Minkatsu-Tohoku Denryoku-Dien.pdf

8/10/2019 Minkatsu-Tohoku Denryoku-Dien.pdf

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List of Contents

Executive Summary s1

Chapter 1 The purpose of survey and overview

1.1 The background of survey 1

1.2 The purpose of survey 2

1.3 Survey summary 3

Chapter 2 The present situation of the Dieng geothermal power plant

2.1 Overview of the surveyed site 4

2.2 Actual state of the power plant 6

Chapter 3 The present situation of scale and assumed causes

3.1 The present situation of scale 9

3.2 Assumed cause of scale

3.2.1 Assumed cause of turbine scale 10

3.2.2 Assumed causes of scale in wells 11

Chapter 4 Study for Optimum O&M

4.1 A measure for scale in steam turbines

4.1.1 Our specific approaches to the problem 14

4.1.2 Application to the Dieng geothermal power plant 17

4.2 Measures for scale in wells

4.2.1 A way to prevent scale from clinging 21

4.2.2 A way to remove scale 24

4.2.3 Application to the Dieng geothermal power plant 26

4.3 High efficiency operation of Cooling tower 26

Chapter 5 CDM feasibility study

5.1 Information related to CDM in Indonesia 28

5.2 Related agencies and a trend of capacity building 32

5.3 The CDM projects applied to the DNA 32

5.4 Possibilities of geothermal power generation projects for CDM 33


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Chapter 6 Study for the possibility of participation in geothermal power generation

6.1 Energy conditions in Indonesia

6.1.1 Overall conditions 34

6.1.2 Energy situation and policies 34

6.2 Extension plan for the Dieng geothermal power plant

6.2.1 A development schedule 37

6.2.2 Project Participants 38

6.2.3 Project Contractual Relationship 39

6.2.4 Evaluation profitability of the project 40

6.2.5 Possibility of participation in the project 45

6.3 Geothermal development plan in the Sarulla region

6.3.1 Overview 46

6.3.2 Development plan 47

6.3.3 Development structure 47

6.3.4 Possibility of participation in the project 48

Chapter 7 Conclusion

7.1 Measures for scale and the optimum O&M 49

7.2 Possibility of CDM projects 49

7.3 Possibility of participation in geothermal power generation 50

7.4 Suggestions 51

APPENDIX

Calculation sheet


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LIST OF FIGURES AND TABLES

Fig.2-1-1 A location map

Fig.2-1-2 Whole view of the Dieng Plateau

Fig.2-1-3 A fumarole

Fig.2-1-4 Buddhism remains (1)

Fig.2-1-5 Buddhism remains (2)

Fig.2-2-1 Panorama of the Dieng geothermal power plant

Fig.2-2-2 The office of geothermal power plant

Fig.3-1-1 Silica scale of injection pipe in the initial phase of the commercial operation (1)

Fig.3-1-2 Silica scale of injection pipe in the initial phase of the commercial operation(2)

Fig.3-2-1-1 Scaling at the turbine nozzle

Fig.3-2-2-1 The solubility curb of amorphous silica

Fig.3-2-2-2 The image of scaling (1)

Fig.3-2-2-3 The image of scaling (2)

Fig.4-1-1 The turbine-washing equipment

Fig.4-1-2 Steam temperature at the surface of nozzle

Metal temperature at the surface of nozzle

Fig.4-1-3 Scaling point on the nozzle

Table 4-1-1 The opening angle of governing valves during water injection

Fig.4-1-4 Turbine inlet pressure

Fig.4-1-5 The opening angle of governing valves

Fig.4-1-6 Condenser Vacuum

Fig.4-2-1-1 The image of the way of well water injection

Fig.4-2-1-2 The water injection equipment


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Table 4-2-2-1A table of comparison with 2,000m class production well

Fig.4-2-2-1 Work scenery by Coiled Tubing

Fig.4-2-2-2 Coiled Tubing

Fig.4-3-1 Relations between the number of operating cooling fan and condenser vacuum

Fig.4-3-2 Relations between condenser vacuum and output correction coefficient

Fig.5-2-1 Approval process flowchart

Fig.6-2-1-1 A location map of Dieng and Patuha area

Table 6-2-1-1A development schedule

Fig.6-2-2-1 Project Participants

Fig.6-2-3-1 Project Contractual Relationship

Fig.6-2-4-1 Sensitivity analysis with the number of Makeup wells

Fig.6-2-4-2 Sensitivity analysis with Decline rate

Fig.6-2-4-3 Sensitivity analysis with Makeup well steam flow rate

Fig.6-3-1-1 A location map of Sarulla area


Fig.6-3-3-1 Project Participants

Fig.7-4-1 Project

Flow


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Abbreviation

ASEAN Association of Southeast Asian Nations

BOT Build, Operate, Transfer

CDM Clean Development Mechanism

CER Certified Emission Reduction

CRT Cathode Ray Tube

GDP Gross Domestic Product

IEA International Energy Agency

IPP Independent Power Producer

IRR Internal Rate of Return

JI Joint Implementation

JV Joint Venture

LNG Liquefied Natural Gas

NGO Non-Governmental Organization

NPV Net Present Value

O&M Operation & Maintenance

PPA Power Purchase Agreement

wt% Weight %


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This work was subsidized by the Japan Keirin Association through its

Promotion funds from KEIRIN RACE.


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S-1

xecutive Summary

Overview of the Dieng geothermal power plant

Surveys of geothermal resources on the Dieng Plateau started from 1970s. From 1985 to1991, a geothermal power plant program(55MW2) was established using the ADB fund.

In 1994, California Energy InternationalCEIin the US led JV signed a contract for theconstruction of the Dieng geothermal power plant( 4 ,150MW by 2001 ), andNo.1(60MW)was completed in 1998. Although 45 wells confirmed the potential for 350MW,the construction of No.2, 3, 4 was postponed following the Asian financial crisis. Then,Mid-American purchased CEI. After the intervention of an American investmentinsurance company (OPIC), GEODIPA, a joint venture between the PLN and Pertaminaobtained the ownership of the Dieng geothermal power plant in August 2001.

Summary of survey results

(1) The present situation of scaleResearch and analyses were carries out to understand

the extent, the components, and the mechanism of thesilica and where it actually located at the Dienggeothermal power plant. The results confirmed that thesilica scale precipitates in the wells because of flush. Dueto this scale problem, the plant operates at around42MW although the rated output is 60MW. At present,injection of chemicals is being examined to address theproblem and the plant is developing effective chemicals.

The Dieng geothermal ower plant

Yogyakarta

calcium carbonatecomponents

flush in the wellmixture of fluidsvarying in pHmechanism

wellextent pipe turbine

silica

Fig.3The possibility and actual situation of each item

calcium carbonatecomponents

flush in the wellmixture of fluidsvarying in pHmechanism

wellextent pipe turbine

silica

Fig.3The possibility and actual situation of each item

Fig.1Location Map

Fig.2Participants and Panoramaof the Dieng geothermal power plant

Scaling

Flush point

Fluid Fluid

Ground

Well

Fig.4The image of scaling

Pertamina National oil

company

National electric

company

Dieng geothermal power plant

Joint-Venture67% 33%

PT GEO DIPA


company

National electric

company

Dieng geothermal power plant

Joint-Venture67% 33%

PT GEO DIPA


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S-2

Sensitivity analysis with the number of Makeup wells Output

Decline rate:5%Makeup well steam flow rate:45t/h

50

60

70

80

90

100

110

120

5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 17.00%

Discount rate

million$

7 New Wells Maintain steam

3 New Wells

No New Wells

(2) Study for Optimum O&MAs an optimum O&M measure for the scale, the Dieng geothermal power plant is

considering injecting chemicals, however even if effective chemicals are developed, the costmatters. With this in mind, Tohoku Electric Power Co. is planning to inject clean water toprevent scale from occurring in its jurisdiction. If this proves effective, we can offer epoch-making technical cooperation to the plant.

In addition, though it is yet posing a serious consequence, considering components of thesilica at the Ding geothermal power plant, silica scale in turbines might become a seriousproblem. In this case, our proven turbine washing equipment could be of great help.

(3) Extension plan for the Dieng geothermal power plantAt present, the extension plan is under way

at the Dieng geothermal power plant. Underthe plan, No.2 will start commercialoperations in 2008 and No.2 will be put intooperations in 2009. This is a large-scaleextension plan to construct 5 geothermalpower stations with the rated output of300MW in the Dieng geothermal power

plant as well as Patuha region close toBundung, far from the Dieng plant.

Both Dieng and Patuha regions havesufficient geothermal resources. There seems to be no problem in terms of technology, but

the plan is delayed because it is difficult to finance huge project cost (500 million $).Taking into account additional plants at the Dieng geothermal power plant, we calculated

the IRR setting the constriction cost per unit at about 100 million $. In this case, the IRR isalmost the same as the risk free rate (6.85%). Furthermore, generated CO2credits will notbe relatively low considering the amount of non- condensed gas, so our participation in thisplan is considered to be difficult.

(4) Geothermal development plan in the Sarrula region

Since this plan is expected to generate about700,000 CO2 t/year, we also conducted thesurvey. In the Sarrua region, 3 geothermalsites are confirmed and 300MW of electricitycan be generated over a period of 30 years.Inaddition, No.1 of Silangkitang, which will bedeveloped first in this region, has alreadyconfirmed sufficient steam(50MW) and theconstruction can be carried out with low riskand at low price.It is desirable to carry out adetailed survey for the CDM, including theCO2Emission Potential in the Sumatra Islandand the resource evaluation. If attractivenessof the plan is quantified through the survey,our more active participation can be expected.

LGTank

Condensate water

Controlpanel

Injection pump

Injection pump

Injection unit

Rewind drum

Coil tube

INCOLOY 825

Lubricator

Tip nozzle

LGTank

Condensate water

Controlpanel

Injection pump

Injection pump

Injection unit

Rewind drum

Coil tube

INCOLOY 825

Lubricator

Tip nozzle

FX-233

MainSteamSystem

Turbine Exhaust

System

irculating

Water System

Water Injection Equipment System

Nozzle

Water Injection Pump

irculating

Water Pump

Jet

ondenser

Generatorurbine

alorimeter

To Flash Steam ooler

Governing Valve

Main Stop Valve

To Turbine Ground

Electromagnetic

Flowmeter

Scale

Separator

from

Production

Wells

Strainer

To ooling

Tower

Fig.6The turbine-washing equipmentFig.5The water injection equipment

Sarulla area

Medan

Namora-I-Langit(65MW3)

Silangkitang(50MW2)

Eastern Sibualbuali

Sarulla area

Medan

Namora-I-Langit(65MW3)

Silangkitang(50MW2)

Eastern Sibualbuali

Fig.7Sensitivity analysis with the number of Makeup wells

Fig.8A location map of Sarulla area


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Chapter 1 The purpose of survey and overview

1.1 The background of survey

Although electricity demand in Indonesia was stagnant following the Asian financial

crisis in 1997 and the following plunge of the rupiah, it grew by 9.3% from 1999 to 2001.

Demand is expected to grow by an estimated 7% and according to an estimate by the

IEA, it will reach 300,000GWh by 2020. However, the massive debt(about 45trrion

Rp.).precludes the PLNAn electricity public corporation from raising sufficient funds

to develop the necessary new power sources to meet such demand In 2003, as the power

supply reserves declined to 5-10%, there are concerns of a serious power shortage

around Jakarta. In addition, in order to promote investment in power production, the

government has imposed considerably higher electricity charges. With several hikes,

the electricity rates in Rp. have approximately tripled compared to what they were at

the times of the financial crisis. Repeated rate hikes have triggered demonstrations,

riots and oppression in industry, which have had a serious effect on the national

economy and the lives of the Indonesian citizen.

To deal with the drastic increase in electricity demand, the Indonesian government

drew up policy of securing supplies by opening up the electricity sector to private

enterprise. As a result, many foreign companies started to participate in the IPP project,

however the 1997 financial crisis resulted in the suspension of a lot of projects. Since

2001, negotiations aiming to reduce costs of power purchases of the PLN have been

resumed in an effort to rekindle interest in the many projects, which remain incomplete.

If the PLN depends solely on its own funds, it will be impossible for the PLN to improve

the installed capacity corresponding to the growing power demand, so active private

investment is necessary.

Indonesia is rich in geothermal resources and at present, it accounts for about 2.5% of

the total installed capacity. However, while geothermal resources offer the potential for

20, 000MW of electricity, only 4% (787MW) has been developed in the past 20 years.

Furthermore, in the 1990s, together with other IPP projects, contracts for geothermal

development projects that amount to 3,417MW were signed, but 7 of them were

suspended because of the financial crisis. Although negotiations for re-starting these

projects are under way, little progress has been made.


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The project plant, the Dieng geothermal power plant, is located on the Dieng Plateau

in central Java The Dieng Plateau is a volcanic region where eruptions, steam

explosions and eruptions of volcanic gas have caused a great deal of damage over thecourse of history. Volcanic activity remains active as can be seen by the recent eruption

of hot mud in1993 and a steam explosion and a volcanic earthquake in 1998.

When it comes to the exploitation of geothermal resources on the Dieng Plateau,

various surveys have been conducted since the 1970s. From 1985 to 1991, a survey

regarding the construction of the Dieng geothermal power plant was carried out

primarily by the PNL with the ADB, and a power generation program constructing

55MW2 was established. In December 1994, California Energy International in the

US (CEI)-led JV signed a contract for the construction of the Dieng geothermal power

plant, which is committed to build 150MW by 2001 at a cost of US $192 million. Under

the plan, 4 plants were supposed to be constructed, but after the completion of No1

(60MW) in 1998, the construction and the exploration activity for No.2 was postponed.

At that time, 48 wells had been drilled, and the project organizer confirmed that the

potential was 350MW. After that, a US firm, Mid-American, purchased CEI, but an

American investment insurance company (OPIC) intervened and mediated when the

project came to a deadlock. Consequently, the ownership was shifted to the Indonesian

government(PT GEO DIPA , a joint venture between the PLN and Pertamina).

During those years, No.1 also temporary stopped operation, but resumed operations

again. The geothermal resources of the plant contain a lot of Si in steam, making scales

cling to steam production wells, steam tubes and steam turbines. As a consequence, at

present, it only generates 40MW of electricity compared to the expected 60MW output.

Despite there have been several measures taken, such as the injection of acid (which is

also done in Japan) none have been effective in solving the problem. Agency for the

assessment and application of technology(BPPT) asked Tohoku Electric Power Co. Incto examine the scale problem in the plant through its overseas projects.

1.2 The purpose of survey

The purpose of this survey is to understand the extent of the scale problem n the Dieng

geothermal power plant and its causes and to provide a basis for a detailed examination,

which will lead to setting up appropriate countermeasures.


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I also interviewed local people concerning PT GEO DIPA, the project entity, and

collected information about the possibility of our participation in the O&M project, the

matter of participation, and the possibility of capital contribution for the extension planand the necessary procedures which will accompany it.

1.3 Survey summary

This survey covers the following items.

(1) Collection of information regarding the project

(2) Brief survey of the extent of the scale problem and its causes

(3) Current scale prevention and its effects

(4) Survey of actual O&M activities

(5) The actual state of the CDM in Indonesia

(6) The geothermal power plant development plan and research on the possibility of

capital contribution


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Chapter 2 The present situation of the Dieng geothermal power plant

2.1 Overview of the surveyed site

The Dieng geothermal power plant is located on the Dieng Plateau, about 80km north

west of Yogyakarta, an ancient city of Indonesia. Dieng came from Di Hyang in

Sanskrit, which means the place where gods live. As the name suggests, there are a lot

of Buddhist ruins in the area.

The Dieng Plateau is situated 2,000m above sea level. It is dotted with lakes created

by volcanic activity and geysers emitting steam, which smells of sulfur. It is well known

as a tourist destination together with Buddhist ruins.

The Dieng geothermal power plant

Yogyakarta

Fig.2-1-1Location Map


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Fig.2-1-2Whole view of the Dieng Plateau

Fig.2-1-3A fumarole Fig.2-1-4

Buddhism remains (1)

Fig.2-1-5

Buddhism remains (2)


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2.2 Actual state of the power plant

The office of the Dieng geothermal power plant is located in Dieng town, about 15

minutes drive from the power plant. The plant general manager works at the office with

a number of employees. Five employees are always stationed at the plant and are

engaged in operation control and patrolling of the steam production facilities and the

generating facilities.

The central control room, which consists of a Electric panel and 2 CRT, is very simple.

A steam turbine, which is a secondhand outdoor type manufactured by Ansaldo in Italy,

was used in Africa before. This reducing the financial costs was a consideration at the

time of the construction.

Indonesian law requires a pre-service inspection before using the power plant, but

once commercial operation starts, the law doesnt oblige any inspections. For example,

there arent the periodical inspections which are conducted in Japan, and all inspections

are carried out on a voluntary basis. They decide the frequencies of inspection

depending on the conditions of facilities, and they are being carried out annually.

Since the steam turbine is an outdoor type, there is an overhead traveling crane, so for

open inspection, a moving crane is rented. Furthermore, because it is an outdoor type,

open inspections cannot be carried out during the rainy season. Considering that, even

if there are troubles which require an open inspection, it is difficult to take prompt

measures. Therefore, this poses a risk of prolonged power failures.

The facilities in the Dieng power plant include a huge after cooler. An after cooler cools

the air extracted from the condenser and separates drain from the gas. The large aftercooler means they deal with a large volume of extracted gas. The rated output of the

Dieng geothermal power plant is 60MW, which is close to the Yanaizunishyama

geothermal power plant (56MW). Comparing both figures, it is assumed that the steam

from both plants contains the same proportion of non- condensed gas. (about 5wt% at

Yanaizunishyama)

(The production fluid in the Dieng geothermal power plant includes rare materials. As

they are planning to sell refined material, they didnt clarify the chemical components

in the fluids.)


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Generally, most of non-condensed gas included in production fluid is CO2. For this

reason, the concentration of non-condensed is a matter of great importance, when

considering CO2emission credits.

Although the rated output of the Dieng geothermal power plant is 60MW, at present, it

operates at around 42MW. The prime cause of this low output is the stoppage of

production wells due to silica scale.


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Fig.2-2-1Panorama of the Dieng geothermal power plant

Fig.2-2-2The office of geothermal power plant


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Chapter 3 The present situation of scale and assumed causes

3.1 The present situation of scale

In the Dieng geothermal power plant, scale, which clings to the injection pipe, was a

large problem in the initial phase of the commercial operation, but it was solved by

measures taken afterward. Now, scale clings to geothermal fluid production wells and

the steam turbines. The main component of the scale is silica.

Fig.3-1-1Silica scale of injection pipe in the initial phase of the

commercial operation (1)

Fig.3-1-2Silica scale of injection pipe in the initial phase of the

commercial operation (2)


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3.2 Assumed cause of scale

3.2.1 Assumed cause of turbine scale

The source of the silica, component in the scale, is considered to be silica dissolved in

mist and in steam. I will explain more later using an example of Tohoku Electric Power

Co., Inc Uenotai geothermal power plant. The prime cause is considered to be that the

turbine nozzles boil the components of the steam mist and then the silica in the steam

mist precipitates and dries.

Fig.3-2-1-1Scaling at the turbine nozzle


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3.2.2 Assumed causes of scale in wells

Though its route varies, scale precipitates because material that dissolves in thesolvent becomes super saturated.

Silica in geothermal fluids is balanced with quartz in a fluid reservoir at high

temperature and at high pressure, but in the process of eruption which bring it to

ground level, it changes to amorphous silica.

The solubility of silica depends on its crystal form. The solubility curb of amorphous

silica can be expressed as follows.

The solubility changes according to temperature, pH and the concentration of Na, Al

and Fe ions and the presence or absence of ions of Fe and Poly silicic acid.

The precipitation of the scale depends on the mechanism for over saturation, which

varies, but is generally caused by a flush in wells which increases the concentration of

dissolved components in the cooling process. On rare occasions, the cause is a change in

pH, which is caused by the mixture of production fluid in multi feed increases the scale

precipitate.

0

200

400

600

800

1000

1200

1400

0 50 100 150 200 250 300

ppm

The solubility of amorphous silica

Temperature ( deg. C)

Silicaconcentration

(ppm

)

Fig.3-2-2-1The solubility curb of amorphous silica


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In the case of water-dominated fluid reservoirs, production fluid is produced with hot

water, in the state of so-called two phase flow. The more production fluid which goes

up to the ground, the less the pressure on the fluid becomes. Fluid tends to vaporize atcertain points known as the flush point.

Inside the wells, there are certain points where the internal diameter is considerably

larger, making them the flush points. Most of the time, the scale precipitates there, but

the flush points are not stationary due to other factors such as pressure in fluid

reservoirs.

The scale precipitates occur wherever the flush point may be.

Scaling

lush point

Fluid Fluid

Ground

Well

Fig.3-2-2-2The image of scaling (1)


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Multi feed points to the situation in which production fluid is taken at several points

varying in depth. In this case, if one of production fluid is acid while the other is

alkaline, it becomes neutral when the fluids mix. As mentioned before, the solubility ofsilica is also affected by pH, and the solubility is the lowest in neutral area if

temperatures and pressures remain constant. When production fluid, super saturated

in acid and alkaline is mixed with it, it becomes super saturated, creating a huge

amount of scale. For this reason, scale precipitates. When there is a lot of precipitate,

one side of the feed point is closed off even though it results in the decline in the amount

of steam production.

There is no significant difference in the PH of production fluid in the Dieng

geothermal power plant, so it can be concluded that the cause of the scale in the wells is

super saturation caused by flush, but not much information is available regarding

where the scale actually are located.

Scaling

Fluid (Acid) Fluid (Acid)

FluidAlkaline FluidAlkaline

Ground

Well

Fig.3-2-2-3The image of scaling (2)


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Chapter4 Study for Optimum O&M

4.1 A measure for scale in steam turbines

4.1.1 Our specific approaches to the problem

Although silica scale clings to steam turbines in the Dieng geothermal power plant, it

is not yet posing a serious problem. However, since the reservoirs contain a lot of silica,

there is no denying that it will become a serious problem when supplemental

geothermal fluid production wells are drilled and put into operation.

In term of scale clinging to the steam turbines, similar problems have occurred in

Tohoku Electric Power Companys Uenotai geothermal power plant just after the start

of commercial operations. In this case, setting up turbine washing equipment worked

well. For this reason, I include the outline of the measures taken by Tohoku Electric

Power Company bearing in mind that it may be applied to the Dieng geothermal power

plant in future.

(1) Background

The Uenotai geothermal power plant [output 28.8MW(up from 27.5MW in February

in 1997)] is located in Yuzawa city in Akita prefecture. Commercial operations

started in March 4th in 1994 based on a joint development with Akita Geothermal

Energy in charge of steam facilities and Tohoku Electric Power Co. in charge of

generating facilities.

Just after the start of operations, an opening angle of governing values rapidly

increased during the rated output operation and then the output of the generators

declined. After an inspection of the dismantled steam turbines, the cause wasascertained to be scale, which was clinging to the first-stagenozzles at the mouth of

the steam turbines and the strainer beforemain stop valve. Left untouched, the steam

turbines would have needed to be dismantled for inspections and cleaning every three

months, so equipment for scale prevention was developed.

(2) The formation of scale

Silica, a component of scale, is considered to originate from silica dissolving in mist

and in steam and each precipitates as follows.


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Precipitation of silica dissolved in mist

a. Precipitation by flush

In the main stop valvesub-stop valvestrainer, the pressure is slightly decreased,resulting in the flush of a hot water mist. Most of the silica scale clinging to the

main stop valvesub-stop valvestrainer is caused by such a flushing mechanism.

It is assumed that silica precipitates and clings when the mist is super saturated

with the silica over a period of time.

b. Precipitation by boiling

The numerical simulation and an experiment using geothermal steam confirms

that at the steam outlet near the first-stage nozzle, the temperature of nozzle is

higher than that of steam.(Amagasa 1995) Thus, at the outlet, mist coming into

contact with and clinging to the surface of the nozzle boils and evaporates, leading

to precipitation of the dissolved components, including silica, which then dry.

Most of the silica scale found in the first-stage nozzle at the mouth of the turbine

in Uenotai was considered to have occurred by boiling.

Precipitation of silica dissolved in steam

a. Precipitation caused by a decline in pressure

Silica scale in Uenotai may have precipitated because of a decline in pressure, but

it is difficult to make such quantitive evaluations.

b. Precipitation caused by a change in the state of steam

In Uenotai, the steam is not super heated; therefore, there is no silica

precipitation caused by a change in the state of steam.

(3) Study for countermeasures

Scale is caused by flush and boiling and injecting water into the turbine can contain

the problem stemming from both causes. For this reason, we concluded that theinstallment of turbine washing equipment, injecting clean water into main steam

pipes, could prevent scale from clinging. Then the following tests and analyses were

carried out.

Outline of water flushing equipment

The water flushing equipment directly sprays circulating water into the main

steam pipes. The water flushing point was set at just before the main stop valve so

that there is sufficient distance to mix the injected water and steam at the mouth of


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the steam turbines. Furthermore, in order to prevent erosion of the steam turbine,

the moisture meter was installed at the mouth the team turbine.

Results of the water injection test

The water injection test was conducted over 7months on site by changing time

(1hour to 14days) and volume of injecting water (1.11to4.2t/h) with the following

results.

During water injections, scale keeps growing when there is less than 2.0t/h of water,

but it is contained when there is more than 2.0t/h of water.

Results of the water injection test over periods as long as 2 weeks show that an

opening angle of the governing valve continues to decline, and in some cases, the

refractory scale, including silica, is cleaned.

According to the open inspection of the steam turbine after the water injection test,

when the moisture level is below 2%( designed allowable value), there is little

erosive effect on the turbine even though water is injected for long periods of time.

Soon after the start of water injection, the opening angle of governing valves always

sharply decline. This is considered to be because soluble scale, such as NaCl, is

removed.

The use of the water injection equipment

Following various analyses based on the test results, stable operation is maintained

in the power plant today by injecting water for approximately 2hours about every 2

weeks.

(4) Conclusion

To remove scale in the Uenotai geothermal power plant, turbine-washing equipment

was installed and a water injection test was conducted. The results confirmed that

water was effective for the prevention of and cleaning of scale at 2.0t/h.


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4.1.2 Application to the Dieng geothermal power plant

Although silica scale is clinging to the turbine in the Dieng geothermal power plant,

the situation is not yet serious and problems such as a decline in output have yet occur.

However, once becomes a serious problem, the Uenotai geothermal power plant's

example could be of great help.

In such cases, the problem is how much water should be injected and at whatfrequency.

This depends on the allowed moisture level which will differ according to what is made

from. Since the allowed moisture level is 2% in the Uenotai geothermal power plant, the

verification test was conducted while monitoring figures. Then, the optimum volume of

water and frequencies were confirmed. Therefore, if this equipment is installed in the

Dieng geothermal power plant, the optimum volume of water injection and frequencies

should be confirmed through similar steps taken by the Uenotai geothermal power

plant although the equipment itself is simple and doesnt require specific know-how.

Fig.4-1-1The turbine-washing equipment

FX-233

MainSteamSystem

Turbine Exhaust

System

Circulating

Water System

Water Injection Equipment System

Nozzle

Water Injection Pump

Circulating

Water Pump

Jet

Condenser

Generatorurbine

Calorimeter

To Flash Steam Cooler

Governing Valve

Main Stop Valve

To Turbine Ground

Electromagnetic

Flowmeter

Scale

Separator

from

Production

Wells

Strainer

To Cooling

Tower


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-10

-5

0

5

10

0 10 20 30 40 50 60 70 80 90 100

Steam temperature at the surface of nozzle

Metal temperature at the surface of nozzle

Differenceoftemperature

Width of a nozzle

0 20 40 60 80 100

Steam

Scale

back

ventral

Fig.4-1-2Steam temperature at the surface of nozzle Metal temperature at the surface of nozzle

Fig.4-1-3Scaling point on the nozzle


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Table4-1-1

Theopeningangleofgoverningvalvesduringwaterinjection

Theopeningangle

ofgoverningvalves

E

arly

period

Latter

period

Period

Flow

rate

(t/h)

mm/dd

C

ondenser

Vacuum

The

opening

angle

mm/dd

Condenser

Vacuum

The

opening

angle

No.

No.

H7.

03.

29

-

04.06

H7.

04.

10

-

04.17

1.

2

1.

2

03.

30

04.

12

84

mmHg

83

mmHg

73

%

75

%

04.

06

04.

17

84

mmHg

83

mmHg

75

%

80

%

No.

No.

H7.

04.

24

-

05.08

H7.

05.

11

-

05.25

2.

0

2.

1

04.

27

05.

11

83

mmHg

90

mmHg

73

%

87

%

05.

07

05.

25

83

mmHg

84

mmHg

70

%

85

%


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4.2

4.4

4.6

4.8

5.0

5.2

5.4

5.6

5 7 9 11 13 15 17 19 21 23 25 27 29 1 3 5 7 9 11 13

kscg

86 87

40

45

50

55

60

65

70

5 7 9 11 13 15 17 19 21 23 25 27 29 1 3 5 7 9 11 13

86 87

570

580

590

600

610

620

630

640

5 7 9 11 13 15 17 19 21 23 25 27 29 1 3 5 7 9 11 13

mmHg

86 87

Turbine inlet pressure

996

June July( day )

The opening angle of governing valves

996

June July( day )

Condenser Vacuum

996

June July( day )

Injection Injection Injection

Fig.4-1-4Turbine inlet pressure

Fig.4-1-5The opening angle of governing valves

Fig.4-1-6Condenser Vacuum


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4.2 Measures for scale in wells

4.2.1 A way to prevent scale from clinging

As previously mentioned, the largest problem in the Dieng geothermal power plant

today is scale in geothermal fluid production wells, and chemical injection is being

considered as a countermeasure.

Here I include some alternative considerations to chemical injections.

At present, several geothermal power plants within the jurisdiction of Tohoku Electric

Power Co. have scale in wells, just like the Dieng geothermal power plant. The

component of scale differs depending on the region with calcium carbonate scale as well

as silica scale being the most common. If the main component is calcium carbonate,

injecting clean water dissolves the scale relatively easily and the volume of steam soon

recovers. On the other hand, once silica scale precipitates, it is not able to be dissolved

unless quite strong acid is used and clean water alone will be insufficient.

Therefore, in the case of silica scale, it is important to prevent precipitate from

occurring. From this point of view, innovative measures are being considered at this

point in time.

To prevent scale in turbines, precipitation can be prevented by injecting clean water into

the steam, which increases the moisture level. The basic principal is that this prevents

super saturation from occurring, which can prevent scales in wells.

Since the reaction rate of silica is fast and the stratum contains a lot of silica,

production fluid maintains balance (a saturated state) with silica included in the

stratum that is near the feed point. (A silica thermometer, which estimates

temperatures from the concentration of silica in fluid, is famous and is widely used as ageochemical thermometer.)

In the case of sales in wells, unless precipitates occur due to the mixture of fluids

varying in pH, the cause is super saturation by flush. First and foremost, the

fundamental problem is that the production fluid is saturated with silica.

Therefore, if the production fluid in a saturated state is diluted with water, it wont

become super saturated even though flush occurs to some extent. In other words,


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precipitation of silica is contained.

In addition, when silica scale is generated, the main components of hot water, such as

NaCl might precipitate first and become the core of the silica scale, so by simplyinjecting water, the NaCl based precipitate can easily be dissolved, which prevents a

core from emerging. As a result, the precipitation of silica scale could be contained

For above reasons, if a certain amounts of clean water is injected into wells, just like

turbine washing, it wont be super saturated in wells, which means that scale will not

precipitate and the component of silica will remain the same until it reaches the

separator. If the component of silica remains the same until the separator, it could be

removed in the injection pipe where scale prevention is already carried out.

Meanwhile, even if the silica scale slightly precipitates in the injection pipe, it can be

dealt with much more easily than by removing scales from the wells.

The concern associated with injecting clean water is the decrease in output caused by

the fall in enthalpy or the solubility decline because of the temperature fall. However,

the simulation in wells confirms that as long as injecting water is limited to a fixed

amount, production fluid is not saturated with silica until it reaches the ground and the

fall in enthalpy doesnt pose a problem.

Waterinjection

Twop

hase

Flush point

Scaling

Measures

Twophase

Steam

Fig.4-2-1-1The image of the way of well water injection


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Since calcium carbonate easily dissolves in water, the method of injecting water into

wells proves effective in each geothermal power plant in Japan as a measure against

calcium carbonate scale. Facilities for silica scale are exactly the same as facilities forcalcium carbonate.

Facilities consist of an injection unit, a rewind drum, a lubricator, a coil tube, a tip

nozzle and among others.

An injection unit, which injects condensed power plant water into wells through a coil

tube, comprises of pump, pipe, various measuring instruments, and electric system.

A lubricator is a facility that fixes a coil tube and stores steam seal and a tip nozzle.

Using this, it is possible to install and collect a tube without stopping production.

Based on experience in each geothermal power plant, the best material for tubes is

INCOLOY825, which is especially corrosion resistant..

In addition, a tip nozzle also works as an anchor.

LGTank

Condensate water

Control

panelInjection pump

Injection pump

Injection unit

Rewind drum

Coil tube

INCOLOY 825

Lubricator

Tip nozzle

LGTank

Condensate water

Control

panelInjection pump

Injection pump

Injection unit

Rewind drum

Coil tube

INCOLOY 825

Lubricator

Tip nozzle

Fig.4-2-1-2The water injection equipment


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4.2.2 A way to remove scale

Prevention of scale, which works for other sites, is not always applicable because of theregional feature. However, even if scale precipitates, it wont be a fatal obstacle for

operations of a power plant as long as scale can be removed relatively easily at low cost.

For this reason, I include how to remove scale as follows.

Generally, work over is used when scale precipitated in wells is removed. work over

removes scale by drilling with bit after the installation of rig, just like usual drilling. It

is effective when scale precipitation occurs only inside wells, but a problem is its cost.

Because rig is installed just like drilling , it requires relatively long construction periods

with a large scale facility. The construction cost is quite high. To solve this problem,

Coiled Tubing method is used in recent years. In Coiled Tubing method, a thin tube

without seams is used as if it is a wire, so drilling pipes dont need to connect and the

construction is completed for a shot period of time. With the short construction period

and simple facility, the cost is low. Furthermore, the construction is carried out while

letting steam emit, therefore the work efficiency can be judged immediately. It also

doesnt have to interfere other wells or induce emission.

Meanwhile, a drawback of the Coiled Tubing method is that the maximum tensile

load is low. If scale is solid or it has a casing trouble, a full examination is necessary

before adopting this method.

A table of comparison based on experiences in the jurisdiction of Tohoku Electric

Power Co. can be expressed as follows.

Table 4-2-2-1A table of comparison with 2,000m class production well

Rotary drilling Coiled tubing

Drilling fluid WaterMud AirProduction fluid

Possibility of interference High Nothing

Separator/Silencer Need not Need

A range of ground facilitiesremoval

Wide Narrow

Induce emission Need Need not

Maximum working depth 2,700m 2,600m

Pipe up-down time 6 hours 3 hours

Maximum tensile load 100 t 45 t

Term of works 60 days 10 days

CostIn case of 1 as Rotary 0.6


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Fig.4-2-2-1Work scenery by Coiled Tubing

Fig.4-2-2-2Coiled Tubing


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4.2.3 Application to the Dieng geothermal power plant

The cause of the scale problem at the Dieng geothermal power plant is not the specialmechanism but oversaturation. Tohoku Electric Power Co. now prevents scale from

occurring in its jurisdiction by injecting clean water. If this method proves effective, it

can be applied to the Dieng geothermal power plant.

With its efficiency, work over by coild tubing seems appropriate to the Dieng

geothermal power plant, which cant stop operations for a long period of time. However,

scale in wells at the Dieng geothermal power plant is considered to be hard because its

main component is silica; therefore, whether this method is applicable or not should be

decided after the experimental use.

4.3 High efficiency operation of Cooling tower

As described before, the Dieng geothermal power plant has a huge after cooler, but a

huge cooling tower also catches our eyes. Since the total number of cooling fans amounts

to 18, cooling capability is quite high. The cooling tower was capable of cooling

circulating water from 36.1 to 18. Consequently, the vacuum level is 93.3 kPa and

the operation was carried out in a high vacuum. (almost the design value). If the

vacuum level is high, it is possible to get the large output even though the amount of

steam is the same because the adiabatic heat drop becomes large. However, the balance

with the power spent for that purpose is important. In other words, the optimum point

needs to be decided comparing the increased output because of being high vacuum and

the power that is spent for cooling fans.

Although it depends on equipment, including the deterioration level of the equipment,

the number of cooling fans is not always proportionate to the vacuum level. In addition,the vacuum level in the condenser is not completely proportionate to the output. The

vacuum level also varies depending on whether the load is rated or partial.

Therefore, it is impossible to judge from generalization, but considering all cooling

fans in the cooling tower are operated at the partial load in the Dieng geothermal power

plant, it should be clarified how vacuum level in the condenser and net output changes

when stopping fans one by one.


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The number of operating cooling fan vs.

Condenser Vacuum (An example)

70

75

80

85

90

95

18 17 16 15 14The number of operating cooling fan

CondenserVacuukPa

Condenser Vacuum vs.Correction Coefficient (An example)

-5

-4

-3

-2

-1

0

1

87.989.390.692.093.394.796.097.498.7

Condenser Vacuum kPa

CorrectionCoefficient

Fig.4-3-1Relations between the number of operating cooling fanand condenser vacuum

Fig.4-3-2Relations between condenser vacuumand output correction coefficient


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Chapter 5 CDM feasibility study

5.1 Information related to CDM in Indonesia

Geothermal power generation uses natural energy. It is effective for prevention of the

global warming because basically, CO2 emissions are small. For this reason, it is

positioned as a power source for CDM/JI based on the Kyoto Mechanism. As long as

conditions are met, geothermal power generation will generate CO2 credits, creating

added values.

The most fundamental condition is whether a country ratifies the United Nations

Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.

Furthermore, whether the Designated National Authority(DNA) is set up within the

country is also a basic condition.

The Indonesian government ratified the Kyoto Protocol on December 4th in 2004.

Although it took some times to make deliberations within the country, the DNA was

officially established in Indonesia. Indonesia is now listed on the DNA list of UNFCCC.

The following describes detail information related to CDM.

(1) Ratification and participation in the UNFCCC

Indonesia signed the UNFCCC in 1992 and ratified it in accordance with the

ordinance No6.

(2) Ratification of the Kyoto Protocol

The ratification of the Kyoto Protocol had been delayed in Indonesia not by the

national resolution but by procedures related problems. Indonesia ratified the Kyoto

Protocol on December 3rdand was taken effect on March 3rdin 2005.

(3) The establishment of the DNA

The DNA was established in Indonesia in July 2005, which means Indonesia meets

conditions to participate in CDM project activities as Non AnnexParties depicted in

the Marrakesh Agreement, which includes detailed regulations of the Kyoto Protocol.

Now, Indonesia is eligible to approve CDM projects.

The DNA is a national CDM committee (NCCDM) consisting of the following 9

ministries and agencies.


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Ministry of Environment

Ministry of Energy and Mineral resources

Ministry of ForestryMinistry of Industry

Ministry of Foreign Affairs

National Development Planning Board)

Ministry of Home Affaires

Ministry of Transportation

Ministry of Agriculture

The deputy minister of MOE (Environmental Conservation) is appointed to the

chairman of the NCCDM.

The NCCDM comprises of standing organizations, secretariat and engineering

team. If necessary, it can seek assistance to expert advisors and stockholders

forum.

(4) Procedure for the approval of the project

Documents, which should be submitted to the DNA

The following documents should be submitted

a. Application form(description to meet criterion)

b. Project Design Document(PDD)

c. Environmental Impact Assessment(EIA)

d. The record of public consultations

e. Recommendation from the Ministry of Forestry (only for forestation CDM)

f. Others

Procedure for the approval of the CDM

It takes 11weeks to reach a conclusion regarding the governments approval letterafter application form is submitted to DNA. (Except for revisions)

(5) Criteria for sustainable development of the CDM projects. Applicants need to prove

that the proposed project meets the following criterion.

Environmental sustainability

Environmental sustainability that can preserve natural recourses and natural

diversity

Preservation of eco system


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Complying with existing national and regional environmental standards and

regulations

Preserving genetically biological species(genetic contamination is not allowed)Complying with the land exploration plan

Health and safety of regional society

There should be no health risks

Complying with vocational health standards and regulations

There should be a procedure regarding the adequate control and actions based on

documents against possible accidents.

Economic Sustainability

Prosperity of regional society

There should be no negative effects on regional income

There should be adequate measures to deal with a decline in incomes of local

residents.

There should be an agreement with stakeholders to deal with lay off issues in

accordance with existing laws.

Regional public services shouldnt be declined

Social Sustainability

Participation in the project by regional society

Making consultations to regional society.

Comments and complains from regional society are taken into account.

Trust from regional society

The project doesnt cause confrontations in regional society.

Engineering SustainabilityTechnology transfer

Knowledge and the operation of equipment is fully transferred without depending on

foreign countries.

Technology is neither experimental nor obsolete.

Technological ability and its application is promoted in the region.


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Fig.5-2-1

Approvalprocessflowchart

Project

Proponent

Secretariat

Received

application

document

Inte

rnal

Coordination

Me

etingofthe

com

mission

Technical

Group

Evaluation

Secretariat

Received

Evaluation

Reports

Decission-making

Meetingofthe

Commission

letterof

approval

Sectoral

Working

Group

Stakeholde

rForrum

SpecialMe

eting

Ex

pert

Group

Ev

aluation

Propose

d

Project

does

not

meet

thecrite

ria

Data

inapplicationdocuments

need

tobecompleted

Project

Designneedstobemodified

5days

5days

21days

1day

Project

Proponent

Expert

Group

Evaluation


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5.2 Related agencies and a trend of capacity building

A trend of capacity building in Indonesia as follows.

With the cooperation of the World Bank and GTZ, a national strategy for CDM in

the energy sector was drawn up mainly by the Ministry of Environment and NGO

(Pelangi) in 2001.

The Dutch government seems to actively work on Indonesia to sign a bilateral

CER sales agreement with the Netherlands.

The NEDO and the IGES in Japan supported Indonesias approaches by co-hosting

workshops in 2003 and 2004.

While the agencies of DNA and a part of officials in related to the government

agencies are well aware of CDM, there is a lack of awareness among other

government agencies and people concerned. In addition, generally, industry doesnt

have much interest in the CDM, so capacity building needs to be expanded.

5.3 The CDM projects applied to the DNA

Although Indonesia officially established the DNA in July in 2005, staff members

were officially positioned in December. However, due to swift actions taken by the

DNA, the following 5 projects were officially approved as of January in 2006.

The project utilizing solar heat

, The project concerning cements

The project utilizing palm oil

The project utilizing methane from excrement of domestic animals Feces and

urine

In terms of above 5 projects, Indonesia got approval from the environmental minister

and applied for the registration to the UNFCCC before the establishment of the DNA.

For this reason, the government immediately approved these projects since it was

considered that projects had been already approved (examined).


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5.4 Possibilities of geothermal power generation projects for CDM

(1) MethodologyAt present, when it comes to geothermal power generation development,ACM-0002

and AM-0019 are registered as new methodology of the UNFCC.

ACM-0002,which is based on Darajat unit III in Indonesia, evaluates generated

power as replacement to the average grid electricity by connecting to grid. Under this

methodology, geothermal power generation is not simply approved as a shift from

fossil fuel power generation.

In addition, AM-0019 is based on Lihir Project in Papua New Guinea. In this

methodology, geothermal power generation could be a replace from fossil fuel power

generation.

The registration for the DNA

When it comes to geothermal power generations, Darajat unit III project of Amoseas

Indonesia Inc.Chevrons capitalhad been applied for registration to the UNFCCC

together with the above mentioned projects. However, its PDD is being modified at

present because there was a complaint regarding how to calculate the CO 2emission

factor in the methodology. Therefore, no projects concerning geothermal power

generation have been applied to the DNA.

Chevron is in charge of calculating CO2 emission factors, which will be made

public through the DNA as official values in Indonesia. Thus the same emission

factors can be used if it connects to the same grid this year


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Chapter 6 Study for the possibility of participation ingeothermal power generation

6.1 Energy conditions in Indonesia

6.1.1 Overall conditions

Indonesia consists of 33 provinces under republic system. President is the head of

state as well as the head of the administrative body. Susilo Bambang Yodhoyono

was officially sworn in the 6thpresident in October, 2004.

The parliament in Indonesia is People's Consultative Assembly (MPR), MPR makes up

Peoples Representative Council (DPR The fixed number 550) and Regional

Representative Council (DPDThe fixed number128).

Indonesias economy suffered most in ASEAN courtiers and Korea by Asian financial

crisis in July 1997and the GDP growth rate in 1998 dramatically declined to 13.13%.

After that, the GDP growth rate was shifted as follows: 0.79% in 1999, 4.29% in 2000,

3.45% in 2001, 3.69% in 2002, and 4.5% in 2003. Based on such growth, major macro

economic indexes are improved including reduction of inflation, stock price rise and

stabilization of the rupia.

Indonesia, which is rich in resources, sets up the policy, generating the best possible

benefit by fossil fuel and delaying the depletion of resources in the second long term

national development plan.

6.1.2 Energy situation and policies

The Indonesias comprehensive energy policy (February in 1998) raises the following

five items as basic policies.

Diversification of energy

Intensifying exploration of energy resources

Energy saving

Energy price (price adjustment)

Concern for the environment

(1) Water resources

Water reserves in Indonesia are assumed 8,200kW. Hydraulic power generation


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facilities are 301.5million kW at the end of 2000 and much remains to be undeveloped,

but in Java island where demand is high, most places are already developed. Water

reserves are concentrated in Sumatra, Kalimantan, Irian Jaya, but large scaledevelopment cannot be hoped because areas that need electricity are small and spotted.

However, small-scale water development is expected to play a large role as social

development projects.

(2) Oil

Indonesia has 5 billion barrels of oil reserves as of the end of 2001, The central part of

Sumatra has the largest oil production, followed by the north west coast of Java island,

East Kalimantan and the sea near the Natuna .

Indonesia is the only OPEC member in Asia and one of the largest oil producing

countries, but there are concerns that oil reserves will run out, so the government

encourages citizens to shift form oil to coal and gas.

(3) Natural gas

It is confirmed that natural gas reserves in Indonesia are 2triion 590billion as of the

end of 2001, which is the largest oil reserves in South East Asia. Gas fields are situated

in North Sumatra, East Karimantan, off shore of East Java and the sea near the

Natuna.

60% of Natural gas is exported as LNG and becomes a crucial means to gain foreign

currency.

(4) Coal

Coal reserves in Indonesia are 5.1billion tons as of the end of 2001.The major

production sites are South Sumatra, KalimantanJambiRiau among others. Coal

production has become 12 times for these 10 years.

The Indonesian government places coal as important resources replacing oil.

(5) Renewable energy resources

Indonesia is one of countries that have many volcanoes with more than 130 active

volcanoes across the country. It is assumed that potential geothermal capacities are

about 20million kW (1995).

Several geothermal power plants have already started operations, generating 360,

000kW in the total output (2000). A lot of geothermal development projects including

IPP were planned, but they were suspended because of the financial crisis. However


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6.2 Extension plan for the Dieng geothermal power plant

6.2.1 A development schedule

At present, an extension plan is under way in the Dieng geothermal power plant.

According to the schedule, No2 will start commercial operations in 2008 and No3 will be

put into operations in 2009.

This extension project includes not only the Dieng geothermal power plant but also

Patuha region that is close to Bandung. It is a large scale project including the

construction of geothermal power plants ( the total output 300MW).


2005 2006 2007 2008 2009 2010

Dieng No.2 60MW

Dieng No.3 60MW

Patuha No.160MW

Patuha No.260MW

Patuha No.360MW

A construction period Commercial operations start

Bandun

Bandun

Fig.6-2-1-1A location map of Dieng and Patuha area


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6.2.2 Project Participants

Project entity is PT Bumigas energi (hereafter Bumigas), which gains development

rights from PT GEO DIPA, based on BOT for 15 years per unit.

Under this plan, the total of 300MW electricity will be generated (Dieng is 120MW and

Patuha is 180MW), but Bumigas got power sales rights up to 800MW , and has a plan to

extend each to 400MW.


company

National electric

company

PT GEO DIPA

PT BumigasPT CitraDrilling company

PT RekayasaEPC company

Joint-Venture to developgeothermal plants67%

33%

BOT Contract for 15 years per unit

Consortium

Financier

Planning company

Joint-Venture

30%

70%


company

National electric

company

PT GEO DIPA

PT BumigasPT CitraDrilling company

PT RekayasaEPC company

Joint-Venture to developgeothermal plants67%

33%

BOT Contract for 15 years per unit

Consortium

Financier

Planning company

Joint-Venture

30%

70%

Fig.6-2-2-1Project Participants


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6.2.3 Project Contractual Relationship

Power sales revenues from PLN is first deposited in the escrow account, then 60% goes

to Bumigas, 30% goes to the O&M company and 10% goes to PT GEO DIPA.

Bumigas, which receives 60%, puts this money towards covering the capital cost of the

project including interest payment.

Meanwhile, 30% of revenues is given to the O&M company, but this rate is rather high

considering the level of personnel costs. On the other hand, despite interest is set at 6%,

the capital cost is relatively low. In other words, the initial capital cost is low.

Indonesia adopts so- called External form standard taxation, imposing 6% tax on

revenue from power sales and it is coved by PT GEO DIPA, which receives 10% of

revenues. Remaining 4% is supposed to be accumulated in PT GEO DIPA as debt

reserves.

National electric

company

PT GEO DIPA

PT Bumigas Planning company

Escrowaccount

USDPayment

30%

10%

60%

Electricity sales

National electriccompany

PT GEO DIPA

PT Bumigas Planning company

Escrowaccount

USDPayment

30%

10%

60%

Electricity sales

Fig.6-2-3-1Project Contractual Relationship


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6.2.4 Evaluation profitability of the project

(1) Overview

The total project cost is about 500 million $. Although the cost changes depending on

the number of wells, it is calculated one unit will cost around 100 million $.

In terms of revenues stems from power sales to PLN, 60% is planning to go to Bumigas,

30% will go to O&M and remaining 10% will be earmarked to taxes and others.

There are a lot of hot springs, geysers and sulfur geysers in the Dieng geothermal

region, which suggests geothermal resources are plenty. It is estimated that geothermal

resources are at least 300MW. During the development of No1, it was turned out that

the temperature of reservoirs is 270 to 340 and the depth is 2,000 to 2600m. The

potential is high.

It is obvious that the most important thing to evaluate profitability of the project is the

accuracy of assumed income and expenses. Income is calculated by multiplying

generated electricity by electric price. Geothermal development is said to be risky

because an accurate projection is difficult. In other words, since steam production

depends on nature in geothermal power generation, production risk is high compared to

fossil fuel power generation. However, in the extension project, confirmed geothermal

resources will be used, so production risk is considered to be low.

Meanwhile, even if power is generated as expected, income will decrease unless

generated power is sold as planned, so a long term contract with the PLN, so-called the

credibility of PPA, is extremely important. In addition, interest on finances is inverseproportion to the reliability of the project. When the reliability is high, interest is low

and income from the project becomes high. On the other hand, if the credibility is low,

interest goes up, resulting in low profitability of the project.

At a time of the financial crisis, which occurred from 1997 to 1998, PLN couldnt fulfill

its duty to buy electricity at promised prices. Consequently, it lost credibility in

international society. However, after that, the PLN re-negotiated various kinds of

long-term power sales contracts focusing on practicality. As a result, the PLN seems to


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have no default risk at present.

Generally, steam production declines naturally in geothermal power generation, so itneeds to maintain the output by drilling supplemental wells periodically. In this sense,

projection regarding decline is significant because drilling wells costs a lot. However,

projection is not always accurate since the steam production also depends on nature. If

production capacity of reservoirs is overestimated, more than expected number of

supplemental wells will have to be drilled, resulted in the sharp fall in project income.

The total production scale in the region is confirmed 300MW, which is sufficient to add

at least two of 60MW. Thus, risk of over exploitation is low. Drilling unexpected number

of supplemental wells is unlikely to occur in future.

However, although above evaluation is applied to overall capacity of reservoirs, there

is no denying that steam production will decline because of local decay of wells.

Specifically, scale clinging to the inside wells could cause obstacles in production.

Usually in this case, work over is used to recover production, but work over, which

needs large-scale facilities just like drilling, is relatively expensive and becomes a factor

to deteriorate the project balance.

In this region, existing No1, which has scale in its wells, has already deteriorated.

Therefore, pessimistic expense projection will be necessary for the additional

equipment reflecting frequencies of work over and the cost based on experience of No1.

(2) Calculation of profitability

Based on conditions confirmed in this survey, we calculated the profitability according

to various variable factors. The results are expressed as follows.

Generally, the discount rate can be calculated by risk free rate and risk premium,but here we use 6.8%, which is the yield of 10-year government bond in US dollars

issued by the Indonesian government. Since its evaluation varies depending on project

participants, we use risk premium as the parameter and made calculations setting the

discount rate at 6.85%, 10% and 15%.

For detailed calculations, please refer to attached material.


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42

a. Impact of additional wells

Geothermal power generation needs supplemental wells to maintain the ratedoutput since production steam generally declines. Regardless of the constant rated

output, it is possible to operate power generation depending on natural course of event.

However, the economic assumption shows that maintaining the rated output by

drilling supplemental wells is much more cost efficient than letting it run its course.

$

6.85% 109,182,789 102,969,672 91,811,11610.00% 84,932,799 81,014,645 73,509,87015.00% 59,508,206 57,596,125 53,480,513

Discountrate

7 New Wells 3 New Wells No New Wells

Sensitivity analysis with the number of Makeup wells Output

Decline rate:5%Makeup well steam flow rate:45t/h

50

60

70

80

90

100

110

120

5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 17.00%

Discount rate

million$

7 New Wells Maintain steam

3 New Wells

No New Wells

Fig.6-2-4-1Sensitivity analysis with the number of Makeup wells


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44

c. Impact of steam produced in additional wells

Furthermore, with supplemental wells being drilled, steam production in this region

is expected to reach about 45t/h/, however, it is not always the case. It has turned outthat there is not much difference in economic efficiency when the production steam is

45t/h per well and when it is 5t/h per well.

$

45t/h 25t/h6.85% 109,182,789 103,928,283

10.00% 84,932,799 81,252,194

15.00% 59,508,206 57,345,119

Makeup well steam flow rateDiscountrate

Sensitivity analysis with Makeup well steam flow rate

Decline rate:5%Maintain steam

50

60

70

80

90

100

110

120

5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 17.00%

Discount rate

million$

Makeup well steam flow rate:45t/h

Makeup well steam flow rate:25t/h

Fig.6-2-4-3Sensitivity analysis with Makeup well steam flow rate


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45

d. Conclusion

I made a sensitivity analysis using parameters such as the number of wells, which

are drilled, the rate of decline and steam production when supplemental wells aredrilled. Comparing these parameters, the IRR has larger impact on the economic

efficiency of the project

When the rated output is maintained with the rate of decline at 5 % and the volume

of the production steam at 45t/h, it is worth 117million dollars if the assumed discount

rate is 6%. On the other hand, it is worth only 60million dollars if it is assumed that

the discount rate is 15%.

For this reason, projects organizers, who intend to invest into this project, need to

judge how much risk is involved in this project and how much return they hope.

When they hope around 15 % of the IRR, the value of this project has become

significantly low and it is difficult to promote it.

Judging from the construction cost of the plant, the expected IRR is considered to be

around 10%.

6.2.5 Possibility of participation in the project

As describes above, the extension plan in this region can be judged good as a whole,

however, the necessary project cost amounts to over 60 billion yen. It is considered that

raising this amount of money depending solely on private loans involves a great deal of

risk, so financers that offered financial contributions to Bumigas have not implemented

it.

Thus, the initial plan of completing finance close in November 2005 and starting the

construction of Dieng No2 is likely to be delayed.


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46

6.3 Geothermal development plan in the Sarulla region

6.3.1 Overview

This region offers high potential for geothermal development and is being promoted

followed by the Dieng & Patuha extension plan. CO2credits are expected to be about

700,000CO2-t/year. Since our participation in this project seems highly significant, we

also conducted the survey.

The Sarulla region is located about 200km southwest of Medan on the Sumatra Island.

Form early 1993 to the middle of 1998, Pertamina and Unocal carried out research in

this region. Research included geological survey, geochemical survey and geophysical

exploration. Based on the results, 3 wells were drilled.

Research confirmed 3 geothermal sites, such as Eastern Sibualbuali, Silangkitang,

Namora-I-Langit, which will make it possible to generate 330MW of electricity over a

period of 30 years.

Sarulla area

Medan

Namora-I-Langit

Silangkitang

Eastern Sibualbuali

Fig.6-3-1-1A location mapof Sarulla area


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47

6.3.2 Development plan

In Sarulla region, 3 geothermal sites mentioned above have been confirmed, but thecurrent development plan only covers Silangkitang and Namora-I-Langit.

Under the plan, No.1 and No.2 of Silangkitang (50MW) will start commercial

operations in 2009, followed by No.1,2,3 of Namora-I-Langit (65MW), which will be put

into commercial operations in 2010.

Meanwhile, the Indonesian government has a strong desire to start power generation in

this region at the earliest possible time due to growing power demand in the country.

Therefore, there is another plan to start commercial operations of No.1 of Silangkitang

in FY 2007 with 25MW2.

Table 6-3-2-1A development schedule (Commercial operation start)

2009 2010

Silangkitang No.150MW

Silangkitang No.250MW

Namora-I-Langit No.1 (65MW)



6.3.3 Development structure

Development entity of this region is PT Geo Sarulla, co-financed by PT GEO DIPA(45%)

and Mega Power Mandiri (55%). Basically, PT GEO DIPA is in charge of steam

production and Mega Power Mandiri is in charge of power generation. PT Geo

SARULLA opened its office in Jakarta in December 2005, but was not officially

registered as of January 2006. However, both PT GEO DIPA and Mega Power

Mandirisend staff to the office and around 6 people are always work there to promote

the project.

PLN, which is also planning to invest capital in PT Geo Sarulla, will acquire 20% of

shares from PT GEO DIPA. Mega Power Mandiri is a subsidiary of PT Bukaka,which

had constructed hydropower plants and transmission grids. However, it has no

experience of building a geothermal power plant, so it is improving development

structure by hiring ex employees of Pertamina.


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49

Chapter 7 Conclusion

7.1

Measures for scale and the optimum O&M

This survey was carried out to understand the extent of the scale problem at the

Dieng geothermal power plants and its causes and to provide a basis for a detailed

examination which will lead to setting up effective countermeasures.

The survey has confirmed that the silica scale that precipitates in wells is posing a

problem at the Dieng geothermal power plant and injecting chemicals is being

examined as a countermeasure.

Once silica precipitates, it is not able to be dissolved unless quite strong acid is used,

so its countermeasures need to focus on preventing precipitate from occurring. In this

sense, the development of effective chemicals is expected.

However, even if effective chemicals to prevent scale are developed, the problem is

their cost. There are various kinds of chemicals, known as inhibitors, which work for

calcium carbonate scale, but they are not actively used because of the price.

Taking these points into account, Tohoku Electric Power Co. is trying to contain silica

scale in wells within its jurisdiction by injecting clean water. If effectiveness of this

method proves, it can be applied to geothermal power plants around the world that

have similar problems and we could do international technology transfer.

In addition, although it is not yet posing a serious problem, considering the

components of steam, silica scale clings to steam turbines might become a serious

problem at the Dieng geothermal power plant. However, there is no particular problemin the Dieng plant, so the scale in turbines can easily removed by installing turbine

washing equipment.

7.2 Possibility of CDM projects

When it comes to the CDM, the Designated National Authority (DNA) started to

function in December 2005 in Indonesia. We confirmed that so far the government has

approved 5 projects, but no geothermal power generation projects have obtained the


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50

government approval. (One is modifying the PDD to recalculate the Emission Factor)

Once its approved as a CDM project, economic added value will be created. In thissense, the development of the relevant project is worth watching, but the CDM is not

fully understood in Indonesia. For this reason, there is a need for us to support the

CDM in the case of new geothermal development and our active involvement is

expected.

7.3 Possibility of participation in geothermal power generation

Together with this survey, we interviewed local people concerning PT GEO DIPA, the

project entity, about the possibility of our participation in the O&M project, the matter

of participation, the possibility of capital contribution in the extension plan and

necessary procedures which will accompany it. We collected detailed information on

the Dieng & Patuha extension plan as well as the geothermal development plan in

Sarulla region.

In terms of the extension plan of the Dieng geothermal power plant, undisclosed

material on geothermal reservoir evaluation has confirmed that stem is sufficient to

build a new power plant. We realized its high potential.

Furthermore, in the Sarulla region, 50MW-worth of steam, sufficient for the

development of No.1 of Silangkitang, has already been confirmed. We made sure that

the construction could be carried out with low risk and at low price.

As mentioned, though geothermal recourses are rich at the surveyed site, the

development has not been made progress since the Indonesian government cannot

raise sufficient funds.

For this reason, if we make proposals to convince the Indonesian counterpart that

our participation will be beneficial to raise necessary funds, the project would be

taking a great step forward.


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51

7.4 Suggestions

This survey has made us understand the high potential of geothermal resources inIndonesia. At the same time, we realized that the construction of geothermal power

plants has not made progress since the Indonesian government cannot raise sufficient

funds.

The most effective way to break this situation is considered to be that advanced

countries provide development funds. Therefore, Japans active involvement, including

the support of the CDM, will promote the construction of geothermal power plants in

Indonesia.

Here, I include promising project plans.

First Stage

This survey.

Second Stage

With the cooperation of Indonesian parties concerned, Japanese company will

conduct F/S by using public fund in FY2006. Specifically, Japanese company will draw

up PDD in CDM F/S and carry out validation. In addition, Japanese company will sort

out information that is necessary on requesting for financing to government-affiliated

financial institutions while examining Japanese companys investment possibilities of

SPC in F/S.

Start of

Construction

drawing up PDD

validation evaluation of

geothermal recourses economic evaluation

Third Stage

Implementing

F/S

Second Stage

Start of

Commercial

Operation

Forth Stage

construction consultant

plant export

Final Stage

Closing of

Finance

investment in SPC

request to JBIC forfinancing

acquisition of CO2 credit

consultant

PreliminaryResearch

First Stage(now

Involvement of

Japanese company

Discussion with

parties concerned implementation completionevaluation

Fig.7-4-1Project Flow


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52

Third Stage

As a result of F/Sif Japanese company concludes that the project is promising, we

will invest in SPC in order to reap the benefit of the project. Japanese company willalso make a request to government-affiliated financial institutions for financing on

better conditions so that profitability of the project can be enhanced. We assume that

finance of government-affiliated financial institutions will be foreign direct financing

based on Project Finance.

Forth Stage

For the purpose of streamlining and increasing profitability of the construction of a

geothermal power plant in a responsible manner, Japanese company will undertake

consulting. And we assume that Japanese company will export the plant.

Final Stage

After the start of commercial operation, Japanese company will be in charge of O&M

consulting so that we can be responsible for streamlining and increasing profitability

of the project. In addition, we hope all CO2 credits will be given to Japanese

company.


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Appendix

Calculation Sheet


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Discountrate

.8

5

Calcu

lationsheetE

lectr

icity

Price

4.4

5/kWh(at

2003,Inflat

ion:1.5

%)

Year

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

ElectricityVolumeMWh

473,0

40

473,0

40

473,0

40

473,040

473,0

40

473,0

40

473,0

40

473,0

40

473,0

40

473,0

40

473,0

40

471,6

97

473,0

40

473,0

40

473,0

40

Electr

icity

Price

/kWh

4.45

4.7

9

4.8

7

4.9

4

5.01

5.0

9

5.1

6

5.2

4

5.3

2

5.4

0

5.4

8

5.5

6

5.6

5

5.7

3

5.8

2

5.9

0

Electr

icity

Revenue

$

22,6

77

,130

23,017,287

23,3

62,5

46

23,712

,984

24,0

68,679

24,4

29,7

09

24,7

96,1

55

25

,168

,097

25,5

45,619

25,9

28,803

26,3

17,7

35

26,636

,669

27,1

13,189

27,5

19,886

27,9

32,6

85

O&Mcost

$

6,8

00,0

00

6,902,000

7,005

,530

7,110,613

7,2

17,2

72

7,3

25,5

31

7,435

,414

7,5

46,945

7,6

60,150

7,7

75

,052

7,891

,678

8,010,053

8,1

30,204

8,2

52,157

8,375

,939

Tax,o

thers

$

2,2

67

,713

2,301,729

2,3

36,2

55

2,371

,298

2,406,868

2,4

42,9

71

2,479

,615

2,5

16,810

2,5

54,562

2,5

92

,880

2,631

,774

2,663,667

2,7

11,319

2,7

51

,989

2,793

,268

Network

ing

Cap

ital

$

453

,543

6,8

03

6,9

05

7,009

7,114

7,221

7,3

29

7,4

39

7,550

7,664

7,7

79

6,3

79

9,5

30

8,1

34

8,2

56

Cap

italexpen

diture

$

0

0

0

0

3,0

00,0

00

3,0

00,0

00

0

3,0

00,000

3,0

00,000

0

3,000

,000

0

3,0

00,000

3,0

00

,000

0