Geothermal Economic Analysis

ALI ASHAT

March 2013

Flow Chart Cash Flow Proyek PB

( - )

( - )

Gambar 3 Kontrak Kerjasama Panas Bumi

INDONESIA TAKE

Cost Recovery

Investment Allowance

Tax Contractor Share

Gross Revenue

TOTAL CONTRACTOR SHARE

Contractor Cash Flow

Cost

Economic parameters analysis:

Revenue. Tangible investment, non-capital investment (intangible) Expenses. Depreciation and Amortization Taxable income Tax Cash flow Economic Indicator : Net Present Value, Rate of Return, Productivity Index (PI), Pay Out Time (POT)

Revenue

Electrical generation per year = MW x t x CF

Revenue= MW x t x CF x P

where:

MW = electrical geneartion capacity (Mwe)

t = electrical generation period in one year

(hour)

CF = Capacity factor (fraction)

P = Electricity price ($/MWh)

Capacity Factor (CF)

Ratio of the actual output of a power plant over a period of time and its potential output if it had operated at full name plate capacity the entire time.

Revenue from CDM

R = PET x P where : R = Revenue CDM ($) PET = Annual emission reduction/CER (Ton/year) P = Emission price ($/Ton) or: Annual income = MW x 8760 (jam) x Load Factor

(fraction) x CO2 reduction (ton/MWh) x CDM price ($/ton)

Emission Reduction for Geothermal

International Geothermal Association (IGA) in year 2001 conduct the analysis for CO2 emission from geothermal power plants with total capacity of 4325 Mwe. The result shows that the avarage CO2 emission is 110 gram/kWh. While in the same year, of 580 MW geothermal installed capacity in Indonesia the average C02 emission is 69.2 gram/kWh. In Philippines, of 1124 MW installed capacity, the emission is approximately of 94.1gram/kWh. The average CO2 emission globally from geothermal power plant is less than 100 gram/kWh.

Comparison

Data from New Zealand Energy Efficiency and Conservation Authority on CO2 emission from fossil fuel power plant:

Coal power plant efficiency 35% = 915gram/kWh Diesel power plant efficiency 35% = 760 gram /kWh Combined Cycle (Gas and vapor) efficiency 55% = 345

gram/kWh

Therefore, if combined (natural gas) cycle power plant is replaced by geothermal, it reduces emission up to 245 gram/kWh. Oil power plant can reduce emission 660 gram/kWh and coal power plant can reduce 815 gram/ kWh.

Revenue from CDM

Nowadays, selling price of CER in international market ranges from 2.8 – 15 US$ per ton CO2.

Jangka waktu penjualan CER berdasarkan mekanisme CDM adalah 10 tahun kontrak yang tidak dapat diperbaharui, atau 7 tahun kontrak yang dapat diperbaharui sebanyak 2 kali dengan jangka waktu yang sama.

Upstream Investment

Upstream Investment consist of: Well cost Land preparation cost for well, access road Cost for fluid transmitting from well to PLTP Additional facility

Investastment

Downstream Investment (Power Plant)

Detailed engineering. Access road, land cost and excavation. Fasilitas pembangkit listrik (plant equipment), construction and installation. Construction of PLTP, office, laboratory, general facility and other cost (civil work).

Investasi Kapital & Non Kapital

Investasi kapital adalah investasi yang dikeluarkan untuk membeli barang yang berwujud dan memiliki umur pakai sehingga seiring dengan waktu terdapat pengurangan nilai berupa depresiasi akibat dari pemakaian barang tersebut. Dalam proyek pengembangan panasbumi yang termasuk kedalam investasi kapital adalah peralatan pengeboran, fasilitas produksi, pembangunan gedung, dan peralatan power plant. Investasi non kapital adalah investasi yang dikeluarkan untuk membayar jasa yang diberikan oleh pihak lain untuk menyelesaikan suatu pekerjaan. Walaupun investasi non kapital tidak memiliki wujud, akan tetapi memiliki umur manfaat lebih dari 1 tahun sehingga dapat dinyatakan sebagai aset dan memiliki pengurangan nilai seiring dengan waktu berupa amortisasi. Dalam proyek pengembangan panasbumi, yang termasuk kedalam investasi non kapital adalah jasa pengeboran dan pembangunan infrastruktur.

Menurut beberapa praktisi panasbumi investasi intangible biasanya sekitar 70% dari biaya sumur (well cost) di tambah dengan penyiapan lahan untuk sumur, jalan masuk ke lokasi (land cost, access, site work). Diluar biaya itu, yaitu biaya untuk mengalirkan uap dari sumur ke PLTP ditambah 30% dari well cost, termasuk biaya tangible (Investasi Tangible). semua investasi yang berkaitan dengan pembangkitan energi listrik tersebut diatas termasuk kedalam investasi kapital.

Expense

Expense is adalah pengeluaran untuk membayar jasa yang diberikan oleh pihak lain untuk menyelesaikan suatu pekerjaan dengan umur manfaat kurang dari 1 tahun.

Expense dibedakan berdasarkan tahap pengembangan, yaitu:

Expense yang berkaitan dengan penyediaan uap (Expense Steam Field Development). Expense yang berkaitan dengan pembangkitan energi listrik (Expense Power Plant Development).

Expense Upstream

Geology and Geophysical surveys Core holes Analysis Resource study Environmental study Reservoir study Operating cost

According to some experts, steam supply

operation cost is approximately 3% of cummulative steam supply capital investment (Total Capital Steam Field Development).

Expense Downstream

The expense related to electric generation cost limited to operation and maintenance cost. According to some expert, the amount of geothermal generation is around US$ 3-5/MWh.

Depreciation & Amortization

Depreciation can refer to the decline in an asset’s value due to its use in business activities. Amortization is the gradual reduction of the value of an asset or liability by some periodic amount.

Can be calculate using Straight Line or

Declining Balance.

Taxable income

Taxable income = Revenue – Depresiasi Total – Expense - Interest Deduction

Developer has the obligation to pay tax if taxable

income cumulative has a positive value. Number of paid tax is current taxable income

multiply by geothermal tax. Income tax = Taxable income x tax untuk panasbumi

GEOTHERMAL TAX SYSTEM DEVELOPMENT IN

INDONESIA

Elemen

Perpajakan

Kep. Men. Keu.

No. 746/KMK.012/198

1

(Generasi 1)

Kep. Men. Keu.

No. 766/KMK.04/19

92

(Generasi 2)

UURI No. 17 / 2000

Pajak Penghasilan

(Generasi 3)

Tarif Pajak Penghasilan 46% 34% 30%

PPN 10% Tidak ada Ada, dapat ditunda dan dapat diperoleh kembali

Ada, tidak dapat di- peroleh kembali

Royalti Tidak ada Tidak ada Ada

Bea Masuk Impor dan PPN Barang Operasi

Tidak dipungut Tidak dipungut Dipungut

Pungutan-pungutan Lain Tidak dipungut Ditanggung Pemerintah

Dipungut

Metode Depresiasi

Masa Depresiasi

Tarif Depresiasi

Switching

6 tahun

12,5% (kecuali tahun 3)

Declining Balance

7 tahun

28,57%

Tidak Diatur

Tidak Diatur

Tidak Diatur

Investment Tax Credit (Fasilitas perpajakan)

Ada

(4 tahun @ 5%)

Tidak ada Dimungkinkan

(Maksimum 30%)

THE DEVELOPMENT OF GEOTHERMAL REGULATION IN INDONESIA

Operation Contract

ASPEK PERPAJAKAN

2 Contract

ASPEK BISNIS

6 Contract

0 Contract

Penyempurnaan Pergantian

Pergantian Pergantian

Kep. Pres. No. 22

Tahun 1981

Kep. Pres. No. 45

Tahun 1991

Keputusan Presiden

No. 76 Tahun 2000

Kep. Pres. No. 23

Tahun 1981

Kep. Men. Keuangan

No. 746 Tahun 1981

Kep. Pres. No. 49

Tahun 1991

Kep. Men. Keuangan

No. 766 Tahun 1992

Undang-Undang

Yang Berlaku

(Termasuk UU RI No. 17

Tahun 2000)

Aspek Operasional Aspek Perpajakan

Perubahan

Penggantian

Penggantian

Penggantian

Undang-Undang

No, 27 Tahun 2003

Cashflow

Cashflow =

+ Loan Capital

+ Revenue

– Total investasi

– Total Expenses

– Interest

– Income Tax

– Principle Payment

Economic Indicators

NPV

POT

PI

IRR

n

tt

t

r

CFNPV

0 1

Io

NPVPI 1

mm

m

CCFCCF

CCFmPOT

1

0

0

10

n

tt

t

IRR

CF

Geothermal Development Budget Cost?

Exploration drilling and survey cost

Geothermal field development cost

Power plant development cost

Maintenance and operation cost

Quite vary from one prospect to the other (site spesific)

Depends on : The area and the type of survey conducted during

Chance of success of well exploration drilling

The amount of planned electric capacity

Well potential

Number of production, injection, make-up, and, cold well

Exploration Cost

•ACTIVITIES COST (US$)

Preliminary Survey phase 0.025 – 0.05 mil

Further Exploration 0.5 – 2 mil

Reliability phase (Exploration Drilling) 10-20 mil

Total Exploration Cost 10 – 22 juta

Exploration Cost Unit from Literature (Hence, 2005)

Cost (US$)

1 Pre-FS

-

1,000,000

- Temperature Profile 1,500,000

2 Exploration

- Exploration Drilling (6 well) @5mil US$ 30,000,000

- Rig Mobilitation/ Demobilitation 1,500,000

3 FS

- 100,000

- Infrastructue 7,500,000

41,600,000

Activities

Total

Geology, Geophysics, and Geochemistry

Survey

Environmental Analysis

Project Cost (55 MW) s.d. FS – Upstream (Source: Minerba Pabum)

Duration of Exploration Drilling

Kamojang : 50,2 days

Salak : 75,5 days

Darajat : 112,4 days

Dieng : 169,9 days

Lahendong : 98,6 days

Sibayak : 130,7 days

0

5000

10000

15000

20000

25000

30000

35000

40000

1998 2004 2005 2006 2007 NOP2007

Tahun

Sew

a R

ig U

S$/H

ari

INCREASING STATISTICS OF GEOTHERMAL RIG

RENT SERVICES COST

CAPACITY: 1500 HP

The increasing depends

on oil and gas cost

What is the average number of well output? It’s vary from around 1-2 MW to 25-30 MW Stefansson (2002) predicts 3.4±1.4 MW/km or 4.2±2.2 MW/well. The numbers came from the analysis carried out in 31 high temperature geothermal field in the world. Around 5 MW/km, taken from 4 well known geothermal field.

RECENT WELL COST Sumur Eksplorasi

Sukses Rasio : 50%

( 1 ) Jumlah Sumur : 2 sumur

( 2 ) Biaya Sumur : 5,500 US$ ribu per sumur

Sumur Pengembangan

Sukses Rasio : 80%

( 1 ) Jumlah Sumur Standar : - sumur

( 2 ) Biaya Sumur Standar : 4,000 US$ ribu per sumur

( 3 ) Jumlah Sumur Big Hole : 9

( 4 ) Biaya Sumur Big Hole : 5,000 US$ ribu per sumur

Sumur Injeksi

( 1 ) Jumlah Sumur : 2 sumur

( 2 ) Biaya Sumur : 5,000 US$ ribu per sumur

Sumur Make Up

( 1 ) Jumlah Sumur Big Hole : 7 sumur

( 2 ) Biaya Sumur Big Hole : 5,000 US$ ribu per sumur

Geothermal Field Development Budget Cost

Infrastructure

Supporting Facility Cost

Production Facility Well Pad

Separator

Pipe

Well cost

Infrastructure

Consist of cost needed to: - Land acquisition of road and wellsite

- Road construction

- Supporting features (Ware House, Laboratory,

Housing, Kitchen, Dining Room, Fire water tank,

Water treatment system, Roads & Paving)

From experience in geothermal field in Indonesia, cost

of infrastructure : IDR 5 – 10 mil

Production Facility Gathering System Cost per well

Cost/production well $327.000

Cost/injection well $285.000

Cost/dry well $47.000

Unit Cost of Separator $300.000

Detail & Cost Unit of Production Facility

Item Rate Unit

Transmission Pipe 30 $ / inch m

Insulation 85 $ / m pipa

Cost of Geothermal Power Plant

Biaya Investasi Pembangkit

y = 27.553Ln(x) - 49.539

R2 = 0.88090

20

40

60

80

100

120

0 20 40 60 80 100 120

Kapasitas Pembangkit, MW

Bia

ya In

vesta

si, ju

ta U

S$

Geothermal Power Plant Cost nowadays: 1.5 million/MW

(Mitsubishi dan Fuji Electric)

4 . 8 94.45

5.95

6.24

1.04

1.76

2.1

2.99

4.02

5.19

6.61 6.61

3.15

3.347

3.594

4.2

4 . 7 2 4

3.724

4.1364.271

4.521 4.55

5.07

5.33

4.2

4.4914.644

4.793

5.45

4.917

5.414

4.915.06

5.339 5.376

3.687

3.5434.03

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

6

6.5

7

2000 2001 2002 2003 2004 2005 2006 2007YEAR

Geo

therm

al E

nerg

y P

rice

(cen

t U

S$/k

Wh

)

Regional tarif of. Elect. In Bali Steam Price of SalakElectricity price of Darajat Electricity price of SalakSteam price of Kamojang Steam price of darajat

GEOTHERMAL ENERGY PRICING IN INDONESIA

KOB, BEL Bedugul : 70% * Regional Tariff

KAMOJANG STEAM PRICE TIED TO DOMESTIC OIL PRICE,

FORMULTED (KEPMEN P & ENo. 269/1983):

PRICE/kWh =80 % x 0.28 l/kWh x FUEL OIL/liter

Current KMJ price: = Rp. 611,07 ~ 6.64 cents US $/kWh

Small scale electricity price = 80 % x HPP ( Prov. Sumut 816)

Sibayak (2007)) = Rp.1195,-/kWh ~ 12.84 cents US $/kWh

STATUS :SEPTEMBER 2007

MNL electricity base price= 4.94 cents us $/kWh

36

Geothermal Benefits

Energy Value

Fuel Cost Reduction Value

Fuel Saving Value

Tax Value

Environmental Value

8.2 ¢$/kWh

0.3 ¢$/kWh

5.7 ¢$/kWh

1.6 ¢$/kWh

1.9 ¢$/kWh

Benchmark Price (Coal PP)

GOI can reduce subsidy

Exportable Value

GOI gets more tax

CO2 Reduction (@20$/t)

Total Value of Geothermal : 17.7 ¢$/kWh 11.9 ¢$/kWh

(Geothermal Selling Price) >

Hasil Study JICA untuk Depkeu, Juli 2009