I would sure like to see the long term contract wording regarding the purchase price of the palm oil for that PLN plant. Wonder if the price is set in conjunction with the one on the world market that fluctuates as well as a certain percentage of profit or they set a 2 yr or 3 yr price based on the prices when oil was 140 USD a barrel..........
Thu, 30 Oct 2008
JAKCHAT/PLN operates first power plant fired by crude palm oil
Following the issue of a government regulation mandating the use of biofuel in all sectors, state power company PT PLN has started to operate a power plant fired by crude palm oil (CPO) which it claims to be the first of its kind in the Asia Pacific region.
PLN's director Murtaqi Syamsuddin said the power plant had a capacity of 10 megawatts and was located in Dumai, Riau Province.
"This is a pilot project. The power plant has been operated, but is still at the commissioning stage," Murtaqi told reporters on Wednesday.
Murtaqi said the power plant was initially fueled with diesel but was later converted to a crude palm oil (CPO)-fueled power plant by installing converter equipment at the plant.
"The equipment basically converts the CPO to fuel," he said, adding that the cost for this pilot project was covered by the government.
The converter equipment is provided by Neue Maschinenbau Halberstadt GmbH (NMBH) -- a global biofuel engines producer based in Germany.
Franz J. Komischke, NMBH director for marketing and sales, said the investment to convert the 10 MW diesel-fueled power plant into 10 MW CPO-fueled power plant cost anywhere between Rp 22 billion (US$1.9 million) and Rp 29 billion.
"The investment figure is pretty much dependent on how many engines a power plant has and the size of the engines."
According to Komischke, replacing diesel with CPO to fuel power plant could eventually reduce production costs by between 40 and 60 percent.
He said, based on the current oil price level, the conversion of a 15 MW diesel-fired power plant will save up to $4.5 million per year in electricity production costs.
About 1,500 tons of CPO is needed per year for a 10 MW power plant, he added.
The Indonesian Palm Oil Association (GAPKI) estimates the country will produce 18.4 million tons of CPO this year, which will make Indonesia the world's largest CPO producer.
The government last month issued a regulation requiring the use of biofuel by manufacturers, commercial business, fuel retailers and power plant operators.
The mandated biofuels are pure palm oil, biodiesel, and bioethanol.
Pure palm oil is to replace fuel oil used by manufacturers and power plant operators running low and medium speed engines.
The power plant in Dumai is the PLN's first power plant powered with CPO. But, the company already has nine power plants fueled with other types of biofuel.
These nine stations have a total capacity of 96 MW.
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