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2 June 2014

Indonesia announces worlds largest geothermal plant

Construction of the world largest geothermal power plant power will begin in Indonesia next month and the Sarulla project will cost around $1.6-billion, according to the country’s economic minister said on Wednesday.

Indonesia has the largest geothermal resources in the world and is aiming to meet energy capacity growth of more than 7 per cent a year.

Plans are in place to add 60 gigawatts of capacity to the country’s grid by 2022.

The government has planned to source 12 per cent of Indonesia’s energy from geothermal power by 2025 but the sector has struggled to attract sufficient investment due to complex regulations and difficulties securing project finance.

Coordinating Economic Minister Chairul Tanjung spoke to the media on Wednesday to confirm that the Sarulla project had reached financial closing and construction is expected to start next month.

The project was originally initiated in 1990 but ground to a halt during the Asian financial crisis in 1997.

Its first phase is expected to begin operation in 2016, with the next two phases to follow within 18 months.

The project is set to have a 330-MW capacity and is designed to provide clean power to an Indonesian grid dominated by fossil-fuel energy.

According to reports, the project is due for completion is 2018 and will reduce Indonesia’s annual carbon dioxide emissions by 1.3 million tonnes.

The Sarulla project is seen as a key breakthrough for Indonesia’s largely undeveloped 29 gigawatts of geothermal potential.

The institutions involved in financing the project are the Japan Bank for International Cooperation (JBIC), the Asian Development Bank (ADB), the Bank of Tokyo-Mitsubishi UFJ Ltd, ING Bank NV (a unit of ING Groep NV ), Societe Generale, Sumitomo Mitsui Banking Corportation, Mizuho Bank Ltd and National Australia Bank Ltd.

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