French Storage Moves into Indonesian Geothermal

French storage giant Storengy is diversifying its business with a move into geothermal energy production in Indonesia, its parent Engie said January 27. In its first phase it will produce 80 MW, from commissioning in 2019.

Engie is part of the PT Supreme Energy Muara Laboh consortium, along with the Japanese trading and investment company Sumitomo Corporation and the Indonesian geothermal power developer, PT Supreme Energy.

The consortium has signed a $440mn financing agreement with the Japan Bank for International Cooperation, the Asian Development Bank and a set of commercial banks and building work is expected to start this year in the Solok Selatan region in West Sumatra province. Indonesia relies heavily on coal for its energy and there are funds supporting a move into cleaner fuels.

Engie CEO Isabelle Kocher said the partnership in the Muara Laboh geothermal project "is fully in line with Engie’s strategy to be a leader of the energy transition in the world, notably focusing on competitive renewable energies.”

Geothermal energy is a renewable, non-intermittent and eco-friendly source of energy that is both efficient and economical, using the heat coming from deep underground either for heat, power generation or even air-conditioning, said Engie.

Storengy is, like other storage operators, suffering from the decline in peak demand for gas in Europe and the resulting lower summer-winter price differentials. The over-capacity is expected to lead to a wave of plant closures.

William Powell