Geothermal development cost remains high in Indonesia

Muara Laboh geothermal plant, West Sumatra, Indonesia (source: Jacobs)

Domestic geothermal development is still hampered by the high investment required. To develop geothermal potential in Indonesia, US$4 million–US$5 million is needed to obtain 1 MW of power generation capacity. Of the estimated amount of investment required for the development of geothermal energy, drilling or drilling into stages the most cost. Vice Chairman of the Jakarta Drilling Society Ashadi said that the costs for the drilling stage reached 40 percent of the total investment required.

This condition finally makes the developers have to ensure that the geothermal potential at one point is very mature. In addition, the cost of geothermal development infrastructure costs around 10-15 percent of the total needs. Not to mention the cost of equipment to project management which is also included in the investment.

“Building 10 MW [in Indonesia] requires investment of approximately US$40 million. This is the previous data. However, with economic skills, of course the cost of manufacturing will be cheaper, which was previously US$4 million–US$5 million, it can be reduced to US$3–US$4 million per MW,” he said during a media training , this week. Meanwhile, Chairman of the Jakarta Drilling Society Yudi Hartono explained that drilling costs ranged from 30-60 percent of the total cost of geothermal projects. “It costs US$60,000–US$80,000 per day. The cost of drilling in each geothermal field can reach US$1.8 million–US$11 million,” he explained.

The high budget for the development of geothermal energy has also prompted the government to provide a number of incentives to accelerate investment in this new and renewable energy-based industry. One of them, namely government drilling , a program that is expected to reduce the risk of upstream drilling. The move is expected to attract investors to develop geothermal energy.

Source: Bisnis.com