Supreme Energy building second geothermal plant in West Sumatra

The 80-MW unit is scheduled to start operating in October 2027.

PT Supreme Energy is pressing ahead with the second phase of its Muara Laboh geothermal power project in West Sumatra after years of regulatory delays, adding to Indonesia’s clean energy pipeline as the nation struggles to balance demand growth with decarbonization targets.

The 80-megawatt (MW) unit is scheduled to start operating in October 2027 after the first 86-MW phase that came online in end of 2019, President and CEO Nisriyanto told Asian Power in an interview in Jakarta. Together, the two will generate about 160MW, enough to power almost 760.000 households.

A third unit, projected at 60 MW, is also planned under state utility PT Perusahaan Listrik Negara (Persero) Tbk’s (PLN) long-term power plan, though Supreme Energy is studying ways to bring it forward from its 2033 schedule, he added.

“It took almost five years to secure an economic tariff and obtain the necessary approvals,” said Supramu Santosa, founder and chairman at Supreme Energy, in the same interview. “That was the long part. After that, things moved more smoothly.”

The second unit will use the same double-flash technology as the first to optimise reserves that were left untapped.
“With Unit 2, we will optimise those reserves,” Nisriyanto said. “The higher pressure allows us to generate more energy within the same complex.”

Construction is expected to be simpler than the first phase, with most of the supporting infrastructure already in place. Much of the effort will centre on drilling and the additional power plant. “Because this is an incremental construction, the construction is simpler and the total investment cost is less than Unit 1,” Supramu said.

The project plays a key role in Sumatra’s grid. Muara Laboh connects to a transmission corridor running from Lampung to Aceh, helping PLN to support electricity supply in other regions, especially in Riau and parts of North Sumatra. Unit 1 alone supports about 440,000 households.

Beyond electricity, Muara Laboh contributes to regional development. Annual nontax state revenue from the site is about $4.2m (IDR70b), half of which flows to the Solok Selatan Regency.

The project was once the second-biggest private investment in West Sumatra, after Semen Padang. Supreme Energy also trained and hired local engineers ahead of commissioning and built access roads.

“The multiplier effect must be considered when evaluating the cost and benefit of geothermal,” Supramu said.

Still, geothermal’s economics remain tight. “Financing is not the issue,” Supramu said. “Once reserves are certified and the purchase agreement is signed, banks are ready. The challenge is pricing. Geothermal is very sensitive to volume, and the current tariff under Perpres 112/2022 is not economic.”

The high upfront cost of infrastructure makes scale essential, with projects under 100 MW struggling to break. Subsidies also continue to favour fossil fuels, Nisriyanto said. “If subsidies were redirected to renewables, the impact would be much larger.”

The Indonesian Geothermal Association are in talks with the government on reforms to make geothermal power more competitive. “We need to find a balance between government fiscal limits and project viability,” Supramu said.

Looking ahead, the company aims to complete Muara Laboh Unit 2 before advancing Unit 3 and reviving Rajabasa in Lampung, a stalled project long delayed by permit and power purchase agreement issues.

“Geothermal has to be made economically viable,” Supramu said. “Once the economics are in place, we can deliver more projects.”