STRATEGIC VALUE OF GEOTHERMAL ELECTRICITY AND THE IMPACT OF ITS PRICING
Anang Yahmadi
PT PLN (Persero) – Directorate of Construction and New/Renewable Energy – New/Renewable Energy Division
INDONESIA INTERNATIONAL GEOTHERMAL CONVENTION AND EXHIBITION 2014
Jakarta, June 5th, 2014
Assembly Hall JCC
AGENDA
GEOTHERMAL FOR ELECTRICITY
PLN POLICY ON GEOTHERMAL DEVELOPMENT (NOT LEAST COST VS PLN TARIFF)
GEOTHERMAL OPERATION MODE (BASE VS PEAK)
GEOTHERMAL TARIF IMPACT (SUBSIDY)
FACTORS IMPACT TO GEOTHERMAL TARIFF
CONCLUSION
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Power Plant Capacity (PLN + IPP): • Non RE has share 86 %• RE has share 14 % (geothermal 3,5 %)
Generation (PLN + IPP): • Fossil power plant is dominant by 91 % (Coal, Oil and
Gas ).• Share of RE only 9 % (geothermal 4%)
Generation Share (2013)
Existing Total Capacity 38,320 MW
Coal Steam PP
Combine Cycle PP
Gas Turbine PP
Diesel PP
Geothermal PP
Hydro PP
0 2000 4000 6000 8000 10000 12000 14000 16000
14006
7704
3224
3267
564
3524
4797
645
291
60
745
345.4
IPP
PLN
Geothermal, 3.5% Hydro,
10.2%
Coal STPP,46.6%
CCPP,21.7%
GTPP,9.2%
Diesel,8.8%
Power plant composition (35.617 MW in 2012)
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The Significance of Geothermal for Electricity( Geothermal share of 4 % )
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Gas
Geothermal
Hydro
LNG
HSD MFO
Coal
• Strengthening the power capacity and energy supplied to meet the electricity demand
• To reduce the dominant of Coal Fired Power Plant in Java Bali and Sumatra or large systems
• To replace the fossil fuel oil consumption in the system with fossil fuel oil generation (mostly in the small systems)
• To achieve more competitive the generation cost of electricity
• To increase energy security due to its highest capacity factor
The Role of Geothermal for Electricity
Gas
Geothermal
LNG
HSD MFO
Coal
To support the National Policies on utilizing RE development (including geothermal) such as : Geothermal Law (UU 27/2003), Government Regulation for Geothermal Development (PP 59/2007), President Regulation for Contribution of RE (Perpres 5/2006), President Decree for Fast Track Programs II (Perpres 4/2010) and also related Ministries Regulation.
Consistently increasing the role of RE as capacity expansion: to supply electricity demand growth, to meet the electrification ratio target and to achieve the target of Fossil Fuel Consumption Reduction Program
In line with policy of prioritising the utilization of local energy source and vision on environmental perspective
The development of geothermal is not based on “least cost” but on the readiness of the scheme but should comply with the concept of demand – supply balance to avoid over capacity of base loader power plant in the system.
Expected to reduce the electricity generation cost in the related system or less than the electricity tariff.
Policies on Geothermal Development for Electricity
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HydroGeothermal
Coal
Gas
LNG
Fuel Oil
PLN’s 10 YEARS ELECTRICITY DEVELOPMENT PLAN (RUPTL 2013 – 2022) ( Expected share of Geothermal increase from 4 % to 11 % by 2022 )
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Total 60 GW additional capacity in the period of (2013 – 2022) consisting of:
Coal fired : 38 GW Hydro : 6.5 GW Geothermal : 6.0 GW Combined cycle : 5.0 GW Gas Turbine/Engine : 3.7 GW Other : 0.3 GW
Coal will be more dominant and geothermal is expected to increase significantly (from 4% to 11%)
Fuel Mixed Projection
Capacity Expantion Plan
Capacity Expantion Plan
Geothermal Capacity Expansion Plan (2013-2022)Total 6060 MW
• Expected commissioning years mostly after 2016.
• Geothermal development will be dominated by IPP (96 %)
• Majority is part of the Second Fast Track Program (FTP II) by 4965 MW (82 %)
• Mostly, 93%, developed in Java Bali and Sumatra system with base load operation mode to reduce the dominant of CFPP.
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YEAR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 TOTALSUMATRA 0 0 0 55 330 445 360 490 405 770 2855JAVA-BALI 0 55 30 30 225 0 1275 110 220 855 2800OUT OF JBS 0 5 0 0 25 50 30 50 45 200 405TOTAL 0 60 30 85 580 495 1665 650 670 1825 6060COMULATIVE 0 60 90 175 755 1250 2915 3565 4235 6060
14183
20820
19915
22751
4000
8000
12000
16000
20000
24000
28000
1 8 15 22 29 36 43
MW
Jam
Beban Harian Tipikal Sistem Jawa Bali
Idul Fitri Sabtu Minggu B. Puncak 2013
.
CFPP
GothermalPP CCPP
GTPP
Demand and Supply Typical Curve of Java – Bali System
Typical Daily Load of Java Bali System
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Hydro Res & LNG/CNG
Gas
Geothermal
Hydro
LNG
HSD MFO
Coal
• Geothermal power plant operated : total 1313 MW (566 MW of PLN and 747 MW by IPPs)
• Energy produced from geothermal (realization and projection):
• Energy cost from geothermal (at power plant) :
• National cost of electricity production (at power plant) : 9.23 c USD/kWh (RKAP 2014)
• Average tariff of electricity : 7.97 c USD/kWh (RKAP 2014)
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COST OF ELECTRICITY FROM GEOTHERMAL
Year 2012 2013 2014 2015 2016
TWh 9.4 9.8 10 10.9 16.0
Geothermal electricity price (2012) 6.67 c USD/kWh
Geothermal electricity price (contracted)
Existing WKP (9 PPA)
New WKP (6 PPA)
8.04 c USD/kWh (5.6 – 18.2)
7.02 c USD/kWh (6.79 – 8.25)
9.08 c USD/kWh (8.09 – 9.55)
Geothermal electricity price (bidding result) 8.25 c USD/kWh (5.6 – 18.2)
Gas
Geothermal
Hydro
LNG
HSD MFO
Coal
• The contract of IPP Geothermal will increase PLN subsidy since the generation cost of geothermal electricity higher than coal fired electricity, except in small system, which the electricity mostly supplied by diesel oil. For example in Flores system, IPP Geothermal expected to reduce subsidy.
• Referring to Geothermal Tariff study by consultant of World Bank – ADB (2014), PLN avoided cost for geothermal tariff based on coal power plant : 6.92 c USD/kWh (2014) escalated to 8.50 c USD/kWh (2019)
• With assumption the average tariff of 3.5 GW IPP geothermal at 11.5 c USD/kWh in 2020, additional subsidy through PLN (estimate) : 0.78 bill USD in 2020. If the contract of IPP Geothermal about the ceiling price (14.7 c USD/kWh – WB/ADB study) the subsidy will be more than double.
The Impact of Geothermal Tariff to PLN Subsidy
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Gas
Geothermal
Hydro
LNG
HSD MFO
Coal
The Factor Impact to Geothermal Tariff
• Royalties, fees, retribution, taxes, incentives, guarantees : The Government has provided regulations to promote the attractive tariff for geothermal
• Permits (number and duration) : Need improvement
Regulation
• Cost of fund : Developer should give the best effort to have access on the lowest cost of fund
• Capacity Factor, escalation, TOP/DOP : has been standardised in the PPA
• Cost of investment increase due to market condition: Cost of drilling increase due to many projects come in the same schedule
Commercial
• Drilling success ratio : More developers state high difficulties to meet the success ratio target
• Well characteristic (capacity, steam fraction, chemist, etc)
• Project management (when the COD) : More developers fails to commit the COD target
Technical
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Gas
Geothermal
Hydro
LNG
HSD MFO
Coal
• The contribution of geothermal for electricity is more to support the government policy on RE and more in line with PLN vision to doing business with environmental perspective and
• Geothermal power plant will reduce the high dependency on coal as power plant with base load operation mode, in which the GPP commonly have a higher security of supply than CFPP.
• Geothermal power plant will increase PLN cash out therefore, it is important to clearly defined and transparency disclosed the portion of geothermal tariff will be responsible cost of PLN, government incentive or pass trough to the consumer.
Conclusion
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