Sarulla Geothermal Power Project, Indonesia
The Sarulla Geothermal Power Project is located in the Tapanuli Utara district, in North Sumatra province, Indonesia. It is the largest single-contract geothermal power project to date. It is owned and will be operated by a consortium of Medco-Ormat-Itochu-Kyushu.
The consortium includes PT Medco Energi International (27.5%), US based Ormat Technologies (12.75%), Japan based Itochu (25%) and Kyushu Electric (25%). It has a joint operating contract (JOC) with the concession holder Pertamina Geothermal Energy (PGE), a subsidiary of the state-owned oil and gas company PT Pertamina.
The Sarulla Geothermal Power Plant will have an installed capacity of 330MW which will be constructed in three phases of 110MW each. Phase 1 is scheduled to become operational within 30 months of the financial closure which is expected to be one year after the signing of the Energy Sales Contract (ESC). The remaining phases will become operational in stages of 18 months after the commissioning of Phase 1.
The entire plant is to be completed in five years. It is one of the private power plants under the second round of 10,000MW programme announced in 2004 by PLN.
Indonesia is trying to cut the consumption of crude oil and is looking for alternative sources of energy.
It has the potential to produce 27,000MW of electricity from geothermal sources but has not been able to achieve this fully due to the current high cost of geothermal energy.
The estimated cost of the project is $1bn, most of which is expected to be financed by Japan Bank for International Corporation (JBIC).
JBIC and the Indonesian Ministry of Finance have reached a mutual agreement regarding the financing. The project will also receive financial backing from Asian Development Bank (ADB).
The Sarulla Geothermal Power plant was first considered in 2005. PT Geo Dipa Energi, a company jointly owned by PLN and PT Pertamina was awarded the contract to build the plant. However, the construction did not take place due to the purchase price dispute between the consortium and the PLN.
PLN had previously agreed to pay $4.64 per KWh for electricity purchased from the plant but the consortium was insisting on a higher price due to increase in the cost of construction by $200m. After long negotiations the deal was finally signed in April 2010 for $6.79 per KWh for a period of 30 years.
The new ESC allows the consortium to pay high tariffs in the early years of commercial operation. The tariff will be gradually reduced in later years. The parties to the contract have also agreed for a 90 day schedule to resolve other contractual issues to facilitate the financing and signing the revised ESC.
The ESC is not yet finalised and is subject to verification by the state audit agency. It is also pending approval from the Ministry of Energy and Mineral Resources.
Sarulla plant details
The plant will be fuelled by two steam production and injection reservoirs –Silangkitang and Namora-I. The first unit will be constructed at Silangkitang and the other two units at Namora-I.
The plant will use Ormat's Geothermal Combined Cycle Units (GCCU) which are more efficient than conventional steam power plants.
The GCCU will capture the steam from the wells and produce energy throughout the day without any interruptions.
The geothermal fluid will be re-injected in the underground wells to avoid depletion of gases.
The steam from the plant will not be released into the atmosphere, but will be released back into the ground to ensure the sustainability of the well.
The power from Silangkitang will be transmitted to a substation at Namora-I via a 20km long, 150kV transmission line. This will be the interface point where PLN will construct a new transmission line to transmit power to the national grid.
Indonesian power market
Indonesia depends largely on oil to produce electricity. As of 2009, around 45.1% of energy was produced by oil, while gas constituted 26.7%, coal 24% and hydro electricity 2.3%.
Efforts to reduce dependence on the oil are underway. Since 2003, the government has negotiated with 26 independent power projects. Indonesia is already facing an electricity crisis and blackouts in regions such as Java.
Plans to end PLN's monopoly by 2012 are underway, so that private companies can sell the power directly to consumers. However they will have to continue to use PLN's transmission network.