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  Weekly News Report
   
  12 November 2010
         
         
     

Indonesia to Expand Geothermal Use to Power Regional Development Across the Country

 
         
     

Indonesia has arguably the world's greatest geothermal potential, followed by Iceland, and possesses significant coal bed methane resources as well as hydro potential in respect of renewable energy. However, Indonesia is also amongst the world's largest emitters of greenhouse gases. Around 85 percent of these emissions result from land use issues: agricultural practices, land use methods and land use changes in forest and peat-land areas. Indonesia's Copenhagen Accord commitments include a voluntary 26 per cent reduction in emissions by 2020 with no baseline year identified. Indonesia has identified the potential for an additional 15-16 per cent reduction in emissions with the support of other parties, being a possible total reduction of 40-41 per cent by 2020. In terms of the Clean Development Mechanism, Indonesia has some 48 projects registered by the CDM Executive Board

Indonesia, has already 1,189MW of installed geothermal capacity out of government identified total geothermal resources of 28,453 MW.  The Indonesian Government plans to increase capacity by 250% to 2,897 MW by 2014 with a further doubling by 2025.  The plan will be supported by just announced US$1.8bn of development grants ($300m) and lending ($1.5bn) from The Climate Investment Funds of the ADB, World Bank, EBRD, AfDB and IADB as well as grants from UNDP, USTAD and AusAid. The focus of much of the development of geothermal energy is to provide power to regional cities and centres beyond existing base-load capacity supplying the grid on Java servicing the larger cities. Favourable power tariffs, long PPAs and the availability of carbon credits makes investment attractive for commercial investors alongside Government action.

The development of geothermal is in the context of The National Action Plan Addressing Climate Change prepared in 2007 (the NAP), which is a general guide to be used by multiple Indonesian institutions to provide for a co-ordinated and integrated approach to addressing climate change. The NAP is referred to as a "dynamic policy instrument". It is supported by Ministry policies, for example the Ministry of Public Works recently released National Action Plan on Mitigation and Adaptation to Climate Change specific to Public Works which includes policies, strategies and programs to lower impacts of climate change in the public works sector. The NAP lists the regulatory efforts to be implemented for tackling climate change in categories including short–term and long-term implementation.

Panax, a Brisbane-based, ASX listed company has two joint venture projects in Indonesia at Skoria on Flores and Dairi Prima on Sumatra which are to deliver 30MW in Flores to the regional centre of Ende to replace diesel powered generators, and 6MW for off-grid power for underground mining operations at Dairi Prima in Sumatra. Panax, one of a number of Australian companies developing projects in Indonesia, uses the commercially and technologically proven Hot Aquifer geothermal power production process.  Panax has geothermal operations in South Australia, Indonesia and India.

 
         
     

German Solar – Too Much of A Good Thing?

 
         
     

Until the recent reduction of its feed-in tariff, Germany provided some of the most generous solar incentives in the world. In July 2010 the German Government announced that it was cutting the feed-in tariff (FIT) for solar, and was also considering a hard cap on installation levels.  As part of the review of Germany's renewable law (EEG) next year further cuts in the FIT may occur. Since 2000, when the FIT program was created, the global solar market has climbed from 170 MW of installations per year to 17,000 MW installed in 2010. Around 70% of total global installations have been in Germany. Over 60 countries, provinces or municipalities have followed the German FIT model for stimulating the adoption of renewable energy.

 

In October 2010, Stephan Kohler, the head of the German energy agency, DENA, stated that the rapid solar build-up threatened to overwhelm the country's power grid. He proposed capping the amount of new solar that could be added each year at 1,000 MW, or around 10% of the capacity in place as of the end of 2009. The problem that Herr Kohler identified is rooted in the large disparity between the average and peak output of solar panels installed in high latitudes and under Germany's notoriously cloudy skies. On average, every MW of solar capacity installed in Germany generates only about 100 kW over the course of the year. If that were a constant, it would be a lot easier for grid managers to accommodate. However, that capacity generates nothing at night, while still putting 1 MW into the grid at noon on a bright summer day. This large difference, or swing in capacity, affects how much backup capacity must be available to the grid and how much other capacity must be taken offline as solar output ramps up daily and seasonally. While in a sunny location it might suffice to keep a few "peaking" gas turbines on standby--a role that might even be filled by electricity storage in the future--in a place as un-sunny as Germany it requires substantial capacity capable of running economically on standby for many hours a day, week after week. It is possible that Germany may even need to import power from elsewhere in Europe to address the gap, including from France which is predominately nuclear.

 

The German experience demonstrates one of the unintended consequences for connecting solar, wind or tidal renewable generation capacity to the grid – without energy storage then standby generation capability is required, the cost of which is passed back to consumers as part of the cost of “going green”. Although generally very sunny compared to Germany, Queensland generators will none-the-less need to creatively address both storage and standby generation issues when connecting both domestic and commercial scale solar or wind generation capability.  Western Australia is considering using a wind-powered pumped storage solution for standby hydro-generation to offset the swing effect caused by its significant wind generation capability having too little wind or tripping out off grid when there is too much wind.

 
         
 
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