Preliminary Financial Modelling with Probabilistic Approach for Geothermal Development Project in Indonesia

Abstract

The right of geothermal field concession in Indonesia is obtained by tender as per Law No. 21/2014 Article 18. In the submitted proposal, the developer candidates shall mention the plan of field development strategy, while available data is limited due to a preliminary survey or preliminary survey and exploration were just performed. Then the developer candidates must be able to formulate the financial condition of the project so that the field utilization not only sustains but also produces appropriate profits. This paper discussed some regulations which are related to the economics of geothermal development project in Indonesia and a simple example of financial modelling with a probabilistic approach using Microsoft Excel Monte Carlo simulation and analysis tool. The input data were some technical assumptions such as installed capacity, steam fraction, steam specific consumption (SSC), well’s capacity, well’s success ratio, and financial assumptions such as well’s price, power plant construction’s cost, operation and maintenance cost, and others. The output of modelling were NPV (Net Present Value), IRR (Internal Rate of Return) and parameters that were sensitive to both values, whether financially or technically. The result of simulation showed from the financial aspect, wells and power plant cost were the most sensitive parameters in IRR calculation, while well’s capacity and steam fraction were the most sensitive parameters from the technical aspect.