energy project in Tibet. (Photo/Xinhua)

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"Recalibration of Free Choice"–  Mar 3, 2012 (Kryon Channelling by Lee Caroll) - (Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Loose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth,  4 - Alternate energy sources (Geothermal, Tidal (Paddle wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical)  8 – Wars will be over on Earth, Global Unity, … etc.) - (Text version) 

“…  4 - Energy (again)

The natural resources of the planet are finite and will not support the continuation of what you've been doing. We've been saying this for a decade. Watch for increased science and increased funding for alternate ways of creating electricity (finally). Watch for the very companies who have the most to lose being the ones who fund it. It is the beginning of a full realization that a change of thinking is at hand. You can take things from Gaia that are energy, instead of physical resources. We speak yet again about geothermal, about tidal, about wind. Again, we plead with you not to over-engineer this. For one of the things that Human Beings do in a technological age is to over-engineer simple things. Look at nuclear - the most over-engineered and expensive steam engine in existence!

Your current ideas of capturing energy from tidal and wave motion don't have to be technical marvels. Think paddle wheel on a pier with waves, which will create energy in both directions [waves coming and going] tied to a generator that can power dozens of neighborhoods, not full cities. Think simple and decentralize the idea of utilities. The same goes for wind and geothermal. Think of utilities for groups of homes in a cluster. You won't have a grid failure if there is no grid. This is the way of the future, and you'll be more inclined to have it sooner than later if you do this, and it won't cost as much….”

Geothermal Takes a Step Forward in Indonesia With Sumatra Drill

Jakarta Globe, Tito Summa Siahaan, September 24, 2012

This 2010 file photo shows an Indonesian worker of PT Pertamina Geothermal
 Energy checking a production well in Kamojang. The government has announced
 it will raise the price of three types of renewable energies for electricity needs,
saying the move is necessary to encourage Indonesia's overall renewable
energy production. (AFP Photo/FILES/ ADEK BERRY)

               

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Nearly a decade after government set the rules for geothermal energy, a developer on Friday undertook the first exploration drilling for the much-vaunted resource that could help power the nation.

Supreme Energy Muara Laboh has started drilling at its working area in South Solok, West Sumatra. The activity is expected to take up to nine months to complete, and will be followed by the construction of a 220 megawatt geothermal power plant should the exploration be successful.

The geothermal energy director at the Energy and Mineral Resources Ministry, Tisnaldi, hailed the project as an historical landmark because it was the first such activity conducted since the government issued the Law on Geothermal Energy in 2003. He added that it was one of the largest energy projects in Sumatra.

“Geothermal projects are crucial in order to make our energy more environmentally friendly in the future, especially considering that our oil, gas and coal resources are in decline,” Tisnaldi said.

If the power plant goes ahead, the project is estimated to cost Rp 7 trillion ($722 million), according to a company statement received on Sunday. “The power plant construction will start in 2014 and is expected to begin commercial operation in 2016,” the statement said.

The electricity generated from the power plant will be dispatched to state utility Perusahaan Listrik Negara’s power grid based on a 30-year power purchase agreement, it said.

Surpeme Energy Muara Laboh is jointly controlled by local company Supreme Energy, France-based International Power-GDF Suez and Japanese firm Sumitomo Corporation.

This project is a part of phase II of a government program to add 10,000 megawatts in generating capacity across the country. While phase I consisted largely of new coal-fired power plants, phase II concentrates on renewable energy.

By 2025, the government expects the portion of electricity generated from renewable energies to reach 17 percent, while diesel fuel will stand at 20 percent, gas at 30 percent and coal at 33 percent.

At present, 5.7 percent of electricity is from renewable sources, 24.5 percent is from coal and 20.1 percent from gas.

To encourage investment, the government this month raised the price floor for renewable energy.

Geothermals Boosted by New Price Floor

Jakarta Globe, Tito Summa Siahaan, August 30, 2012

A geothermal power plant in Wayang Windu, West Java. (GA Photo/M. Defrizal)  

      

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s debate rages on the legacy likely to be left by President Susilo Bambang Yudhoyono when he leaves office, one contender is his efforts to encourage Indonesians to embrace a lower-carbon economy.

The president is aiming to bring the contribution of renewables to the national energy mix to 25 percent by 2025 and 35 percent by 2050.

Those renewables are likely to be sourced largely from the country’s vast geothermal potential, which some estimates put at 40 percent of the world’s reserves, and hydropower.

State funding alone will not be enough to achieve such an energy mix, so private investors must be lured to participate.

Energy and Mineral Resources Minister Jero Wacik said on Wednesday that he had signed a decree that will increase the tariff for electricity generated from geothermal power plants. The decree will soon be made official in the form of regulation, probably this week, the minister added.

He said that the decree will set the minimum tariff for geothermal electricity at 10 cents per kilowatt hour in Sumatra; 11 cents per kWh in Java and Bali; 12 cents per kWh in Central, Southeast and North Sulawesi; 13 cents per kWh in North Sulawesi and Gorontalo; 14 cents per kWh for East and West Nusa Tenggara; and 18 cents per kWh for Papua.

Jero said the government realized there was a need to massively develop the nation’s geothermal potential and that investors had shown excitement toward the sector when the plan to raise the tariff was announced.

“We only utilize around 5 percent of geothermal potential. I estimate that around 6,000 megawatts of electricity can be generated [from geothermal],” Jero said.

While a more attractive tariff will increase private investor interest in geothermal projects, investment returns are just one of the limitations curbing activity.

Motofumi Kohara from the Japan International Cooperation Agency, a government body involved in Indonesia’s infrastructure development, said the issue of complicated permits and the risk that investors must carry acted as constraints on the development of geothermal projects.

Speaking at the Indonesia International Infrastructure Conference and Exhibition 2012 currently taking place in Jakarta, Kohara said the government needed to mitigate the risk borne by independent power producers during the exploration stage of geothermal projects.

Furthermore, he noted, half the geothermal projects in the second phase of a government program to fast-track the development of electricity generators require permission to use forests, another concerning issues.

While investors in geothermal projects may soon enjoy a higher return, a cautious approach is still evident in the hydropower sector.

Josef M. Ullmer, the president director of Andritz Hydro, an equipment distributor for hydropower plants, called on the government to show more commitment in its push for hydropower projects.

“Hydropower is the cheapest of all energy sources and has a 90 percent efficiency rate,” he said.

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Pertamina’s Geothermal Push Gets a Price Boost

Pertamina’s Geothermal Push Gets a Price Boost

Jakarta Globe, August 15, 2012

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Pertamina Geothermal Energy, a subsidiary of state energy firm Pertamina, plans to develop another eight geothermal projects after the government announced that the electricity price from geothermal power plants would be increased to make the sector more attractive.

Work on the projects is expected to begin next year but there was no information on where they would be located.

Slamet Riyadhi, president director of PGE, said the company planned to spend an additional $2.7 billion on geothermal projects. That is in addition to the $6 billion it has invested in the ongoing development of 10 geothermal projects.

The new projects would generate 900 megawatts of electricity, he said. The 10 projects already in development would have an estimated combined capacity of 962 megawatts once completed.

The energy and mineral resources minister, Jero Wacik, announced last month that the purchase price of electricity produced by geothermal sources would be increased from 9.7 cents per kilowatt hour to between 10 cents and 17 cents per kilowatt hour, depending on the location.

“If the government makes this price increase official this year, we can start the process of surveying for the new projects next year,” Slamet said.

He said the internal rate of return, a measure of profitability on investment, for geothermal projects under the current price of 9.7 cents per kilowatt hour was 9 percent.

“That is well below the ideal 11 to 14 percent rate for investment in renewable energy,” Slamet said. He added that an 11 to 14 percent rate of investment return could be reached under the proposed new price.

He said the current price structure left investors reluctant to develop geothermal projects, particularly with the additional upstream risks they faced.

“Now they will have no more excuses,” he said.

Slamet said the Energy and Mineral Resources Ministry and the Forestry Ministry had signed a memorandum of understanding on the utilization of forest areas for geothermal projects that could speed up the process of obtaining permits.

“Now we can secure a permit for a geothermal project a month or two faster than usual,” he said. “This is good. Now we can achieve our target of generating 2,000MW of electricity in 2018, ahead of our previous timeline of 2020.”

Indonesia is said to hold some 40 percent of the world’s geothermal energy potential. Unlike other energy sources, however, geothermal energy cannot be transported so a power plant must be built near the source to tap it, making investment more expensive.

Investor Daily

High-Tech Reverse Osmosis Water Plant on Its Way to Riau Islands, Ministry Says

Jakarta Globe, July 28, 2012

Water vendors fill up jerry cans in Madura, East Java. The water comes
from a plant that uses reverse osmosis. (JG Photo/Safir Makki)  

   

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The national government is planning to build a plant to convert seawater into drinking water using reverse osmosis technology in Tanjung Pinang, Riau Islands, an official said on Friday.

The plant will have a clean water production capacity of 50 liters per second, said Danny Sutjiono, director for drinking water development at the Public Works Ministry.

“This is estimated to be able to meet the demand for 40,000 customers at a tariff of around Rp 8,000 to Rp 9,000 per cubic meter per second,” Danny said.

Danny said the project was now in the tender phase for construction. He said that he hoped a contract could be signed in October and that construction could start immediately thereafter.

“I hope the project will be operational at the end of 2013,” he added.

Reverse osmosis is expensive. Danny said the investment needed for the Riau Islands project was four times what freshwater projects of a similar scale would cost.

The Public Works Ministry said it would allocate Rp 40 billion ($4.24 million) to build the plant.

The winner of the tender must not only construct the physical facility but also operate the plant and build the necessary distribution pipeline network, Danny said.

“They will have to handle the construction process and the provision of water. All we want is for the seawater to be processed into drinking water and channeled to the houses,” he said.

The ministry has already built one reverse osmosis plant, on Mandangin island in Sampang, East Java, off the coast of the larger Madura island.

That plant has a similar production capacity to that of the proposed Riau Islands facility. After the Mandangin plant is officially inaugurated by Public Works Minister Djoko Kirmanto in early August, it will serve an estimated 20,000 people.

That plant’s water sells for Rp 12,000 per cubic meter per second, Danny said.

Investor Daily

VP opens renewable energy conference 2012

The Jakarta Post, Rabby Pramudatama, Jakarta, July 17 2012

Boediono: (Antara/Puspa Perwitasari)

Vice President Boediono kicked off the 2012 Indonesia Renewable Energy and Energy Conservation conference and exhibition at the Jakarta Convention Center (JCC) on Tuesday.

The event, which was initiated by the Indonesian Renewable Energy Society (METI) and is supported by the government, is open to the public from July 17 to 19.

“The technologies for developing renewable energy have been advancing rapidly. They have also become much more economic. We are lucky to have such diverse sources of energy ... that we can rely on in the future,” Boediono said at the opening ceremony.

He said it was important to synchronize political, economic and environmental aspects to support the development of the country’s renewable energy and energy conservation policies.

Aside from the conference, as many as 75 international and local companies working in the energy field are participating in the event to showcase their products and achievements in renewable energy innovation. (iwa)

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National Electric Car Can Begin Mass Production in 2013: Dahlan

Jakarta Globe, July 16, 2012

Depok Mayor Nurmahmudi Ismail, in the driver’s seat, tests an electric
 car on Jatimulya in Depok in West Java, on Friday. The car, which was
 invented by Depok resident Dasep Ahmadi, reportedly runs 150 kilometers,
 or between four and five hours on a single charge. (Antara Photo/Indrianto
Eko Suwarso)

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State-Owned Enterprises Minister Dahlan Iskan said on Monday that the country can begin mass production of the national electric car as early as next year after doing a test drive of its prototype on Monday. 

“If the infrastructure is ready, we can start mass producing the car with a capacity of 5,000 units per year,” he claimed. 

The minister drove the prototype of the Ahmadi Mesin 5.0 electric car, which was named after its maker Dasep Ahmadi, 48 kilometers from its garage at Jati Mulya, on the outskirts of Jakarta, to the Research and Technology Ministry building on Jalan Thamrin in Central Jakarta. 

The prototype so far only has a local police road certificate since regulations on taxes and registrations for electric vehicles, which do not fall under existing categories, have yet to be put in place.

Dahlan said President Susilo Bambang Yudhoyono has already instructed the ministers for industry, research and technology and trade to work on the necessary regulations. 

“Within the next three months, there should be a clear technical guide for commercial regulations, so that the car can be mass produced,” Dahlan said. 

Besides Ahmadi’s electric car, there are four other versions in the final stages of completion under the minibus, city car and sports car categories.

Antara

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Indonesia 's PIP allocates Rp1.8 trillion for geothermal investment

Antara News, Sat, July 14 2012

Jakarta (ANTARA News) - Government investment agency Pusat Investasi Pemerintah (PIP) has allocated around US$192 million for investment in the geothermal sector in the second semester this year, PIP chief Soritaon Siregar said.

"A total of US$132 million of the funds will be for exploitation activities and US$60 million for two projects now still under exploration," he said in Banten on Saturday.

He said the investment for geothermal projects is indeed huge because the government is striving to increase electricity supply from renewable sources.

On the other hand, he said, the geothermal investment is also risky as only three out of ten explorations could be continued to a exploitation stage.

In view of that it is difficult to expect private parties to develop the business by themselves, he said.

"To reduce risks PIP is now setting up a team of the best consultants in the world hailing from Japan, Norway, Australia and the US," he said.

They will be assigned to appoint technical, legal and financial consultants and supervisors to analyze the investment risks seen from various fields.

Regarding mini hydro-power projects (PLTMH) PIP meanwhile has allocated around Rp649 billion distributed to 29 applicants for investment loans, he said.

"All the applicants for the PLTMH projects are private because the value of the project is too small to be carried out a state-owned enterprise," he said.

He said the PLTMH projects are located in Sumatra, Java and Sulawesi.

Besides geothermal and PLTMH projects PIP also plans in the second semestet to purchase securities worth Rp1.5 trillion and carry out a public-private partnership project worth Rp100 billion.

Total funds provided for investment in the same year is Rp13.280 trillion.

Editor: Suryanto

Indonesia, Germany team on geothermal energy

Deutsche Welle, 12 July 2012

Indonesia is said to have the world's largest geothermal energy reserves but their potential remains mostly untapped. That could soon change with German know-how.

With 240 million people, Indonesia is the biggest and fastest growing market in Southeast Asia. And as the country's economy grows, so, too, does its demand for electricity.

President Susilo Bambang Yudhoyono is a self-acclaimed fan of "green energy." In a meeting with German Chancellor Angela Merkel during her recent visit to Indonesia, Yudhoyono talked about one of his major goals: to give greater focus to alternative energy resources such as wind, solar and, in particular, geothermal heat.

Untapped resources

Volcanic areas, like Indonesia, are a rich source of geothermal energy. The island nation is situated on the so-called "Ring of Fire" volcanic belt, which encircles the Pacific Ocean, accounting for 40 percent of the world's geothermal reserves - more than any other country. 

Indonesia lies in Pacific's volcanic
'Ring of Fire'

The government has pinpointed 250 locations where geothermal energy can be produced, including Seulawah on Sumatra, Ijen on Java and Tomohon on Sulawesi. Today, just 15 geothermal plants are in operation, with the last one going live in 1997.

Not all geothermal fields, however, are suited for commercial energy use because they don't have the right temperature, pressure or permeability.

"With geophysical, geochemical and geological tests, you try to get a picture of what it looks like inside the Earth," says Thorsten Schneider from Germany's KfW Entwicklungsbank in Jakarta.

After the test, drilling begins, representing a huge financial risk, according to Schneider. "A typical drilling costs between 3 and 5 million US dollars," he says. "And if you find nothing, the money is gone."

Expensive undertaking

Building a geothermal power plant is an expensive undertaking. Its costs are estimated to be two to three times more than that of a coal power facility, according to Schneider. 

Volcanic areas are ideal sites for
geothermal energy plants

In addition to costs, Indonesia's excessive bureaucracy, tough regulations and strict government price controls add to the challenges. So the country, concedes Schneider, "has a bit of a problem at the moment."

Most of the geothermal power plants in operation in Indonesia today are run by the state-owned natural gas and oil company PT Pertamina.

But in a move to tap into the country's vast geothermal reserves, the Indonesian government has opened the doors to foreign investment and know-how.

German money and know-how

Today, Germany is one of the biggest supporters, together with Japan, Australia and the US. The German government has earmarked 300 million euros in aid. 

Although Germany is not a "volcanic country," it has extensive geothermal expertise, admits Professor Ernst Huenges from the German Research Center for Geosciences in Potsdam.

"Currently in Indonesia, only geothermal steam is used," he says. "In Germany, by comparison, we're also able to utilize the energy from hot water" to significantly increase power production "by as much as 60 gigawatts."

'Demanding target'

Potential business opportunities also exist for German companies, points out KfW's Schneider. "Building power plants, with all the electronics and other technical equipment involved, is certainly of interest to German businesses," he says.

Merkel and Yudhoyono have agreed to collaborate in increasing Indonesia's share of renewable energies to 25 percent by 2015.

Schneider calls the target "utopian." Merkel, on the other hand, prefers more diplomatic language, referring to the agreement as a "demanding target," which Germany can help Indonesia achieve.

Few will disagree, however, that there is plenty of work to be done - and some risk involved - if Indonesia wants to tap its vast reservoirs of geothermal energy deep down.

Author: Monika Griebeler / jrb

Editor: Sarah Berning

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Geothermal Power Could Help Bridge Indonesia's Energy Gap: WWF