Sonal Patel reports that the vast Southeast Asian archipelago of Indonesia with more than 17,500 islands straddling the equator, has become an established and crucial player in the world’s energy markets. Although endowed with some of the world’s largest reserves of fossil fuels, the country with the world’s fourth-largest population direly lacks sufficient power supplies needed to boost a surging economy, a feat that is compounded by its geographic complexity.
While per capita power consumption has risen rapidly in recent years, so has the electrification ratio, boosted by the country’s determination to meet an electrification target of 99.7% by 2025. In late 2014, the government also launched an ambitious target to build 35 GW of new capacity by 2019, but experts contend numerous challenges may prevent the nation from meeting it, the most glaring of which concern management of new-build development, uncertainties related to cost-reflective tariffs, and its already strained existing infrastructure. (For an in-depth look at the country’s challenges, see: “Indonesia: Energy Rich and Electricity Poor” in POWER’s July 2013 issue and online at powermag.com.)
At the same time, an energy security crisis looms in Indonesia’s near future, owing to the ongoing depletion of its abundant reserves of oil, natural gas, and coal. That’s one reason the government has shifted its emphasis to renewables, which could offer twin benefits of low costs and environmental mitigation. The government has called for hydropower, geothermal, biomass, solar, wind, and ocean power to make up 23% of its energy mix by 2025, more than doubling its current share of 10%.
Since 2004, it has worked specifically to boost its geothermal capacity from the current 1.6 GW to 7.2 GW by 2025, allocating trillions of Indonesian rupiahs in subsidies to support risk mitigation for geothermal exploration drilling and building capacity. For the government, the investment in geothermal is sound because the country harbors a geothermal potential of about 27 GW—roughly 40% of the world’s known reserves—and it is one of the best options to provide a baseload response to the fast-growing energy demand. The country’s geothermal power experience got its start in 1983, and capacity has been added via expansions at most of its existing plants, which were built before 2000. Yet in terms of new greenfield developments—which tend to carry greater risks—only the three-unit Sarulla geothermal project has achieved financial closure over the last decade.
But Sarulla’s development hasn’t been easy, and it has taken decades to achieve. Exploration at the Sarulla geothermal field in Tapanuli Utara District, North Sumatra province—a site about 350 kilometers to the south of Medan, the country’s fourth-largest city—began in 1987, spearheaded by Indonesian state-owned oil and gas firm PETRAMINA. The company identified several high-temperature prospects in the greater Sarulla area, within a tectonic graben associated with strands of the Great Sumatra Fault Zone. Between 1994 and 1998—when the Asian financial crisis stalled development—Unocal (now a Chevron subsidiary) drilled a total of 13 deep exploration wells into three prospects, one at the Silangkitang (SIL) field and two at the Namora-I-Langit (NIL) field. The discovery amounted to about 330 MW. All wells reportedly produced fluids with temperatures of more than 260C and up to 276C.