Next month Indonesia will begin construction of its long-delayed $1.6 billion Sarulla project, which will be the world’s largest geothermal power plant. Economic Coordination Minister Chairul Tanjung told reporters on Wednesday: “The Sarulla groundbreaking will be very soon,” adding that the project had reached financial closure and the government expected construction to begin next month.
Indonesia is home to the world’s largest geothermal resources and is striving to meet the growth in power demand of more than 7 percent a year; the plans are to add 60 gigawatts of capacity to its existing grid by 2022. The stalls in development have been due to struggles to attract investment because of the complex regulations and problems securing project finance. This project was started in 1990, but was halted in 1997 with the Asian financial crisis.
The project secured sponsorship from Itochu Corporation (25%), Kyushu Electric Power Company (25%), PT Medco Power Indonesia (37.5%), a unit of Medco Energi Internasional and Ormat Internations, a unit of Ormat Technologies Inc (12.5%). The financing came from the Japan Bank for International Cooperation (JBIC) and the Asian Development Bank (ADB) as well as the Bank of Tokya-Mitsubishi UFJ Ltd, ING Bank NV (a unit of ING Groep NV), Societe Generale, Sumitomo Mitsui Banking Corporation, Mizuho Bank Ltd and National Australia Bank Ltd.
The 330-MW Sarulla project is predicted to provide clean power as an alternate in a grid reliant on fossil-fuel energy. Sarulla is therefore anticipated to reduce carbon dioxide emissions by 1.3 million tonnes a year when it is completed in 2018.