Kyushu Power To Launch Indonesian Geothermal Project

Kyushu Electric Power Co. said Thursday it will launch a geothermal power generation project in Indonesia with trading house Itochu Corp. This marks the first overseas geothermal power generation project by a Japanese electric power company. Kyushu Electric said a power plant will begin operating as early as late 2016 and all of the electricity generated there will be sold to an Indonesian state-run utility.

Construction of the plant, with a capacity of about 330,000 kW, will begin around April 2014 on the island of Sumatra, according to Kyushu Electric. Kyushu Electric and Itochu said they will each have a 25% stake in the project, and the remaining investment will come from PT Medco Power Indonesia, a major Indonesian energy firm, and Ormat Technologies Inc., a U.S. generator manufacturer.

In 2007, the Japanese utility exchanged a MoU with the three companies on the investment in the project in Indonesia, which has abundant geothermal resources. The utility plans to raise funds for the project from the government-backed Japan Bank for International Corporation and the Asian Development Bank and repay debt with revenues from sales of electricity.

Kyushu Electric, which has been struggling due to higher fuel costs for thermal power generation amid the suspension of its nuclear power plants, aims to stabilize its business foundation with revenues from overseas operations.

The company operates Japan’s largest geothermal power plant, with generation capacity of 110,000 kW, in the town of Kokonoe in Oita Prefecture. The Indonesian government plans to increase geothermal power generation capacity by 10 times from 2005 levels to 9.5 million kW in 2025.