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Indonesia: $5 billion in geothermal deals

April 28, 2010 at 10:16 AM   |   Comments

BALI, Indonesia, April 28 (UPI) -- Indonesia announced it signed $5 billion worth of geothermal energy deals as it serves as host for the World Geothermal Conference in Bali.

The deals coincide with the country's ambitious goal of generating 9,000 megawatts from geothermal sources by 2025, also announced Monday by Indonesian President Susilo Bambang Yudhoyono as he opened the conference, which was attended by representatives from 80 countries.

"It is my intention that Indonesia will become the (world's) largest user of geothermal energy," Yudhoyono said, noting that, although an estimated 40 percent of global geothermal power reserves are in Indonesia, the country is using only 1,100 megawatts -- 4.2 percent -- of its reserves.

In March the country's energy and mineral resources ministry revised Indonesia's geothermal potential to 28,100 megawatts, up from 27,000 megawatts a decade ago. That's equal to 12 billion barrels of oil.

Indonesia, Southeast Asia's largest economy, faces frequent power outages as the country's infrastructure has failed to keep up with growth. Its existing generating capacity is 30,500 megawatts, which represents a power deficit of 4,555 megawatts, data from state-owned power company PT Perusahaan Listrik Negara show.

Indonesia ranks third in terms of geothermal energy consumption, after the United States and the Philippines.

The world's third biggest emitter of greenhouse gases, Indonesia aims to cut emissions by 16 percent by 2025.

While the new agreements would help Indonesia to add about 1,340 megawatts of electricity generated from geothermal sources, edging the country closer to its aim of using 5,000 megawatts by 2014, they fall short of the Indonesian government's target of attracting around $12 billion in new investment for the geothermal sector.

Pri Agung Rakhmanto, an energy analyst at Reforminer Institute, told The Jakarta Globe that investors expect more assurance regarding the duration of contracts to be sure to recoup investments. Until that happens, he said, development of Indonesia's geothermal sector would continue to be sluggish.

For Indonesia to become a world leader in geothermal, said Jim Blackwell, Chevron's president of Asia-Pacific exploration and production, it needs to revise its legal and regulatory frameworks.

"There needs to be a stable legal and regulatory regime, which allows for long-term development rights, open markets created by long-term contracts and long-term prices with certainty of payment," Blackwell told the Globe.

An estimated 42 percent of Indonesia's potential geothermal reserves are in protected or conservation forests but Yudhoyono said the issue "has already been resolved," referring to recent regulations allowing geothermal wells to be drilled in such areas.

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