Sumitomo Corporation (President & CEO: Susumu Kato; Head office: Chuo-ku, Tokyo; hereinafter, "Sumitomo") has signed a full turn-key contract (including civil, construction, engineering and installation works) with PT. PLN (Persero), Indonesia's state-owned power company, for construction of the Ulubelu geothermal power station (units 1 and 2) with a total capacity of 110 megawatts (MW).
The power station is to be built in Ulubelu in the province of Lampung in South Sumatra. The main unit--the geothermal steam turbine and generator--will be manufactured and delivered by Fuji Electric Systems, while a major Indonesian engineering company, PT Rekayasa Industri (hereinafter, "Rekayasa"), is responsible for civil, construction and installation works, as well as substation and transmission-line construction. The work is to be completed within 32 months; by October 2012. The project will be financed with yen credit loan from the Japan International Cooperation Agency (JICA). It will be the largest yen credit loan yet for a geothermal power plant.
Sumitomo has, in cooperation with Fuji Electric Systems and Rekayasa, been focusing on geothermal power generation projects in Indonesia. Sumitomo has so far signed seven contracts with a capacity of approximately 530 MW, and our most recent undertaking is the construction of the 20 MW Lahendong Unit 4 (contract signed in November 2009). With this new contract, geothermal power stations delivered by Sumitomo and Fuji Electric Systems account for about 50% of all geothermal power-generating facilities completed or under construction in Indonesia. Outside of Indonesia, Sumitomo and Fuji Electric Systems have delivered a number of facilities in New Zealand, the Philippines, the U.S.A, El Salvador and Iceland.
Geothermal power plants are beneficial to efforts to protect the environment as their steam-power generation facilities, which use renewable geothermal energy, emit less CO2. Furthermore, with the recent rise in fossil fuel prices, their economic feasibility is improving compared with other thermal power generation systems. The turbine is driven by geothermal steam, which does not rely on conventional heat exchange in the boiler, but rather natural steam containing corrosive impurities ejected from under the ground. This requires advanced technologies supported by extensive experience, particularly in addressing the problems of corrosion and scaling. Japanese heavy electric machinery manufacturers have considerable expertise in making turbines for geothermal power generation, and Fuji Electric Systems, manufacturer of the main unit for this project, has one of the largest market shares in the world, supplying about 40 percent of all steam turbines over the past decade (as of February 2010).
Although Indonesia has the world's largest resources of geothermal energy, the present output of power generated remains at 1,200 MW, or 4.5% of total. Under these circumstances, according to the 2nd Crash Program recently announced by the Indonesian government, the total output of geothermal power generation facilities is planned to be increased by 4,000 MW until 2014 and Indonesian government is planning to increase geothermal power generating to 9,500 MW by 2025, for the purpose of speeding national development of geothermal energy and making effective use of the country's abundant geothermal energy resources. In order to realize Indonesia's plan of promoting geothermal power generation and facilities enhancement, Sumitomo will make further efforts to obtain contracts for geothermal power generation projects in Indonesia, and cooperate in the economic development of the country by leveraging our considerable achievements and experience in contract execution.