US-based alternative and renewable energy technology provider Ormat Technologies has signed and closed a set of agreements to acquire 49% in the Ijen geothermal project company from a subsidiary of Medco Power .
The Ijen geothermal project company holds geothermal license to develop Ijen project in East Java. The acquisition is expected to further strengthen Ormat’s position in Indonesia.
Under the transaction agreements, Ormat will acquire 49% of the shares of the Ijen geothermal project company and will commit to provide additional funding for the project exploration and development, subject to specific conditions.
Ormat and Medco will develop the project jointly
Ormat and Medco will develop the project jointly, while a subsidiary of Medco Power is expected to retain 51% ownership in the Ijen.
Ormat chief executive officer Isaac Angel said: “We have established a tremendous relationship with Medco, including partnering on our Sarulla plant, and we are excited to extend this relationship to a second major project in Indonesia. As part of this partnership, Ormat holds a preferential right to supply equipment to the project, leveraging our expertise and increasing the opportunities for our product segment.
“Medco shall hold a preferential right to operate and manage the project after its commercial operation, in-line with Medco’s significant operation and maintenance experience. Indonesia has significant volcanic geology that is reported to have a major part of the world’s potential geothermal resources, estimated at 28,000 megawatts.”
Ormat said that the Ijen project assets include a geothermal concession and 30-year PPA for up to 110MW capacity, and its final capacity will be determined after exploration.
In addition, the project is ready for exploration and development with some slim holes already drilled and is expected to start commercial operation at the end of 2022.
Angel added: “The government of Indonesia has announced plans to produce more than 9,000 MW of geothermal power by 2025, becoming the world’s leading geothermal energy producer. This would account for 5% of Indonesia’s total energy needs, creating significant opportunities for additional geothermal expansion.”
