Meeting with the Indonesian Ambassador to Russia H.E. Djauhari Oratmangun
On January 14th I flew into Jakarta, for I knew that Mr. Djauhari, the Indonesian Ambassador to Russia, was going to be in the country. His Excellency has an amazing ability to create and surround himself with activity and hospitality. He already supports a number of projects that have the potential to help develop various industries in the country, and during the two meetings we had with the Ambassador we talked about the high potential for green energy in Indonesia. The country has plenty of sunlight and humidity – perfect conditions for growing hundreds of millions of plants annually – and the Ambassador indicated his interest in the methods available for converting plants (biomass) into cost-efficient electricity.
The fact is that the current technology for gasifying biomass to produce electricity is economically unprofitable. I have explained this position in my earlier publications. Today, competition with cheap raw materials like crude oil and gas is futile. However, biomass gasification can reasonably compete with crude oil and gas under two conditions. The first condition is inexpensive gas turbines (as part of a gasification system) at a price not higher than US$250 per 1kW/h capacity. This kind of turbine will provide cheap electricity for the whole gasification facility (making it self-sustainable), as well as providing additional low-cost electricity for market consumption. For example: the cost of a 10MW/h gas turbine on the market today is US$10 million, which results in an electricity cost of US$0.18. Ideally, the cost of the gas turbine should not be higher than US$2.5 million, giving an electricity cost of US$0.06.
The second condition is for new turbines to have an efficiency of not lower than 60%. This kind of gas turbine (Eco-SV turbine) is being developed by the Singaporean company NRGLab Pte Ltd, and Ana Shell Fund finances this project.
Meeting with PT Medco Power Indonesia
On January 15th I met with the MedcoEnergi Power team. The main topic of discussion was the possibility of starting a new joint business in Indonesia’s local and global energy markets.
In Indonesia, electricity produced from biomass gasification may soon become the main kind of energy production. The price per ton of bamboo, palm waste, or rice husk is equivalent to the price of 180 kg of liquefied natural gas (US$70) or 1 ton of coal (US$50). This means that the same amount of electricity, 1.5MW/h, is produced when burning 180 kg of LNG, 1 ton of coal, or 1 ton of palm waste, rice husk, or bamboo.
For Indonesia, however, it would be much more profitable to burn biomass, as this kind of fuel is a renewable source of energy and is twice as cheap as crude oil. If adopted, this concept would allow the Indonesian Government to export its crude oil and LNG resources and thus attract foreign currency. With the price of agricultural waste or wild plants at US$10 per ton, the price of one kW/h is estimated to be US$0.05-0.08.
Meeting with Medco Power
I spoke for over an hour with Mr. Soetrisnanto, Senior Advisor, and Mr. Hernawan, Business Development Consultant, and the Medco Team about utilizing energy from biomass gasification. I particularly enjoyed the strategy introduced by the MedcoEnergy Board to become “the preferred energy company” for investors, shareholders, partners, employees, and communities. We decided to work together (through NRGLab on my side) on the biomass gasification and electricity generation project, which could become highly profitable on the market. MedcoEnergi and the Indonesian Government have announced their intentions to reduce oil consumption by 25% in the next five years through the introduction of alternative energy projects, including the development of geothermal energy. By the year 2025, Jakarta intends to increase production of alternative energy by 9,000 megawatts, which will allow them to save 4 billion barrels of crude oil over that time.
PT Sarana Multi Infrastruktur
On January 16th I met with the leadership of PT Sarana Multi Infrastruktur (Persero) to gain further support for the biomass gasification project using the new NRGLab Pte Ltd gas turbine. President Mrs. Emma Sri Martini and her team will provide technical solutions for infrastructure development, which will ensure the growth of renewable energy projects nationwide.
We also discussed a proposal to utilize the 10 millions tons of heavy residue left at eight Pertamina refineries every year. By implementing Viscoil technology, these 10 million tons of residue can be tranformed into 6 million tons of diesel fuel, which would create approximately US$3 billion of profit. The capital costs for re-equipping the refineries are estimated at US$30 million, and the project would take 6 months. For comparison: the capital costs to build 8 visbreaking plants would require no less than 10 years and US$6 billion.
Pusat Investasi Pemerintah
I also met with PIP’s management, headed by Mr. Siregar, head of PIP, who listened to the two suggested projects and pinpointed a potential role for PIP in these projects. I have high hopes that PIP will become a catalyst for economic growth and infrastructure development in key strategic sectors of the Indonesian economy. We have agreed to jointly develop a strategy for the project, provide detailed assessments of the project to minimize risk, and work on the legal issues to potentially create an investment agreement with PIP. Mr. Siregar Soritaon appointed two of his specialists – Julia and Puji – to work with the Fund and promptly prepare all the necessary documentation (see the photo below).
On a personal note, I would like to comment on the optimistic rates of geothermal energy implementation in Indonesia. The high cost of energy utilization from the “fire mountains” remains the main obstacle: a geothermal plant costs about twice as much as a coal power plant of the same capacity; moreover, it requires long years of research and design development. The NRGLab biomass gasification project is twice as cheap and faster; it also utilizes the limitless resources of renewable materials Indonesia has. Our second project – producing 6 million tons of diesel from heavy residue at Pertamina refineries – can be implemented in one year and with minimum investments. H.E. Ambassador Djauhari has identified these two projects as the beginning of our long-term strategic cooperation.
Report prepared by Ana Shell