Adam Bennett

Adam is a political reporter for the New Zealand Herald.

Indonesia provides geothermal opportunity

One of Indonesia's many volcanoes, Mount Lokon, put on a spectacular display of geothermal power last year. Photo / AP
One of Indonesia's many volcanoes, Mount Lokon, put on a spectacular display of geothermal power last year. Photo / AP

Lying on the Pacific's rim of fire, New Zealand and Indonesia share a history of not just earthquakes but massive volcanic activity.

New Zealanders have become world leaders in harnessing it to produce electricity.

They have also been sharing that expertise with Indonesia for more than 35 years.

Arriving in Indonesia in 1974, Mike Allen was among the New Zealanders who pioneered geothermal power there as part of an aid programme.

Allen ran Genzl (Geothermal NZ Ltd), a collaboration between the late Malcolm McConnell's McConnell Dowell civil engineering company, Ceramco, Worley Consultants and Tonkin & Taylor.

Genzl was set up with the encouragement of the Norman Kirk-led Labour government to go to Indonesia "and do exciting things", Allen said.

The original 30 megawatt (Mw) plant was inaugurated in 1983 and is still running today.

Thirty years later McConnell's son David McConnell, the managing director of McConnell Group, is in Indonesia this week with Allen in a business delegation accompanying Prime Minister John Key in his first official visit to the booming Southeast Asian country.

The delegation has four strands including food and beverage, education, and aviation and tourism but there is a strong representation from companies and consultancies involved in the science, engineering and construction of geothermal power plants.

Allen is the chair of Geothermal NZ, an umbrella group for those companies which include McConnell Group subsidiary Hawkins Infrastructure and the soon to be partially privatised Mighty River Power along with engineering consultants Beca Group and Crown research institute GNS Science.

The group sprang from recent successes in developing new geothermal plants in New Zealand including Mighty River's Kawerau and Nga Awa Purua.

While Japan's Sumitomo was the lead engineer-procurer-contractor, a lot of the design, construction and assembly was done by local companies including Hawkins and Beca.

Sumitomo was impressed with the NZ companies' work and suggested further collaborations offshore.

Geothermal NZ was formed in response but will not necessarily work with Sumitomo. It has looked at opportunities in East Africa and Chile, "but Indonesia is an obvious market because we know it well".

"New Zealand consultants are through the whole industry there and have been for 35 years or so. Go into any of the private companies and you'll find New Zealanders are heavily involved in senior management. But what we're really trying to do on this trip is move beyond consulting."

Geothermal NZ gathers the combined expertise of a number of New Zealand companies that are relatively small and don't necessarily have the capacity to go and do independent marketing in Indonesia.

"If we can do it through at least a shop front, a collaborative effort, we can open a door and when we've got some specific projects then Hawkins and Beca can pull together the subcontractors they need and hopefully make things happen."

Beca recently won a contract to provide the mechanical and electrical engineering design for Jakarta's 638m Signature Tower, which will be the tallest building in the Southern Hemisphere. Allen says current revenue from geothermal consultancy work is relatively small.

"It's tens and millions of dollars a year [in] the construction industry. We think we can take that up several fold but we don't really know yet."

Geothermal NZ has already made a number of recent visits to Indonesia, meeting the private sector players in the industry with the message that it now has a broader interest than just consulting.

It's also had discussions with Pertamina Geothermal, a subsidiary of the huge state-owned Pertamina oil and gas company.

"They seem keen to see if there's a model where we could help them accelerate their programme. So there is a lot of potential and this is obviously a good opportunity."

Key's government clearly thinks so too.

Allen says Key is set to sign a memorandum of understanding with the Indonesian Government "saying we're very friendly people and we've got geothermal skills and we're very happy to collaborate".

HUGE HEAT

Geothermal energy in Indonesia:

* Currently has 1200 megawatts (Mw) of capacity
* Plans to build 44 new geothermal plants by 2014, taking capacity to 4000 Mw
* Estimated potential of between 20,000 and 30,000 Mw equivalent to 13-20 Huntly Power Stations.

Big NZ delegation means business

New Zealand's exports to Indonesia - $862 million last year - are already significant.
But a 26-strong delegation of top business leaders shows trade is the emphasis of Prime Minister John Key's visit to Jakarta, the capital of the sprawling archipelago which is home to 240 million people.

About 40 per cent of New Zealand's exports to Indonesia are dairy products so it's appropriate that Fonterra's chief executive Theo Spierings, who lived in Indonesia for a number of years, is part of the delegation.

Indonesia's middle class is expected to treble from 50 million in 2009 to 150 million by 2014. That means demand for protein such as New Zealand's dairy products and meat is set to grow strongly.

Meat companies ANZCO, Silver Fern Farms are also on the trip, as are the NZ Food and Grocery Council and Pipfruit NZ.

The rising middle classes also means growing demand for education for their children and New Zealand's education sector is represented on the delegation by Education NZ, Academic Colleges Group and Victoria and Massey Universities.

Another major strand of the trade push is around aviation and tourism and in his capacity as tourism minister, Key will be meeting with his Indonesian counterpart Mari Pangestu.

Air New Zealand recently said it would begin a direct Auckland to Bali service during the June-October peak season and Indonesia's national airline Garuda is also mulling an Auckland/Jakarta service.

Representatives of the sector on the delegation include chair of Auckland Airport and Mighty River Power Joan Withers, Tourism NZ chief executive Kevin Bowler and chief executive of baggage handling technology company BCS Group Patrick Teo.

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