Muara Laboh geothermal power plant to begin construction

Posted on: November 12th, 2014 by Relation Staff

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Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Mon, November 10 2014, 10:36 AM

Geothermal power plant developer PT Supreme Energy expects to commence the first stage of construction of its 220 megawatt (MW) Muara Laboh project in West Sumatra as early as next year while working on land-related issues in two other phases of development.

Supreme Energy president director Triharyo Indrawan Soesilo said the company expected to work on the first stage of development of 70 MW in the second quarter of next year. “The first stage is expected to finish 30 months after May, June or July of next year,” he added.

The company is currently negotiating and waiting to sign an agreement on electricity price from the geothermal plant with state electricity firm PT PLN.

Supreme Energy obtained approval from the government in 2008 to work on a pre-feasibility study on the potential of geothermal power plant development in Muara Laboh, which is located in South Solok Regency in West Sumatra. The concession covers about 62,300 hectares of land and is bordered by Kerinci Seblat National Park, according to the company’s website.

Supreme Energy — also working on geothermal projects Rantau Dedap and Rajabasa in South Sumatra and Lampung, respectively — began exploration works in the area in 2010. The company submitted a report on its explorations of six wells in September this year. Triharyo said his company had disbursed around US$130 million for the exploration works.

“We already have the figure for geothermal reserves and it is enough for us to seek funding from banks,” Triharyo said.

He added that the company would continue developing the second and third phase of the project after the first stage was completed.

“We have limitations with the second and third phases, in which we need to work in the Kerinci Seblat National Park area. The new Geothermal Law permits us to enter the national park, so further talks need to take place,” Triharyo said.

The House of Representatives recently passed the new Geothermal Law, which eliminates legal obstacles in the development of geothermal power plants.

Under a previous regulation, geothermal works were considered mining activities and therefore could not be performed in conservation areas, where geothermal potentials are mostly found.

Given its topography, Indonesia is estimated to have geothermal potentials of up to 29,000 MW. However, development has been stalled and only 1,341 MW geothermal power plants exist, particularly because of the conservation land issue.

The new law is expected to allow for the resumption of projects stalled on account of the conservation issue. However, it will take a few years for the law to be implemented and for its effects to be seen as the government needs to formulate further regulations to support the law, according to the director general for renewable energy at the Energy and Mineral Resources Ministry, Rida Mulyana.

“While pursuing the regulations to implement the law, we are working with stalled geothermal plants and are making developers obtain power purchase agreements. We expect drillings to resume and if all goes well, we’ll see many geothermal plants finished in the 2018 to 2022 period,” Rida said.