P0WER-MIX POLICY AND CLIMATE CHANGE

MITIGATION USING OPTIMUM

GEOTHERMAL DEVELOPMENT
By: Udibowo Ciptomulyono
Ret. Principal Engineer Grade I PLN, Ret. President Commissioner
PT PLN Geothermal, subsidiary of
State Owned Electricity Corporation Ltd. (PLN), Researcher at Research Insitute for
Humanity and Nature (RIHN), Kyoto
Mobile : + 628158365886
Email: udibowo@gmail.com
Http: www.plngeo.com

Pelatihan Dasar Desain Teknis Power Plant Geothermal, 27 Oktober 2015

The utilization of renewable energy reduces Green House Gases (GHG)

emission and climate change mitigation, United Nations Framework and
Climate Change Convention (UNFCCC), a legal framework of UN mandates the
Parties to start process of stabilizing green house gases in the atmosphere.
With 450 Scenario (UN-Climate goal) demanded that in 2035 stabilizing green
house gases at 450 ppm (CO2 equivalents under 20C), therefore all fuel subsidy
should be abolished, and USD 312 billions should be spent on carbon
extensive development.
While New Policy Scenario (NPS) 2010 (G20 agreements), between 2008-2035
world energy demand will rise by 36%, however based on 2011 scenario,
post Fukushima, nuclear is facing uncertainty, and MENA turmoil raised
questions about regions investment plans. Natural Gas & Renewable become
increasingly important.
2012 scenario indicated that CO2 emissions at record high, while renewable
industry under strain, in the contrary fossil fuel subsidies up almost 30% to
USD 523 billion in 2011, led by MENA and 1.3 billion people still luck of
electricity.
Furthermore 2013 scenario renewed focus on energy efficiency, CO2 emissions
continue to rise, fossil-fuel subsidies increases to USD 544 billion in 2012,
while in 2014 indicates that nuclear power can play a role in energy security
and carbon abatement but financial and public concerns are key issues.
Energy demand of Indonesia pose greater challenge in future, environmental
sustainability is already at risk, development of abundant renewable energy of
geothermal is the key solution.
Indonesia is committed to making a significant contribution to limiting global
green house gas emission with its target of 26 41% compared to business as
usual by 2020 and establishing Energy Policy Direction of Vision 25/25, by
2025, the portion of energy mix of geothermal will be 25% (about 12,000 MW).

The World Energy Outlook 2010: the

450 Scenario and other estimates
450 Scenario (UN-CLIMATE GOAL <20 Stabilizing atmospheric
greenhouse gases at 450 ppm CO2 equivalents).
These are the requirements for the 450 Scenario:
Oil demand peaks just before 2020 at 88,000,000 barrels per day and declines to 81,000,000 in
2035
Coal demand should also peak before 2020
Gas demand should peak before 2030
Renewable and nuclear double combined share to 38% in 2035
Therefore:
All fossil fuel subsidies should be abolished, fast
The freed 312,000,000,000 dollars per year should be spent on carbon extensive development,
because:
Due to the lack of ambition in Copenhagen and the consequential policy delays the cost of
reaching the 2 degree target has risen to 1 trillion dollars (these are of course all to be seen as
economic investments as well, not as damage)

New Policy Scenario (G20 agreements)

Between 2008 and 2035 world energy consumption will rise by 36 percent
Of that world energy rise also 36 percent can be attributed to increased consumption in China
Oil remains the leading fuel in the energy mix of 2035
Oil demand grows from 84,000,000 barrels per day in 2009 to 99,000,000 barrels per day in 2035
Oil price will accordingly rise from 60 to 113 dollars per barrel
05/13/16

ADVANTAGES OF GEOTHERMAL ENERGY

Indigenous Energy
Clean Energy
Diversity Of Use
Long Term Resource Potential
Flexible System Sizing
Modularity
Power Plant Longevity
High Availability
Combined Use
Low Operating and Maintenance Cost

05/13/16

17

05/13/16

18

Sumur
produksi
Sumur
injeksi

SKEMA MODEL PENGUSAHAAN PANAS BUMI

05/13/16

19

05/13/16

20

05/13/16

21

05/13/16

22

Indonesias Energy and Environmental Challenge

ENERGY DEMAND POSE GREATER CHALLENGE IN FUTURE

Rapidly Rising Energy Demand (especially due to expanding economy)
Poor Energy Mix and Security Issues
Significant expansion of coal based power generation (including recent proposal for an additional
10,000 MW)
ENVIRONMENTAL SUSTAINABILITY IS ALREADY AT RISK
3rd Largest GHG Emitter of Developing Countries in Region
Fast rising rate of GHG Emissions

ENERGY POTENTIAL OF INDONESIA

NO

RENEWABLE ENERGY

RESOURCES

INSTALLED
CAPACITY

RATIO IC/RS
(%)

5 = 4/3

Hydro

75,670 MW

5,705.29 MW

7.54

Geothermal

29,038 MW

1,189 MW

4.00

Mini/Micro Hydro

769.69 MW

217.89 MW

28.31

Biomass

49,810 MW

1,618.40 MW

3.25

Solar

4.80 kWh/m2/day

13.5 MW

Wind

3 6 m/s

1.87 MW

Uranium

3.000 MW
(eq. 24,112 ton) for 11 years*)

30 MW

1.00

No

FOSSIL

RESOUR
CES

CAPACITY

RATIO
RS/CP
(%)

PRODUCTIO
N
(PROD)

RATIO
CAP/PROD
(YEARLY)*)

5 = 4/3

7 = 4/6

Oil (bill barrel)

56.6

7.99 **)

14

0.346

23

Natural gas (TSCF)

334.5

159.64

51

2.9

55

Coal (bill ton)

104.8

20.98

18

0.254

83

Coal Bed Methane/CBM (TSCF)

453

FLOWCHART FOR GEOTHERMAL DEVELOPMENT

Potential/ Geothermal
Stadium Potential

Authority

Ministry
ESDM

(S-0)
Peta
Potensi

OPERATION STADIUM (S-X)

Preliminary
Survey

Decision
WKP

(S-1)
Survey
Budget
(APBN)

(S-2)
report

Evaluation

WKP

Tendering
WKP

Issuing
IUP

Tendering
Report

Price

Explr

(S-3)

(S-4)

(S-5)

(S-6)

(S-7)

IUP-N

WKP-N
(S3-N)

(S4-N)

Winner

Local
Prov.

Survey
Budget
(APBD)

Local
Kab./
Kota

Survey
Budget
(APBD)

Entity

PLN

WKP-P

IUP-P

(S3-P)
Winner

(S4-P)

IUP-K

WKP-K
(S3-K)

(S4-K)

Winner

Assignment
Others

Assignment
PPA

FS
(S-8)

Explt

Operation

(S-9)

(S-10)

OPERATION FLOW CHART GEOTHERMAL DEVELOPMENT

Local Prov/Kab-Kota

KESDM

REGULATOR

WKP

PRICE *)

WINNER

REKOMENDATION

IUP HOLDER

PRICE APPROVAL

PRICE
APPROVAL *)

Local Approval
PEMDA

Yes
FORREST?

Forestry Approval

No
EXPLORATION

FORREST?

Yes

Forestry Approval

No
EXPLOITATION
*) problem priority

Off Taker (PLN)

Pre Preliminary Survey

TENDERING
WKP

ENTITY

Authority

STEAM

Note :
If in the Forrest Area

Off Taker

FISCAL INCENTIVE FOR GEOTHERMAL

1. PP No. 62/2008 jo. No. 1 / 2007

2.
3.
4.
5.

6.

Net - revenue subtractions 30% from Total Investment,

charged
6 years at 5 % yearly.
Tax charged paid to foreign tax subject at 10%, or less
recording to double tax avoidance agreement.
Loss compensation for more than 5 - 10 years.
No. 177/PMK/011/2007 for free tax for upstream goods of oil gas and geothermal.
No. 021/PMK.011/2011 for facility incentive customs tax for
renewable energy utilization.
No. 22/PMK/011/2011 free added - value tax (subject to GoI)
of import goods for exploration of oil - gas and geothermal
in 2011.
No. 139/PMK.011/2011 for Government Guarantee to PLN for
renewable energy, coal and gas IPP as substitution of PMK No.
77/2011 about Government Guarantee after COD, have not
accommodated guarantee for upstream activity, feasibility
study and Government Force Majeure.
No. 03/PMK.011/2012, Revolving fund allocation for
exploration and feasibility study of geothermal, risk sharing.

New Addition of Generation Capacity for Indonesia

8.643

Total : 55.484 MW
6.607 6.565

6.248
5.490 5.596
4.586

4.985

4.156

2.608

COAL

GEOTHERMAL

GAS /CC

GAS/OC

FUEL OIL

HYDRO

FUEL MIX INDONESIA 2010-2019

Nucle Coal
ar

Geothermal in Energy Mix 6% (2010) and 13% (2019).

According to PLN Planning 2010 - 2019 additional geothermal
will be 5,990 MW.

Geothermal Provides Good Option for Improving Base Load Power Mix

ENERGY SECURITY BY UTILISING AN ABUNDANT NATIONAL RESOURCES

Enhance energy security by exploiting

dependable indigenous (non-tradable) resource

ENVIRONMENT BENEFITS OF UTILIZNG A CLEAN ENERGY SOURCE

Reduction in local pollutants (TSP, NOX, SO2)

Reduction in Green House Gases (GHG)

HEDGE AGAINST VOLATILE PRICES FOR FOSSIL-FUELS

Geothermal fuel price does not fluctuate

unlike fossil fuels, providing a natural hedge in
managing Indonesias energy mix portfolio

Distribution Map of
Geothermal

Recent Geothermal; Fields

Development

Present Geothermal
Installation

Present Geothermal
Installation

2 WKP di Prov.
NAD
Jaboi
Seulawah Agam

45 WILAYAH KERJA PANAS BUMI

4 WKP di Prov.
SUMUT
Gn. Sibayak
Sinabung
Gn. Sibual Buali
Sipaholon Ria-ria
Sorik Marapi Roburan - Sampuraga
1 WKP di
Prov. JAMBI
Sungai
Penuh

2 WKP di
Prov. SUMSEL
Lumut Balai
Rantau Dedap

1 WKP di
Prov.
SULTENG
Marana

1 WKP di
Prov.
GORONTALO
Suwawa

2 WKP di Prov.
SULUT
Kotamobagu
Lahendong-Tompaso
2 WKP di
Prov. MALUT
Jailolo
Songa Wayaua

1 WKP
di Prov.
MALUKU
Tulehu

Ket:

Terpasang

ARBITRASE AWARD UNCITRAL (4 MAY 1999)

Contract
Claimants
Responded
Award

:
:
:
:

ESC (Art.8 Consultation and Arbitration)

HCE and PPL
PLN
PLN total Lost (unanimous)
Dieng :

Patuha :

damnum emergens USD 273.757.306

lucrum cessans USD 117.244.000
cost USD 722.846 (art. 38 UNCITRAL)
damnum emergens USD 154.907.856
lucrum cessans USD 24.592.000
cost USD 722.846 (art. 38 UNCITRAL)

AWARD ARBITRASE UNCITRAL (6 JUNE1999)

Contract
Claimants
Responded
Award
CLAIMS
PERTAMINA
GOI

:
:
:
:

ESC (Approval letter of Ministry of Energy Mineral Resources and Ministry of Finance)
HCE and PPL
RI
RI lost similar as for PLN

:
- to sue HCE and PPLN for not involving in the Arbitration against PLN
- to register not to accept Arbitration Award to the Court
:
- to refuse Arbitration II in Den Haag
- to demand that court in Den Haag should block Arbitration Panel
- the demand has been refused, Proceeding Arbitration still in progress
50

51

GEOTHERMAL DEVELOPMENT
REGULATION

RI
PERTAMINA

HCE

PERTAMINA

Filed Suit

Refuse

J
O
C

J
O
C

Awar
ds

Deni
ed

Settl
ed

no

???

PLN

PLN

PERTAMINA
MoME

pay

PPL

S
u
e

MoF

E
S
C

USA

OPIC
PLN
Defa
ult

President Decree No.45/1991

President Decree No.49/1991

HCE

Suspende
d

PPL

Civil
Court

Claimi
ng

Settl
ed

UNCITRAL
Arbitration

pay
Awar
ds

Dieng : - damnun emergens

USD 273.757.306
- lucrum cessans
no
USD 117.244.000
- charge USD 722.846
(ART.38 UNCITRAL)

Patuha : - damnum emergens

USD 154.907.846
- lucrum cessans
USD 24.952.000
- charge USD 722.856
(ART. 38 UNCITRAL)

Security
Interest USD
573 mills

OPIC

USA
USD 290 mills

S
ue

UNCITRAL
ARBITRATION

Moti
on

S
u
e

P
ari
s
Cl
ub

RI

Global
Settlem
ent

settled
?

Lenders
USD 144
mills

Recommissioning
Subsidiary company
New units
Liquidation

GLOBAL
SETTLEMENT

52

CONCLUSION
Energy

security
by
utilizing
an
abundant national resources
Environment benefit and green energy
goals by utilizing a clean energy source
Geothermal
Energy Hedge against
volatile prices for fossil fuels
Base on 55 MW model requires USD 36
bills for geothermal investment
PLN apply fixed system planning for
geothermal development
Must-run for geothermal operation