The Ring of Fire:
The Use of Geothermal Energy in Indonesia
For Indonesia's myriad smaller islands, as well as for rural
locations that cannot be economically connected to the grid, electric
power development strategy is increasingly seen more in terms
of the country's abundant renewable energy resources. Hydro, biomass,
solar and wind energy are being explored for their potential to
generate power, to lessen national dependence on fossil fuels.
Expert attention today is focused on exploiting the huge geothermal
potential of the spectacular mountain ranges in Java and Sumatra,
volcanic Indonesia's so-called "Ring of Fire". Richard
Mogg, Lanna Blue Bangkok reports on geothermal energy production
and use in the region.
Indonesia: the current situation
With a total land surface area of 1,900,000km and a population
estimated at some 220 million today, the Republic of Indonesia
is by far the largest member of the ten-member Association of
South East Asian Nations (ASEAN). (Besides Indonesia, ASEAN membership
includes Brunei Darussalam, Cambodia, Laos, Malaysia, Myanmar
(Burma), the Philippines, Singapore, Thailand and Vietnam.) While
some 6,000 or so of Indonesia's more than 16,000 islands are inhabited,
over 60 percent of the total population is concentrated in Java
According to figures given by G.W. Huttrer at the World Geothermal
Congress 2000, Indonesia's installed generating capacity driven
by geothermal power had reached a level of 589.5MW, which generated
4,575GWh. Over half of this was privately owned and operated by
two commercial affiliates of oil interests based in the United
States (see below). Unocal and Amoseas Indonesia, which is a joint
venture between Texaco and Chevron, are contractors to Pertamina,
Indonesia state-owned oil, gas and geothermal enterprise.
Three more joint ventures, all partnerships between American
and Indonesian commercial interests, have signed power purchase
agreements and joint-operating contracts with Pertamina, to develop
a further 680MW of geothermal generating capacity. Pertamina,
which today styles itself the "national oil, gas and geothermal
organisation", stated mid-September that it intends to invest
US$5 billion in a programme to develop high-growth operations
in the period 2002 to 2006. The programme focuses government policy
to reorient domestic usage away from oil dependence.
Indonesia thus joins a small group of countries that have increased
their installed geothermal generating capacity by at least 50
percent in the period 1995-2000. The others are Costa Rica, El
Salvador, Iceland, New Zealand, the Philippines, Portugal (Azores)
and Russia. Indonesia's overall installed generating capacity,
of all types, jumped in 1997 by 16 percent to 33,255MW, and by
a further 13 percent in 1998 to total 37,532MW. Of this, 2,881MW
comprised large and small hydropower units, Indonesia's largest
renewable energy generating sector.
According to an assessment made by Dr John W Lund, Director of
the Geo-Heat Center, Oregon Institute of Technology, USA, and
his colleagues, current total electric power produced worldwide
by geothermal means is equivalent to saving an annual 83.3 million
barrels (12.5 million tonnes) of oil. It results, too, in the
saving of an estimated 11.03 million tonnes of carbon pollution
that burning the oil would produce. Global warming, believed to
be reaching an unacceptable level, should not be forgotten in
the quest for sustainable renewable energy development.
RE on the sidelines?
Southeast Asia's surging 1990s economic development spawned rapid
development of generating capacity fired with cheap, readily available
fossil fuels. The name of the game in Indonesia was base-load and
merchant generating plant fuelled by oil, gas or the country's plentiful
coal reserves. The ASEAN countries generally regarded renewable
energy as an interesting but rather minor sideline, lacking true
investment potential. Environmental considerations were considered
counter-productive, and often still are. This has resulted in the
Manila-based Asian Development Bank (ADB) labeling the ASEAN nations
the most polluted in the world today. Geothermal plant may emit
small amounts of gas, but even this is eliminated where a binary
system is installed for electric power generation.
Electric power throughout Indonesia is controlled by wholly state-owned
(but recently incorporated) PT.PLN (Persero), a former monopoly
known then as Persuhaan Umum Listrik Negara (PLN). PT.PLN invests
over US$3.5 billion annually in development of the national electricity
system, with prime focus on the Java-Bali grid. Indonesia's largest
state-owned enterprise in terms of assets, electricity production,
transmission, distribution and supply in the Java-Bali grid area
provide around 80 percent of PT.PLN's revenue. Burdened with at
least US$5 billion debt, PT.PLN received a government subsidy of
Rp 1,929,945,502,458 (ca US$ 2million) in 1998, just to cover foreign
exchange loss on fuels purchased during Asia's economic crisis.
In 1992 Indonesian state-owned enterprise (SOE) law was changed
to allow private companies to produce and sell electricity in Indonesia.
A programme had already begun to encourage foreign direct investment
(FDI) in independent power producer (IPP) projects for high demand
areas. PT.PLN was incorporated in 1998 in preparation for liberalisation
of the national electricity market. Today PT.PLN remains a wholly-owned
SOE, with its entire shareholding vested in the Ministry of Stated-Owned
Companies, which took over control from the Ministry of Finance.
Many areas of Indonesia, particularly in the outer islands, are
too remote for grid connection. Rural electrification is perceived
as a vital policy objective in developing national unity. Government
policy is the provision of economical but efficient electric power
as a strategic necessity in preventing social unrest in remote rural
areas and outer islands. As well, Jakarta is keen to defuse calls
for separation motivated by the example of East Timor's establishment
of politically independent self-determination. Ethnic and ideological
differences will almost certainly continue to fuel the growth of
separatism throughout the archipelago.
PT.PLN has developed a Rural Electrification Planning System (REPLASYS),
based on: Required investment; Associated operating costs; Rate
of return; and Forecast net economic benefit per year. By 1995,
38,027 desas (hamlets), that is 61 percent of a national total of
61,975, had gained some sort of electricity service. Where it can,
PT.PLN reaches villages from its Java-Bali grid. But many small
communities install and operate their own independent generating,
distribution and supply systems, sometimes with the assistance of
the many local and foreign non-governmental organisations (NGO)
operating throughout Indonesia.
Asia's 1990s economic boom sparked a surging need for more electricity,
particularly in Indonesia's high-demand Java-Bali area. To meet
the urgent need, the government of the day decided to promote foreign
direct investment in private construction and operation of thermal
generating stations, fired by indigenous oil or natural gas. Problems
arose in finalising a suitable power purchase agreement (PPA) tariff
between PT.PLN and IPPs. Put simply, a tariff level to make a project
commercially viable was higher than PT.PLN could afford.
A socially suitable as well as commercially viable tariff formula,
to support IPP development and attract FDI, has not yet been found.
PT.PLN is obliged by government to maintain uniformed tariff structures,
although power distribution and supply costs outside the Java-Bali
grid area are at least twice as high as within it. The World Bank
asserts that, while a social argument exists for subsidies to maintain
a minimum level of consumer service, large consumers should not
be burdened with them. Subsidies, when necessary, should be applied
by the state, directly, not by PT.PLN.
Turning to RE?
With population averaging an annual growth of 1.4 percent, while
the gross domestic product (GDP) surged each year by an average
of 7.1 percent between 1994 and 1997, there is an inexorable demand
for more electric power throughout Indonesia. Oil, gas and coal
for export are Indonesia's most economically vital natural resources,
although agriculture and manufacturing are gaining importance.
Indonesia is the world's largest exporter of plywood, and the
second (after Thailand) largest of rubber. Thus biomass is increasingly
favoured as the renewable energy option.
Particularly difficult for the many outer islands, rural electrification
has become a political as well as social and economic necessity.
As well as for electricity generating, the National Energy Conservation
Programme (RIKEN) covers industry, transport and domestic fuel
consumption. Thus a mix of renewable energy technologies is sought,
with geothermal, hydro and solar leading the field. The five main
aspects of government energy policy for Indonesia are defined
as: Diversification; Energy pricing; Private sector participation;
Balanced regional development; and Protection of the environment.
Greater dependence on indigenous, non-tradable renewable energy
sources is defined in an official programme, covering a period
to the year 2019, known as PJP II. Electrification of 95 percent
of the country by 2004 is defined as the goal of the current five-year
(1999-2004) National Economic Development Plan (REPELITA VII).
The aim is to provide electricity to towns, villages (kampungs),
and hamlets (desas) throughout Indonesia, with a mixture of geothermal,
mini- and micro-hydro and photo-voltaic energy. Core rationale
is to refocus village generating away from diesel dependence.
Indonesia lies across the southwestern sector of the Ring of Fire,
the chain of volcanoes that stretches around the Pacific Rim.
There are more than 200 volcanoes around the Pacific, many of
them still active. Geothermal steam-fields, in areas of volcanic
and tectonic activity found in Iceland, Hawaii, Italy and Japan,
convert the heat and power within the earth into electricity.
Indonesia's geothermal potential is estimated to be over 20,000MW,
enough to meet more than 10 percent of future electricity demand.
This is equivalent to 6 billion barrels of oil, although, unlike
oil, geothermal power cannot be exported.
Some sixty Indonesian volcanoes remain active, mainly in the four
largest islands of Java, Sumatra, Celebes, and Borneo (which is
shared with Brunei Darussalam and Malaysia). Yet Indonesia has
lagged the Philippines - with which it shares Southeast Asia's
sector of the Ring of Fire - in developing its geothermal potential.
After the United States, the Philippines has become the world's
second largest country in terms of electric power production from
geothermal sources. According to a World Bank analysis, 27 percent
of total electricity generation in the Philippines is derived
from the country's abundant geothermal energy resources.
The World Bank points out, furthermore, that geothermal technology
is suitable for small as well as large power grid systems otherwise
dependent on fossil fuels. A key point is Indonesia's growing
need to switch from widespread use of small stand-alone diesel
generators often favoured by isolated communities. The World Bank
states, "Where generation capacity growth is required because
of grid expansion in growth areas or other economic development,
existing thermal power plant can provide backup or peaking while
new geothermal capacity is installed in stages to meet growing
A bonus factor exists in developing a site where there is an industrial
requirement for steam, which can cost as low as US$3.5 per tonne
as a byproduct of geothermal electricity generation. Suitable
for both mini-grid as well as national grid applications, geothermal
unit cost of power ranges from 2.5 to over 10 US cents per kilowatt-hour,
according to the World Bank's analysis. Besides economic factors,
such as scale of development, cost depends on depth and temperature
of the resource, productivity, infrastructure, environmental and
Geothermal energy is created when groundwater is heated by molten
magma rising from deep within the earth. Steam is trapped beneath
an impermeable clay cap at immense pressure and temperature. Drilling
down through the cap, awesome energy can be released. Industrial
focus so far has been on developing base-load generating stations
of up to 1,000MW capacity for continuous operation. Geothermal units
as small as 100kW are feasible, although the 1-5MW range is the
considered optimum for village and community operation.
|The Eastern Indonesia
Renewable Energy Development (EIRED) scheme consists of fifteen
run-of-river (no pondage) mini-hydro projects
Amoseas Indonesia, a Texaco-Chevron partnership, has developed the
world's richest geothermal dry-steam field in Indonesia. Geologically
stable, the Darajat oil reservoir lies above an ancient volcano
that erupted long ago. Close to the city of Bandung, West Java,
Darajat is situated on the edge of a mountain rainforest 6,000 feet
above sea level. Dry steam is delivered to two power plants. Darajat
I, owned and operated by PT.PLN, has an installed capacity of 55MW.
Commissioned in May 2000, Darajat II, owned and operated by Amoseas
CoGen, generates an additional 70MW, which is sold directly to PT.PLN's
The Darajat field's development has been optimised with innovative
drilling techniques, variable pressure steam control, and high-pressure,
high-efficiency steam turbines. Amoseas Indonesia will eventually
be able to realise the Darajat steamfield's full potential of over
400MW. Darajat's Well 21, the world's most powerful dry steam well
is two miles deep and just a few inches in diameter, to produce
40MW of clean electric power. Commissioned in 2000, 300MW Amoseas
Co-Gen is one of the most efficient power plants in Indonesia. Caltex
produces more than 700,000 barrels of oil daily from its Sumatran
fields. In the Enhanced Oil Recovery (EOR) process, high-pressure
steam is injected down to the formation, 1,000 metres deep, heating
and liquefying the heavy crude oil and allowing it to be pumped
to the surface. But EOR systems are expensive to operate, requiring
large investment. Of every million barrels pumped to the surface,
Caltex had been using over two hundred thousand barrels to make
the steam required for EOR. Thus the Amoseas CoGen plant is helping
Caltex to reduce fuel consumption by almost 5 million barrels a
Unocal, another leading geothermal energy producer, operates three
major geothermal power projects, Tiwi and Mak-Ban in the Philippines,
and the Gunung Salak field in Indonesia. Combined installed capacity
of the three is 1,100MW. Unocal began geothermal operations in Indonesia
in 1982 when a subsidiary, Unocal Geothermal of Indonesia, Ltd.
(UGI), signed a joint operations contract with Pertamina for geothermal
exploration and development at Gunung Salak, a promising prospect
about 100km south of Jakarta. UGI today produces geothermal steam
from the Gunung Salak field, to power 330MW of generating capacity.
Two 55MW geothermal power plants, owned and operated by PT. PLN
Persero went online in 1994 at Gunung Salak.
Four more 55MW units, three built and operated by UGI, and the fourth
owned and operated by PLN, entered commercial service in 1997. The
UGI plants will be transferred to PLN ownership after 15 years of
operation, and all four units will be supplied over their 30-year
project lives by UGI, on behalf of Pertamina.
In 1993, Pertamina and Unocal North Sumatra Geothermal, Ltd. (UNSG),
signed a joint operations contract for geothermal exploration in
the Sarulla contract area, a 970 square kilometer prospect, about
100km south of Medan, North Sumatra. In 1995, the partnership successfully
drilled a major discovery well that tested at the steam equivalent
of 23MW of electricity.
Subsequent exploration has indicated a high-temperature geothermal
resource at Sarulla with a potential to generate as much as 1,000MW.
Just across the Malacca strait from the Sarulla field is a potential
cross-border market in Malaysia's Kuala Lumpur-Klang Valley corridor.
World Bank support
Contact: Richard Mogg, Lanna Blue Bangkok, 53/64 Moo10 Soi Bangkru
Condo, Suksawat Road, Bangru, Prapadaeng 10130, Samutprakarn, Thailand.
In June 1998 the World Bank made a combined grant and soft loan
of US$94 million available to PT.PLN for a project to improve
mini-hydro and mini-geothermal implementation, and so bring renewable
energy into the mainstream.
The Eastern Indonesia Renewable Energy Development (EIRED) scheme
consists of fifteen run-of-river (no pondage) mini-hydro projects
(0.8-4.8MW range) with an aggregate installed capacity of about
31MW. At Ulumbu, Flores, in the island province of East Nusa Tenggara,
it includes a single 3MW mini-geothermal plant. Total cost of
the renewable energy scheme, hydro and geothermal, was assessed
to be approximately US$105 million, the balance to come from government
World Bank sources emphasise that the aim of the EIRED project
is to assist PT.PLN in developing renewable energy power projects
in remote areas - particularly outside of grid-served Java - that
are cost-competitive with conventional mini-grid generating options
such as diesel.
It will help mitigation of diesel reliance, too, to address Indonesia's
appalling atmospheric pollution problems. Project implementation,
the World Bank hopes, may address some of the current barriers
to renewable energy development.
But the EIRED project was put on-hold when crisis hit Indonesia.
While some interest remains to resuscitate it, according to the
World Bank's Jakarta office, the project does not appear in its
current lending programme.
There have been no recent major studies of the power supply-demand
situation in Indonesia, although some internal work was done in
preparation for a proposed Energy Sector Project.
At village and island levels throughout Indonesia, mini- and micro-hydropower,
solar energy and biomass renewable energy technologies need priority
as relatively easy, low-cost development projects.
Wind power is not considered suitable, although this view may
change once a detailed wind map has been completed.
The Ulumbu and similar projects, if they can be revived once the
country settles down to a new era of development, may herald a
new era for base-load and village geothermal power development
in Indonesia's turbulent Ring of Fire.
Tel: +66 2819 1830; firstname.lastname@example.org
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