Companies are holding off on geothermal projects because the PLN return is considered unattractive – Regulations

Companies are reluctant to participate in geothermal projects put up for auction by state-owned energy company PT PLN, and analysts point to unattractive profits from the projects, which may not sufficiently compensate for the risks associated with their development.

In March last year, PLN began offering nine geothermal projects with a combined capacity of about 260 megawatts (MW), including the Tulehu project in the Central Maluku Islands, Atadei in East Nusa Tenggara, Songa Wayaua in the North Maluku Islands, Tangkuban Perahu in West Java, Ungaran in Central Java and Kepahiang in South Sumatra.

Entities interested in participating in the project must cooperate with PLN by establishing a joint venture and signing an agreement with PLN under the Geothermal Exploration and Energy Conversion Agreement (GEECA) cooperation program.

Among those interested was listed company Barito Renewables, through its subsidiary Star Energy. The company expressed interest in the Kepahiang geothermal project, which has a potential of generating 180 MW of electricity, but later decided to withdraw from the tender.

PLN Geothermal Vice President Christyono said on June 27 that the company could not go through with the partnership because “Star Energy’s proposal did not meet PLN’s expectations.”

“(PLN) is putting the geothermal area up for auction again,” he said, according to reports Businessemphasizing that Star Energy has not yet been declared the official winner of the geothermal project auction.

Barito Renewables did not immediately respond to a request for comment.

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