PGE plans $300 million capex in 2018

Geothermal developer PT Pertamina Geothermal Energy (PGE), a subsidiary of state-owned oil and gas firm PT Pertamina, has allocated around US$300 million for capital expenditure next year.

PGE President Director Irfan Zainuddin said in a statement on Thursday that much of capex will be used to finance existing geothermal power plant projects and exploration activities.

He said that the company aims to boost the capacity of its geothermal power plants from the current 587 MW to 2,137 MW by 2025.

PGE?s parent, Pertamina has said that it will develop more renewables energy projects to anticipate declining oil and gas reserves in the country as well as help meet the government?s target for renewables to account for up to 23 percent of the country?s energy mix by 2025.

Irfan said that despite the country?s huge geothermal potential, there are a number of lingering challenges in geothermal development including high upfront investment cost of around US$4 million-$5 million per MW, high exploration risk, opposition from local villagers, lack of geoscience data, and the absence of government regulation governing the direct sale of geothermal electricity (it must be made via offtaker).

He did not provide details on the company?s planned geothermal power plant projects.

Editing by Reiner Simanjuntak