State utility firm PT PLN has signed an agreement with US-based global technology and energy giant General Electric (GE) to set up a biomass power plant with a capacity of around 1 megawatt (MW) in Sumba Island, East Nusa Tenggara.
Witnessed by Energy and Mineral Resources Minister Jero Wacik, PLN president director Nur Pamudji and GE Indonesia chief executive Handry Satriago signed a letter of intent for the wood chip-fired power plant project during the opening ceremony of the 19th Conference on Electric Power Supply Industry (CEPSI) in Nusa Dua, Bali on Monday.
The letter of intent was the follow-up of a memorandum of understanding (MoU) on plans to build power plants using renewable energy resources that both sides signed in May this year.
Woodchips for similar projects generally come from trees such as the eucalyptus and acacia trees, and are small enough to ensure even burning temperatures.
Assuming one household needs approximately 1,000 kilowatt-hours (kWh), the planned 1 MW plant could supply power for 1,000 households.
“This project will demonstrate the technical and economic viability of extending electricity to remote areas using biomass fuel sources. [The project] will also serve as a model for developing biomass power plants in other parts of Indonesia,” Pamudji told reporters after the signing ceremony.
Under the agreement, PLN and local administrations in the island will provide 100 hectares of land for the wood plantation needed to supply the planned power plant, while GE will use its integrated biomass gasification technology to execute the project.
The pilot project is a part of the efforts from PLN to trim down the country’s dependency on diesel power plants, which burn subsidized fuel and contribute to the state budget deficit, according to Pamudji.
Although total investment needed to construct a wood chip-fired plant would cost around 30 percent more than what was needed to build a diesel power plant, the return of the investment would be faster, GE Asia Pacific’s gas engine market development director Made Wahyu Wiratma said separately.
“The rate for the electricity from a diesel power plant is between 26 to 30 US cents per kWh, while the rate for the electricity from the wood chip-fired power plant is only 12 to 15 US cents per kWh,” he said.
Including the investment costs associated with establishing the 100-hectare wood plantation, the wood chip-fired power plant project will cost at least US$5 million, according to Made, who expected the biomass power plant to begin supplying power to the residents of Sumba Island in 2014.
