GRC Transactions, Vol.

39, 2015

Sarulla 330 MW Geothermal Project

Key Success Factors in Development
Nir Wolf and Amnon Gabbay
Ormat, Reno, NV, USA
[email protected] • [email protected]

Keywords
Sarulla, geothermal power plant, Organic Rankine Cycle (ORC), Ormat Energy Convertor (OEC), binary, Indonesia

Abstract
Located in the Tapanuli Utara District, North Sumatra province in Indonesia, the 330 MW Sarulla power plant is set
to be the world’s largest geothermal power plant when its construction is completed in 2019. At this time construction has
started but the story of the development of this power plant is a long and interesting one on many levels; it demonstrates
the challenges and risks that geothermal developers will face on the road to success, from regulatory through economics,
technical, legal and financing aspects. Many people and organizations have worked tirelessly for years to bring the plant
to fruition and in this paper we shall outline the history and the various challenges the project has faced, highlighting the
major criteria for overcoming such challenges, while ensuring successful development.
The project originally started development by Unocal in 1993, and in 2004 was retendered by PLN (the Indone-
sian national electricity company). PLN took over Unocal’s interest in the JOC (Joint Operation Contract) and the PPA
(Power Purchase Agreement). In 2006, the Medco-Ormat-Itochu Consortium won the tender to develop the project. Today
the Consortium consists of Medco Energi Internasional Tbk, Ormat Technologies, Inc.; Itochu Corporation and Kyushu
Electric Power Co. Inc.
Based on the above considerations, SOL (as contractor to PT Pertamina Geothermal Energy, “PGE”) formally gave
notice of its intention to develop a geothermal power plant of approximately 330 MW capacity in the Sarulla Contract
Area. This will be comprised of the following units (or stages) as set out in Appendix IV of the JOC.
• First Unit and Second Unit - the SIL Plant: approximately 83-110 MW in 2016 (possibly in several increments)
• Third Unit and Fourth Unit - the NIL I Plant: approximately 76-110 MW in 2017 (possibly in several increments)
• Fifth Unit and Sixth Unit - the NIL II Plant: approximately 76-110 MW in 2018 (possibly in several increments)

1. Introduction - Project Structure

1.1. Project Description and History
The 330 MW Sarulla geothermal power project is located in Tapanuli Utara, North Sumatra, Indonesia (Figure 1).
The project will be constructed in three phases of 110 MW each, utilizing both steam and brine extracted from the geo-
thermal field to increase the power plant’s efficiency. The first phase is scheduled to commence operations in 2016, and
the remaining two phases are scheduled to be completed in stages within 18 months thereafter.
The project is developed, and will later be owned and operated, by the Sarulla Operations Limited (SOL) consortium
of which Ormat has a 12.75% share. Other members of the consortium that owns SOL include Medco Energi Internasional
Tbk (Medco); Itochu Corporation (Itochu); and Kyushu Electric Power Co. Inc. (Kyushu). Ormat also plays the role of
designer and will supply the Ormat Energy Converters (OEC) to the power plant.

907
Wolf and Gabbay

The concession holder for the project PT Pertamina Geother-

mal Energy (PGE) has provided the consortium the right to use the
geothermal field under a JOC. PT PLN, the state electric utility, is
the offtaker for 30 years under the Energy Sales Contract (ESC).
Amendments to both JOC and ESC were signed on April 4, 2013.
The project will be developed and implemented under a 30-year
energy sales contract with Perusahaan Listrik Negara (PLN), the
national electricity utility company, a 30-year joint operating con-
tract with Pertamina Geothermal Energy, and a 20-year guarantee
from the Ministry of Finance.
Exploration of the project’s geothermal resources started in
1993 but stopped in 1998 due to challenges presented by the Asian
Financial Crisis which also led to the original developer to sell its
development rights to PLN. When a law to promote private sector
participation in the geothermal sector was signed in 2004 PLN
opened an Independent Power Producers (IPP) bidding process for
the Sarulla development rights, which the SOL consortium, in its
original makeup of Medco, Ormat and Itochu won in 2005 (Kyushu
only joined the consortium in 2008).
1.2. The Sarulla Consortium Figure 1. Sarulla location the North Sumatera area of Indonesia.

The sponsors own multiple special purpose vehicles that

act together as borrowers and be jointly and severally liable to the
lenders. The borrowers are S0L, Sarulla Power Asset Limited, Kyuden Sarulla Private Limited, OrSarulla Incorporated,
and PT Medco Geopower Sarulla. SOL will be the operating company for steam resource development and construction
and operation of plant facilities.
1.3. Business Model & Financing
On March 28, 2014, the Consortium signed the financing agreements with a syndicate comprised of Japanese Bank
for International Cooperation (“JBIC”) and Asian Development Bank (“ADB”), acting as Lead Structuring Banks (ADB
acting both at its own capacity, as well as an implementing agency for the Clean Technology Fund and for the Canadian
Climate Fund), as well as six commercial lenders: Sumitomo Mitsui Banking Corporation (“SMBC”), Societe Generale
(“SG”), National Australian Bank (“NAB”), Bank of Tokyo Mitsubishi UFJ (“BTMU”), Mizuho and ING Bank. JBIC
also provides political risk guaranty for the portion of the loan provided by commercial lenders, under an EPRG policy.
The financing package will provide up to approximately $1.2bn loans, to finance approximately $1.6bn of the project
costs, provided during approximately 4 years of development phase, followed by a term repayment period of 16 years (20
years door to door). First drawdown under the loans occurred on May 23, 2014.
Upon financial closing, the consortium also engaged in an Interest Rate Swap (IRS) hedging transaction to hedge
between 80%-90% of the interest payments payable under the LIBOR based tranches of the loan.
In order to achieve financial closing, both the financing syndicate and the project sponsors had to agree on numerous
risk mitigation measures. These included allowing for sufficient contingencies, including contingent equity facility, robust
Debt Service Coverage Ratios, and prudent term loan when compared to the project term of 30 years.

2. Project Design
2.1. General
The geothermal world utilizes several common conversion technologies that can be classified as: a) back pressure
steam turbine; b) condensing steam turbine; c) binary cycle. In addition there are combinations of the above that may
be utilized depending on several parameters. Chiefly amongst them are the characteristics of the geothermal fluid, (e.g.
enthalpy, chemical composition), and other aspects such as availability of water, environmental consideration etc.
Considering the amount of brine in the Sarulla field as well as the high content of NCG the selected generating units
are a combination of back pressure steam turbines and ORC units.
2.2. The Sarulla Geothermal Field
The project consists of two field areas: Namora-I-Langit (NIL) and Silangkitang (SIL), slated for a total of about 330
MW net production. Exploration of the Sarulla field began in 1993 under the direction of Unocal North Sumatra Geothermal

908
 Wolf and Gabbay

Ltd. (UNSG) (Gunderson et. al 1995, Gunderson

et. al. 2000). A Joint Operation Contract (JOC)
with Pertamina, the Indonesian National Oil
Company, identifying the area as a favorable
high temperature geothermal concession. The
fields are located immediately adjacent to the
Great Sumatran Fault (GSF), a major right-lateral
strike-slip fault system which transects the length
of the Sumatra volcanic arc. No active volcanism
is present at Sarulla with the youngest intrusive
domes dated at 120ky. The Namora-I-Langit field
hosts a prolific gas-rich fumarole area with boiling
acid-sulfate springs atop a thick altered clay-cap
exposed near surface, west of the Great Sumatran
Fault. Drilling of four deep exploration wells to
over 1500m at NIL demonstrated a 275°C liquid
dominated system. Silangkitang, hosts a 4km
span of fumaroles, sinter and boiling hot springs
along the main axis of the GSF. Equilibrated distal
hotsprings indicate temperatures of about 270°C.
A total of five deep exploration wells were drilled
at SIL between 1994 and 1998 to a maximum
depth of 2300m demonstrating upwards of 310°C. Figure 2. SIL site map.
Both the NIL and SIL reservoirs are hosted within
a tectonic half-graben forming to the west of the GSF with conjugate structures controlling the main permeability within
a thick sequence of Quaternary age rhyolitic to dacitic volcanics underlain by a basement of Paleozoic meta-sediments.
A reservoir simulation study was carried out to verify the capacity of Silangkitang and Namora-I-Langit reservoirs
to sustain a combined extraction of the mass to drive geothermal power units generating about 350 MW of gross capacity
for 30 years. Both models were successfully cali-
brated to natural state conditions and to historical
production and injection conditions by matching
simulated underground pressure and temperatures
to data from the NIL and SIL wells obtained dur-
ing various production tests performed by Unocal.
To meet the design capacity of about 110
MW at 20bara separation pressure at SIL, three
additional production wells and five injection
wells will be drilled. 20 new production wells are
planned at NIL, and 6 injection wells, to supply
the 230 MW expected units at 11bara separa-
tor pressure. Make-up wells are included in the
ongoing drilling campaign which includes three
drilling rigs operating in parallel. Several new
drilling pads are planned for Sarullla to span the
large extent of these fields and to combat the po-
tential for break-through cooling from reinjection
subject to these liquid-dominated systems. The
first well at Sarulla spuded in September 2014
and power plants are expected to be completed
by 2018.
The selected configuration provides the
lowest project risks related to brine chemistry and
maximizes the life of the reservoir. The proposed
wells include a prudent margin of excess capacity.
The anticipated well site locations are shown on
the field layout in Figures 2 and 3. Figure 3. NIL site map.

909
Wolf and Gabbay

2.3. Power Plant Design

Following a comprehensive study,
taking into consideration the thermo-
dynamic efficiency, the geothermal
fluid characteristics and environmental
aspects, a combination of technologies
developed by Ormat were selected as the
best configuration for energy conversion
in both NIL and in SIL. This configura-
tion consists of a back pressure steam
turbine and bottoming OECs (Ormat
Energy Convertor) heated by the low
pressure steam exiting the topping steam
turbine (GCCU). In more general terms
the GCCU represents an excellent solu-
tion for medium to high pressure steam
resources. . The steam exits the steam
turbine and enters the OEC vaporizer
(bottoming unit, see Fig 5 for simplified
flow process) ,at just above atmospheric Figure 4. Nil & SIL process scheme.
pressure (Figure 4).
The brine OEC units utilize the
brine as it leaves the separation station,
thus, rather than just being reinjected it
flows to the OEC brine units ( See Fig 6
For a simplified typical Brine OEC flow
chart) and provides additional power that
otherwise, would have be wasted. The
GCCU has the advantages of the steam
turbine, the ORC and their combination
Advantages of the Back Pressure
Steam Turbine:
• The exhaust pressure of the steam
turbine is just above atmospheric
pressure
• No need for large, complicated and
high energy consuming vacuum
systems
• No air ingress into the vacuum
stages of a condensing steam
turbine
• Less stages, especially eliminat-
ing the last stages of a condensing Figure 5. Typical Bottoming OEC Process scheme.
steam turbine which have very
long blades (since the volume of
exhaust steam at atmospheric pressure is ~10 times lower than at typical 0.1 bara exhaust pressure of a condens-
ing steam turbine)
• Less moisture at the exhaust which reduces erosion and increases turbine efficiency

Advantages of the Organic Rankine Cycle (ORC):

• High Turbine Efficiency at Low speed: Due to the motive fluid’s low acoustic velocity (compared to steam), fa-
vorable aerodynamic matching is achieved at low blade speed. This yields high turbine efficiency at 1800 rpm
without a gearbox.

910
 Wolf and Gabbay

• Fewer Turbine Stages: The lower

pressure ratio and enthalpy drop
of the motive fluid during expan-
sion require fewer stages. This
significantly simplifies the turbine
construction.
• Moisture-Free Turbine Expan-
sion: The OEC turbine remains
dry under all expected working
conditions, a thermodynamic
consequence of the hydrocarbons’
‘drying fluid’ saturation curve.
This eliminates the possibility
of erosion damage to the turbine
blades.
• Condensing Near Atmospheric
Pressure: The thermodynamic
properties of the motive fluid pro-
vide much higher condensing
pressures than comparable steam
systems. By operating at condens-
ing pressures near atmospheric,
the turbine has shorter blades and
the ingress of air into the system
is significantly minimized.
• Utilization of Latent and Sensible
Heat – Temperature curves are Figure 6. Typical Brine OEC Process scheme.
presented in Fig. 7 & 8 for the
GCCU & Brine Bottoming OECs, respectively. As Shown in Fig. 7, after energy conversion in the steam turbine,
the steam releases latent heat as it condenses in parallel to the motive fluid acquiring the heat in a boiling process.
Part of the steam latent heat is used for preheating the motive fluid. In Fig. 8, the brine heat release curve is a lin-
ear line as it relates to sensible heat transfer. A pinch point is created where the motive fluid changes phase from
liquid to vapor.

Figure 7. GCCU T-Q diagram. Figure 8. Brine OEC T-Q diagram.

Advantages of the GCCU - Common Aspects

• Better handling with Noncondensable Gases (NCG): In binary cycle including GCCU, unlike condensing steam
turbine, steam is condensed at a pressure slightly higher than atmospheric pressure. This allows for the NCG to be

911
Wolf and Gabbay

removed from the condenser (or heat exchanger) without an expensive, power consuming vacuum pumping system
or steam consuming ejectors, giving an advantage to the binary cycle over the condensing steam turbine cycles.
• Use of air-cooling: The ORC effectively uses air-cooled condensers due to higher specific density of the organic
working fluid compared to steam/water. This eliminates water consumption and the use of cooling water chemical
treatment. Further, air cooled systems eliminate water mist which is blown out and sprayed over the environment
as well as the highly visible plume of vapour mist and steam discharging on top of a water cooling system.
• 100% injection of all gases and fluids - The use of air cooled condensers allows for the total re-injection of all
produced gases and fluids and improves the sustainability of the geothermal reservoir.
• Utilization of the brine: Since Sarulla field will produce large amounts of brine and since its chemical characteristics
are manageable, the utilization of this brine to produce additional power and eventually to reduce the number of wells
is an important aspect in the resource exploitation. The mixture of 100% condensed steam and the cooled brine to
the reinjection wells makes the use of brine in the binary system ideal as it reduces the potential for silica scaling.

3. Environmental Considerations

To meet the Indonesian government environmental regulations, an Enviornmental Impact Assessment (EIS) was
performed in accordance with those specific regulations for power plant development which are larger than 55 MW and
where the transmission line is larger than 150 KV. In Indonesia the EIS is called AMDAL, “Analysis Mengenai Dampak
Lingkugan”. The EIS has identified important impacts, both positive and negative, of the Sarulla geothermal power plant
plan and in order to control and minimize the negative possible impacts the AMDAL include also environmental manage-
ment and monitoring (RKL & RPL) instructions. As part of the AMDAL three items required special consideration and
mitigation:
• Air pollution mainly from discharge of hydrogen sulfide
• Water pollution with arsenic in water
• Noise impact on residents living near the site boundaries
Other environmental impacts such as waste water, socialization, etc. were also investigated. The consideration in
those studies was also with regards to the activities which are within forestry areas mainly in Namura I langit field and as
a result a Forestry Land Use License was required.
One should not forget however that all of those studies and environmental impact assessments are to support a
large-scale base load geothermal power generation that will help displace fossil fuel-generated power, an electricity source
that is the dominant alternative for base-load generation in the Sumatra grid, thus supporting climate change mitigation
through an estimated net reduction in carbon dioxide (CO2) emissions equivalent to 1.3 million tons per year. In addition
the construction and operation of the power plants will generate employment for the local community.

4. Conclusion
The Sarulla project is a large geothermal project and it has many challenges in all aspects: environment, financing,
field development, and selection of generating technology. Due to the large size of the project and concession area, the
project will be completed in three phases, each sized approximately 110 MW. The date of first operation of the SIL Unit is
scheduled for approximately 30 months after full notice to proceed (late 2016). NIL-1 and NIL-2 are scheduled to follow
approximately 12 and 18 months following Unit 1, respectively, however these dates may vary.
The Ormat technology was selected for this project as it is able to maximize the efficient use of the variable com-
position of geothermal fluid, which in this case includes steam, brine and gases. In addition Ormat’s technology allows
practically 100% reinjection of the geothermal fluid back into the reservoir, maintaining the sustainability of the geothermal
resource thus increasing power and mitigates the negative effect of gases

5. References
Gunderson et. al., 2000, Exploration Results in the Sarulla Block, North Sumatra, Indonesia, Proceedings from the World Geothermal Congress 2000,
Kyushu – Tohoku, Japan, May 28 – June 10.
Gunderson et. al., 1995, Geology and Thermal Features of the Sarulla Contract Area, North Sumatra, Indonesia, Proceedings of the World Geothermal
Congress, Auckland, New Zealand, May 18 – 31.

912