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Supreme Energy Rantau Dedap: Facing Energy Transformation Challenges

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Facing Energy Transformation Challenges The Journey of Rantau Dedap Geothermal Power Plant Development


Table of Contents

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Introduction Opening Quotes Founder & Chairman’s Foreword President Director’s Foreword Background Supreme Energy Vision & Mission Supreme Energy Values Geothermal Energy’s Potential in Indonesia Geothermal Energy Process

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Facing Energy Transformation Challenges

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SERD’s Journey

4 8 10 12 14 16 18 20

History of Supreme Energy & SERD Development of Rantau Dedap Geothermal Plant

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SERD’s Existence 24 26

SERD’s Awareness of the Environment SERD’s Commitment to Company’s Corporate Social Responsibility Program Stakeholders’ Testimonies

Closing

80 84

SERD’s expectations relate with RE & Clean Energy Editors and Contributors

104 108

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Opening Quotes

I hope we will be able to support optimization of energy mix to secure clean, reliable, sustainable and economically viable national energy sources.” (Supramu Santosa - Founder & Chairman of Supreme Energy)

Developing Geothermal Plant is part of our commitment in conserving the environment.” (Hisahiro Takeuchi - Finance Director of SERD / Marubeni Corporation Representative)

Contributing to the world’s harmonious energy advancement is our foundation to take part in the main global challenges.” (Victor van der Mast - Operations Director of SERD / Representative of ENGIE Global SA)

Developing geothermal energy is like a marathon run. It needs endurance, perseverance, commitment, and strong determination to achieve COD. We believe, there is nothing impossible as long as we are willing to do our utmost effort and pray.” (Prijandaru Effendi – Executive VP Relations & Support Services of SERD)

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Facing Energy Transformation Challenges

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1

Introduction


Founder & Chairman’s Foreword

Rantau Dedap project is the most challenging geothermal project due to its remoteness and steep terrain, high elevation (2,600 masl) and constructed in the midst of Covid-19 pandemic. It shows again a very strong commitment of PT Supreme Energy and its partners toward the development of geothermal energy in Indonesia to support the Indonesian Government in achieving the objective of energy transition.” Praise be to Allah SWT. for His blessings and mercy, so that Rantau Dedap Geothermal Plant, having a capacity of 91.2 MW (nett),achieved COD on December 26, 2021. Before starting this journey, I saw energy demand in Indonesia continuously increasing in line with the economic growth; also the electricity demand which was estimated to grow around 7% per annum. However, at the same time, the oil and gas production in Indonesia tended to decrease continuously due to the aging of production fields. Geothermal energy then became one of the best solutions to maintain the national energy resilience which is cleaner and environment-friendly. For this reason, I assigned the exploration team to find 3 best locations in Indonesia with big potentials to develop Geothermal Plants. Those are Rantau Dedap (South Sumatra), Rajabasa (Lampung), and Muara Laboh (West Sumatra). We then requested for permission from the government to conduct preliminary study on the said 3 areas. Finally in 2008, when the exploration was started, we found out that actually the risks and difficulties were much heavier than what we imagined in the beginning.

Supramu Santosa Founder & Chairman

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Facing Energy Transformation Challenges

During my career in the energy sector, development of Rantau Dedap Geothermal Plant is the most difficult and extraordinarily challenging experience. As we are aware, the biggest obstacle in geothermal industry is the development cost; and in Rantau

Dedap, this was more difficult than any other projects. Starting from the infrastructure needs to be constructed along tens of kilometres, drilling process that consumed much of our thought and energy due to the low geothermal capacity that was far below our expectation. Moreover, we faced social issues in the development areas as well as COVID-19 pandemic that infected one third of our workers. In spite of such tremendous challenges, we survived and kept moving to complete this project. 13 years have passed with full of spirit and belief that geothermal energy is absolutely demanded to develop green energy. Thus, by achieving Rantau Dedap Geothermal Plant Commercial Operation Date (COD), I would like to congratulate and express my sincere gratitude to all the management and employees of SERD for their perseverance in maintaining ambitions and commitments to present clean and sustainable energy. Thanks also to the shareholders and stakeholders who have supported and trusted us until now. I also would like to convey my appreciation to the government, Ministry of EMR (Energy and Mineral Resources), and PT PLN (Persero). We hope there will be a new breakthrough by the government in terms of policy and funding as well as investment climates to become more conducive, and encourage the national geothermal industry develop more and achieve the set target.

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President Director’s Foreword Developing Geothermal Plant is like developing a clean and advanced Indonesia in the future. To support the sustainable national electricity demand, geothermal energy is the answer.”

We believe that developing Geothermal Plant is like developing a clean and advanced Indonesia in the future. To support the sustainable national electricity demand, geothermal energy which is independent, reliable and environment-friendly is the answer. Rantau Dedap Geothermal Plant is one of Supreme Energy and its business partners proof of commitment to keep contributing in developing geothermal energy in the country. We have dedicated our hard work, perseverance, endurance and consistency for 13 years. We have passed various kinds of challenges, either technical or non-technical matters. We encountered three heaviest challenges. The first one is topography. Geothermal field located in a mountainous area is of course a difficult terrain that we had to face, with steep slopes and greenfield area forcing us to construct safe infrastructure for the smoothness of the operation. We had to travel uphill up to the top of the mountain at an elevation of approximately 2,600 masl, surrounded by steep cliffs on both left and right side. We had also constructed lot of bridges and roads of around 50 km in length, as the drilling location access. Rantau Dedap is one of the most challenging geothermal resource terrains in the world.

Nisriyanto

President Director 10

Facing Energy Transformation Challenges

The second heaviest challenge was the geothermal reserve capacity that was below our expectation and study results. After performing drilling activities, the geothermal capacity is just 41.5% of the targeted capacity. This forced us to renegotiate the tariff with PT PLN (Persero) as the single buyer for this project. Further, the last hurdle was an unpredicted challenge and had never happened before, i.e. COVID-19 pandemic; which is still

continuing until now and has hit all over the world since the end of 2019. COVID-19 has limited SERD’s movements, where SERD experienced 2 waves of COVID-19 infections, in December 2020 and in July 2021 infecting 1/3 of our employees at site. Nevertheless, all of those challenges could be overcome by SERD by implementing strict health protocol and periodic evaluation oriented to the Business Continuity Plan (BCP) as our guideline. Although the project experienced delays due to various obstacles, SERD survived and kept on making progress by bringing the spirit of clean renewable energy for the benefit of Indonesia’s community, especially for the nation’s next generation. Finally, I would like to express my gratitude and highest appreciation to all SERD personnel for the dedication and unyielding spirit that have been devoted so far. Thanks also to the shareholders, central and regional governments, employees and local communities and all stakeholders who have accompanied SERD in its journey towards the development of Rantau Dedap Geothermal Plant up to reaching Commercial Operation Date (COD). Through this book, I would like to congratulate all of us for our persistence in building Rantau Dedap Geothermal Plant to contribute for the realization of Indonesia as a NetZero Emission Country by 2060.

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Background

Energy Transition for the Future In line with the target of the Indonesian government to achieve net zero emission by 2060, it needs hard efforts and changes in various sectors, one of which is energy. Optimizing the utilization of renewable energy is one of the priority to achieve Net Zero Emission. For more than one decade we have focused on developing geothermal energy for the sake of delivering renewable energy that is cleaner and environmentfriendly. Through the available resources as well as number of professionals, we always support

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each other to maintain the quality of performance. This time, again we made a new achievement with the operation of Rantau Dedap Geothermal Plant. As a realization of our hard work supported by the government, PT. PLN (Persero) and the communities, we have successfully encountered energy transformation challenges by still upholding the principles of wise and environment-friendly energy management. By the Rantau Dedap Geothermal Plant presence, we again deliver the sustainable energy.

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Vision

To become the leading and the most respected geothermal energy producer in Indonesia, generating clean and sustainable electricity, creating maximum value for its stakeholders.

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Mission

• Developing our human capital to their highest potential • Uncompromising commitment to safety, health and environment protection • Utilizing state of the art technology, benefitting from the resources, experience, expertise and brands of the reputed industrial groups we have as shareholders • Nurturing the highest level of professionalism, accountability and compliance with laws, regulations and ethical standards • Fostering active communication, transparency and teamwork • Satisfying interests of shareholders • Becoming the partner of choice for investors, governments, communities and employees • Assuring sustainability of success by maintaining a long term vision

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Values

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S U P

R

E

Strive for excellence, innovation, creativity and entrepreneurship

Respect people, community, culture and the importance of trust, relationships, teamwork and harmony

Environment, health and safety awareness

Unquestionable honesty and integrity

Perseverance and hardwork

M E Mindful of cost and efficiency

Ensure lifetime learning and improvement

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About Geothermal Energy and its potential in Indonesia As a country located on the ring of fire (a series of active volcanoes along the circum-pacific belt), Indonesia have huge geothermal energy capacity. Indonesia is predicted having 40% of the world’s total geothermal potential; however, up to now its utilization is only around 9.4% (2,276 MW). The Government is targeting to add geothermal installed capacity with 3,344 MW (nett) by 2030. Geothermal energy is a heat energy resource contained in hot water, steam and rocks together with other accompanying minerals and gases, which genetically cannot be separated in a geothermal system. The characteristics of geothermal energy among others are clean, environment-friendly and sustainable. Some advantages of geothermal energy includes not requiring large area, reliable for base load, consisting local wisdom and moreover harmonization with the surrounding ecosystems, which is difficult for fossil energy resource to fulfil.

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Facing Energy Transformation Challenges

Geothermal energy utilization needs to be maximized to squeeze the use of fossil energy and accelerate the realization of net zero emission (NZE) by 2060. Geothermal is used as baseload and also reliable renewable energy to meet the government’s target for national energy independency, resilience and sovereignty as well as complying with the government’s commitment to reduce emissions. With the geothermal energy dynamics in Indonesia through various evolutions of laws and regulations, to achieve NZE target in 2060, we are still facing the realization of so many challenges; thus, commitment and cooperation between all stakeholders are required. Geothermal development in Indonesia requires government’s support in terms of policy on geothermal electricity tariff, regulations on permits and licenses process to attract investments, as well as social-community and security.

Indonesia Geothermal Source Map 2020 - 2030

182MW

Located in Kalimantan

3.068MW Located in Sulawesi

75MW

Located in Papua

1.156MW

9.679

MW

Located in Maluku

Located in Sumatra

8.442MW Located in Jawa

1.363,5MW Located in Nusa Tenggara

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Switchyard

Cooling Tower

Process of Geothermal Energy Conversion to Electric Power As environment-friendly and sustainable renewable energy, geothermal energy must be managed in a good and wise manner. In a geothermal plant, geothermal energy contained in hot steam with the temperature higher than 225oC from the reservoir is taken through a production well. The exploited hot steam is not pure steam, but mix of water and steam. Therefore, a separator is required to separate them. SERD uses Dual Flash technology that has two types of separators, namely high-pressure and low-pressure separators. In Indonesia, currently this Dual Flash technology has only been applied by SERD and Supreme Energy Muara Laboh (SEML) only. Two forms of fluid, i.e. steam and hot water obtained from geothermal wells are separated in the first separator, and the steam with relatively high pressure is channelled to the turbine. The fluid from the first separator is then pumped to the second separator (low pressure separator) to separate steam from water.

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Facing Energy Transformation Challenges

The steam from both separators is used to rotate the turbine that is connected with the generator. The turbine converts geothermal energy to kinetic energy and generator converts kinetic energy to electric power which is then transferred to the grid (switchyard). Meanwhile, the steam that has rotated the turbine is channelled to a condenser to undergo condensation process, which occurs due to absorption of heat by the cooling water sprayed by the spray nozzle. The normal level of condenser water is controlled by the cooling water pump and then cooled down at the cooling tower before being circulated. The low-temperature water from the second separator, condenser and cooling tower is reinjected to the subsurface through an injection well. This reinjection well is meant to reduce the effect of environmental pollution, minimizing subsurface motion, maintain reservoir pressure, and maintain water quantity in the reservoir. The reinjection of water whose heat has been utilized to generate electricity makes geothermal energy become sustainable energy.

Turbine

Generator

Low Pressure Separator 1 Condenser

High Pressure Separator

Low Pressure Separator 2

Steam & Hot Water

Cool Water

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2

SERD’s Journey


SERD’s Journey

History of Supreme Energy & SERD The success in developing Wayang Windu Unit II geothermal field, big potential of geothermal energy, and growing electricity demand in Indonesia by 7% each year have inspired Supramu Santosa to build a company that has a core business to develop geothermal energy. Getting started with 10 employees and an office located in Gedung Bursa Efek Jakarta (BEJ), Supreme Energy was established in November 2007 to fulfil such dreams. Having technical capabilities and good relationship with geothermal stakeholders in Indonesia, and upholding the principles of Triple-E (Energy-Economy-Environment) balance, Supreme Energy as the pioneer in this business is optimistic to develop geothermal power plants to support the achievement of clean and sustainable energy in Indonesia. PT Supreme Energy started a preliminary study in 2008 by obtaining Geothermal Permit (IPB or Izin Panas Bumi) at the end of 2010 after participating in the tender initiated by the Government. Thereafter, PT Supreme Energy signed the Power Purchase Agreement (PPA) in 2012 and

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the exploration activities immediately started until 2015. After finalizing the PPA amendment process at the end of 2017, and achieved Financial Close in 2018, the construction and development well drilling activities started. SERD appointed the Consortium of PT Rekayasa Industri and Fuji Electric as the Engineering, Procurement & Construction (EPC) Contractor. The total investment amount to develop Rantau Dedap Geothermal Plant Stage-1 was more than UDS 700 million. Currently, Supreme Energy also operates Muara Laboh Unit-1 Geothermal Power Plant with the capacity of 86 MW (nett) managed by PT Supreme Energy Muara Laboh (SEML) in West Sumatra Province, which has been operated since December 2019. The next two Supreme Energy projects are the development of Muara Laboh Geothermal Unit-2 with the capacity of 80 MW (nett) and exploration of Rajabasa Geothermal Power Plant 2x110 MW (nett) in Lampung Province managed by PT Supreme Energy Rajabasa (SERB). As of today, both projects are pending finalization of PPA Amendment with PT PLN (Persero). The Journey of Rantau Dedap Geothermal Power Plant Development

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02

03

Development of Rantau Dedap Geothermal Plant Preliminary Survey Assignment Upon completion of all geothermal potential location study and analyzing electricity demand and supply in Indonesia, Supreme Energy submitted application for preliminary survey in South Sumatra, precisely on geothermal potential location in Rantau Dedap, Muara Enim District, Lahat District and Pagar Alam City. PT Supreme Energy received preliminary survey assignment from the government in Rantau Dedap on February 1, 2008. Before conducting 3G (Geological, Geophysical and Geochemical) surveys, SERD made official visits to the stakeholders to obtain permission and support to smoothen the preliminary survey implementation in the form of official visit to the local government, information dissemination, and dialogues with the surrounding communities. SERD realized that information dissemination and dialogues plays an important role for sustainability of the project.

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01

Rock survey was conducted horizontally and vertically, for geological, tectonic structure, and its geological history related to the formation, area size, and prospect of the geothermal system. Geological mapping in this survey identifies geological characteristics, such as geomorphology, stratigraphy, and geological structure for Rantau Dedap geothermal area. Through the geological survey, a number of data will be obtained, including tectonic and stratigraphic condition, existence and positions of faults, distribution and age of volcanic rocks, locations of geothermal manifestations, as well as alteration rock locations. All of such data will be used to develop a subsurface conceptual model of Rantau Dedap geothermal area subsurface.

Geochemical survey provides an amount of information regarding geothermal resource that has high enthalpy. This survey requires sample taking of fluid and gas manifesting on the surface, electric conductivity measurement, water pH, as well as water flow rates to obtain data of chemical content of the water and gas, stable isotope, age of fluid, and gas fluxes. Further, analysis and calculations as well as interpretations on chemical geothermometry are conducted for the purpose of development and understanding of temperature and size of the available geothermal reservoir. Geophysical survey is the only way to identify surface structure at a depth at a lower cost than exploration drilling. Geophysical data obtained relating to the physical properties of

surface rocks up to several kilometres below the surface, temperature gradient, gravitational, geomagnetic and electric resistivity, seismic and surface manifestation surveys. Such data are analysed to estimate prospect geometry, locations, and forms of rocks where the geothermal reservoir is located.

04

Determination of Geothermal Work Area Rantau Dedap Work Area is determined under the Decree of Minister of Energy and Mineral Resources No. 0155.K/30/MEM/2010 dated January 15, 2010 on the Determination of Geothermal Work Area (WKP) in Rantau Dedap, Muara Enim District, Lahat District, Pagar Alam City, South Sumatra Province, based on the preliminary survey results submitted in 2008. The end of this stage is the handover of the WKP from the central government to the regional government for the purpose of calling for work area tender.

01. 02. 03. 04.

Information Dissemination on Clean Development Mechanism in 2011 Installation of Site Boundary Pegs at the beginning of the Project Initial activities for infrastructure construction “Batu Balai” fumarole

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05

06

07

08

05. 06. 07. 08.

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Initial condition of project roads Mud pool in Cawang Tengah “Air Kelat” hot spring Public consultations with Muara Enim residents relating to Geothermal Plant as a clean development mechanism project

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09

09.

Cooperation Agreement signing

Supreme Energy Supreme Energy was founded in 2007 by professionals who have long experience and knowledge in energy sector in Indonesia, including those who have been actively and directly involved in oil and gas industry as well as development and operation of geothermal energy for the last 40 years. Supreme Energy executed PPAs in 2012 for the development of three geothermal work areas projects, and is one of the geothermal IPP pioneers in Indonesia.

ENGIE ENGIE is a company providing global energy services focused on three core activities, i.e. low carbon power plant, international network, and customers solutions. ENGIE’s ambition to contribute to the environment-friendly world’s energy advancement becomes the basis to jointly take active roles in main global challenges, such as fighting against global warming, providing access to energy for everyone, and offering a solution and energy production service for individual and collective interests. Together with its customers and partners, ENGIE always makes efforts to build imaginative communities to create solutions to the current problems being faced as the asset in the future.

Marubeni Corporation Marubeni Corporation is one of the leading companies from Japan involved in various business activities, including export-import, trilateral business transactions, global investment provision, and many other activities facilitated through the global network. Marubeni is also consistent in developing geothermal in line with its policy on the implementation of “Sustainability Management”.

Partnership SERD realizes that to develop a geothermal field, having geological engineering knowledge and good relationship with stakeholders are not enough; instead, one must also have technological capability, expertise in operation and maintenance, and access to international reputable financial institutions.

producer that has the largest total generating capacity in the world. To expand the network with financial institutions, SERD entered into a partnership with Marubeni, a Japanese company that has power project financing experiences. Tohoku Electric Power then joined the partnership in 2017 to strengthen SERD’s partnership.

Tohoku Electric Power Tohoku Electric Power is a Japanese company established in 1951, with the business focusing on the development of various power plants including thermal, hydroelectric, geothermal and solar energy. Tohoku Electric Power has joined the partnership for the development of Rantau Dedap Geothermal Plant since 2017, which is the first geothermal development project for Tohoku Electric Power.

To strengthen the power plant technological capability, SERD formed a partnership with ENGIE (formerly GDF Suez), an independent power

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11

12 10

Power Purchase Agreement (PPA) and Government Guarantee It needs hard work and efforts to make the working area tender result called by the government acceptable to PT PLN (Persero) as the only off-taker of electricity from independent power producers in Indonesia. Various meetings were held, facilitated by the government to overcome this obstacle. As a solution, finally the mechanism of government assignment to PT PLN (Persero) was agreed as the appropriate method.

Although it had undergone a tender process to determine electricity price, SERD still needed approximately 2 years’ time to finalize the PPA with PT PLN (Persero) until it was finally signed in the presence of EMR Minister. Despite of the difficulties and challenges in the process of geothermal development, SERD is determined and committed to develop Rantau Dedap geothermal field.

10. 11. 12.

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Group photo after PPA signing PPA signing by President Director of PT PLN (Persero) and President Director of SERD in the presence of EMR Minister Group photo after PPA signing

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Project Milestone 2008 2009 Preliminary Survey Pre-Feasibility Study

2010

2011

WKP (Geothermal Working Area)

Partnership

Rantau Dedap Goethermal Working Area was granted to SERD in World Geothermal Congress (WGC) in Bali

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PT Supreme Energy, ENGIE and Marubeni Corporation officially established a partnership and became shareholders of PT Supreme Energy Rantau Dedap

2012 2013

2014 2015

2016 2017

Power Purchase Agreement

Exploration Drilling & Feasibility Study

PPA Amendment & Financial Close

• Commencement of Exploration Drilling

• Feasibility Study was completed in 2016 continued with PPA Amendment signing with PT PLN (Persero)

• PPA signing with PT PLN (Persero) • Commencement of civil construction to support exploitation activities

• Well Testing • Commencement of Feasibility Study

• Project Financing

2018 Exploitation Drilling and Integrated Power Plant Construction

2021 Commercial Operation Date After a long journey, Rantau Dedap Commercial Operation Date (COD) was declared on December 26, 2021

• Commencement of exploitation drilling • Well testing • Commencement of construction of Power Plant

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Exploration Land Acquisition, Permits and Licenses The largest part of the Rantau Dedap Work Area is located in a protected forest and the remaining part lies within the Other Purpose Area (APL or Area Penggunaan Lain). SERD obtained Environmental Permit No. SK.152. Menlhk/Setjen/PLA.4/3/2017 on March 17, 2017 from the Minister of the Environment and Forestry and obtained Forest Area Borrow-Use Permit (IPPKH) for geothermal exploitation activities in an area of 115 Hectares under the Decree of Head of BKPM (Indonesia’s Investment Coordinating Board) No. 27/1/IPPKH/Aug/2017 dated September 22, 2017 valid until December 28, 2045. In its operational activities, SERD is committed to comply with Laws and Regulations and International Standards required by the lenders. To

cover land procurement, permits and licenses and recommendations required, SERD refers to the guidelines for land acquisition, growing plant compensation and land certification process. SERD prioritizes deliberations and dialogues to reach consensus beneficial to all parties.

Geothermal Well Drilling Exploration Challenges – Subsurface Exploration activities in Rantau Dedap had started since 2008 by carrying out comprehensive geoscience surveys, including geological and structure mapping, geothermal manifestation survey (detailed observation and geochemical sampling), as well as geophysical surveys (MT and MEQ). Such surveys resulted in important information regarding subsurface

Tender Process 13

14

characteristics in Rantau Dedap WKP, such as geological structure dominated by the structure in the direction of southwest – northwest; cap rock layers located at a relatively shallow depth with dome shapes in several locations; geothermal manifestations (in the form of fumaroles, hot spring, steamy land, kaipohan widely spreading all-over the work area; and reservoir temperature in Rantau Dedap higher than 250oC. The data obtained were reflected in the conceptual model which was then used to determine exploration well drilling targets. One of the heavy challenges faced are when the locations of a number of predetermined wellpads based on conceptual model were not easily reachable, so that finally, the wellpad locations must be adjusted for the purpose of accessibility and feasibility in the construction. Drilling of 6 exploration wells in Rantau Dedap proved the existence of geothermal systems that are interconnected. All wells have permeabilities according to the targets, although only 4 out of 6 exploration wells have the expected reservoir temperature. Two wells that do not fulfil the targeted temperature were

projected to be injection wells for exploitation stage. Meanwhile, two of four production wells have a steam zone in a relatively shallow section. This became one of the targeted production zones in exploitation stage. After conducting numerical simulation to identify the size of confirmed reservoir, it was found that the resource potential that can be economically developed in Rantau Dedap geothermal field was 90 MW (nett).

Exploration Drilling Challenges In 2014, SERD started exploration drilling campaign using one rig unit and supporting services such as directional drilling services, cementing services, drilling fluid services, aerated drilling services, mud logging services, fishing & milling services, coring services as well as wireline and logging services. The drilling selection process had passed a strictly lengthy process to determine the business partners with capability in technical and financial terms, also committed to the achievement of successful exploration drilling campaign.

13. 14. 15.

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15

Agreement signing with Halliburton Agreement signing with PT. DATI Rig owned by PT. DATI used during exploration drillings

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19

20

21

17

18

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16. “Green Technology Funds” meeting with ADB in 2013 17, 18, 19, 20, 21. Spud In of the First Exploration Well RD B-1

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22

24

Communication became an important element among stakeholders in order for all parties involved to understand the drilling objectives, both at Rantau Dedap site and in Jakarta. The drilling activities were focused on the achievement of the following four (4) matters: 1. Zero Loss Time Accident (LTA), environmental issue and asset damage, 2. Completion of well drilling referring to the basis of well design; 3. Completion of well drilling according to the trajectory predetermined by subsurface team; 4. Completion of well drilling below the targeted time and budget.

23

Total of 6 (six) exploration wells on different 3 wellpads, i.e. RD-B1, RD-B2, RD-C1, RD-I1, RD-I2, RD-C2, were all completed without

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25

any LTA, environmental issues and damage to the Company’s assets. All the wells are also directional wells at a depth of 2,400mKU on average, and were drilled by penetrating the targeted zone.

22, 23. Exploration Drilling 24. Spud in of the First Exploration Well RD-B1 25. Endikat River passing Rantau Dedap Geothermal Plant area

The result of each well gave updates on the interpretation and understanding on Rantau Dedap subsurface condition that encouraged drilling dynamics. Nevertheless, all wells could be completed before the deadline and below the budget. The end of the drilling campaign in the middle of 2015 showed that total NPT (Non-Productive Time) as 12%, which is an internal improvement from the total NPT after drilling of 6 exploration wells. The biggest challenge in this stage was relating to the readiness of the infrastructure, such as wellpads and access roads.

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Infrastructure Construction Challenge • • • • • •

Located in a remote area, Less infrastructure, such as roads and bridges, Difficult geographical condition and steep, Very long distance from the main road to the site, Prone to landslides, Elevation, located on a highland

Based on the planned layout, Rantau Dedap Geothermal Plant is located on a mountain with approximately height of 1956 masl within a protected forest area covering Muara Enim district, Lahat district and Pagar Alam City. To reach the wellpad locations, road and bridge infrastructure had to be improved, including construction of new road of ±40 km in length from the Zero-point main road (Kota Agung Sub-district) to accommodate mobilization of heavy equipment and materials. The construction of road and bridge infrastructure at exploration stage started in 2013 by the awarded contractor, i.e. LCI (Leighton Contractor Indonesia). 27

The hurdles encountered in the construction of road infrastructure and drilling supporting facilities in the exploration stage in 2013-2015 includes: 1.

Land Acquisition Land acquisition for road improvement and construction of new roads to the wellpads was another challenge, especially for the Relation and Project teams who frequently received complaints from the land owners and cultivators. The various amounts of land acquisition compensation also created another challenge in construction works.

2.

Road Blockage Road blocking frequently happened in the process of mobilization of equipment and materials using the names of land cultivators/owners/ communities expecting project retributions in various forms.

3.

Road Geometric The roads constructed to access Wellpad B, E, D and I were quite long, extreme and steep, particularly the shortcuts with the slope of 21% that require extraordinary efforts during mobilization of heavy equipment and materials for drilling activities.

4.

Weather Weather also affected the progress of construction of the bridges and wellpads. Heavy rains that were potential to cause landslides, slippery roads, fogs and cold air became obstacles in the construction of infrastructure.

5.

Transportation Cost The long distance to the Rantau Dedap Geothermal Plant site and the extreme terrains and weather resulted in high transportation costs to mobilize equipment and goods.

26. 27. 28.

Atmospheric Flash Tank used during the Well Testing activities Geothermal Well Heads Construction of Giant MSE wall in a shortcut area towards the project

access road

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29 29. Mobilization of construction equipments during exploration activities.

Infrastructure Construction during Exploration

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No.

Project

Infrastructure Built

1.

Road Improvement from Block 0 to Tunggul Bute (14 km)

• Lahat District Road of 3.5 meter in width and having less maintenance made Tunggul Bute isolated for a quite a long time as cars could not pass KM 11+000. • Due to the permit to use the road from Lahat local government, SERD is obliged to improve the road quality, and in 2015 some sections were asphalted by SERD. • Some certain road sections, including Block 0 was expanded for heavy equipment manoeuvre, particularly for mobilization of drilling equipment and materials. • Mata Lintang Bridge, Lawang Agung

2.

Talang Pisang Camp

• Construction of Talang Pisang Camp for LCI and SERD’s workers accommodation during exploration.

3.

Construction of Talang Pisang Wellpad B Project Roads (New Road of 14.5 Km in length)

• • • • • •

4.

Construction project road of 7 km in length from Anoa Junction to Wellpad E

• Works for construction of Road and MSE Wall bridge • Wellpad E, drilling of RD-E1

5.

Construction of project road of 2.5 km in length from Wellpad E to Wellpad C

• Land Acquisition • Works of construction of Road and MSE Wall bridge • Wellpad C, Drilling of RD-C1 and RD-C2

6.

Construction of project road of 2 km in length from Junction C to Wellpad I

• Land Acquisition • Road and MSE Wall bridge construction • Wellpad I, Drilling of RD-I1 and RD-I2

Acquisition of the community’s land commonly planted with coffee Works for construction of Endikat River bridge and MSE Wall Construction of Wellpad B Drilling of RD-B1, B2 Warehouse construction Temporary explosive bunker at KM 8+000

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30

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30. One of water intake locations 31., 32., 33. Civil Construction for access roads and bridges

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Feasibility Study Feasibility Study is the developer obligation upon the exploration completion. From the environmental and social aspect, Rantau Dedap Geothermal Working Area has fulfilled the requirements and feasible to be developed. However, from the economical aspect, Rantau Dedap Geothermal Work Area was not feasible to be developed if using the base tariff set out in the agreed PPA since the result of exploration shows the capacity of only 2x49 MW (gross) far below the initial target of 2x110 MW. This exploration result, which is below expectation, gave another pressure to SERD for the development. The Feasibility Study by the EMR Minister and amended PPA on electricity base tariff had to be discussed based on the applicable laws and regulations. The Feasibility Study of Rantau Dedap Geothermal Plant started in January 2016 and obtained approval from the EMR Minister on March 9, 2018.

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34, 35. Site Visit for Feasibility Study

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PPA Amendment In accordance with Regulation of the Minister of Energy and Mineral Resources (EMR) No. 17 of 2014, if the results of exploration does not conform to the initial target, the developer may submit request for tariff adjustment. This base tariff adjustment shall be made by the seller and buyer based on the principles of transparency, economic viability and fairness. This electricity tariff must obtain approval from the EMR Minister.

The challenge in this stage was the process of discussion and negotiation with PT PLN (Persero) and its consultant. SERD attempted to convince PT PLN (Persero) with explanation in technical, non-technical, legal and financial aspects. This PPA Amendment process took around 2 years until the PPA Amendment was finally signed by both parties and obtained approval from the EMR Minister and Business Viability Guarantee (BVGL) from the Minister of Finance. .

36

38

36. 37. 38. 39.

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President Director of PT PLN (Persero) and SERD signed the PPA Amendment in the presence of EMR Minister Group photo with EMR Minister after the PPA Amendment signing ceremony Discussions on PPA Amendment between PT SERD and PT PLN (Persero) Group Photo after PPA Amendment signing

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Project Financing Due Diligence, Financing, EPC & Drilling Tenders Compliance with Financial Institution Standards SERD worked intensely with Mizuho Bank as the coordinator in charge for coordinating the process of due diligence by the financial institutions represented by consultants. The financial institutions involved in this process were JBIC, ADB, NEXI and 3 commercial banks; Mizuho Bank, SMBC (Sumitomo Mitsui Banking Corporation) Bank and MUFG (Mitsubishi UFH Financial Group) Bank with variance of compliance standards from one to another institution. The scope of due diligence to measure compliance with standards included the following aspects: a)

b) c) d)

The legalities and permits & licenses, resources certification, technical, social & environmental, insurance, financial, accounting and taxation aspects; Application and documentation relating to hedging; Financing agreements and other relevant documents; Acceleration for fulfilment of conditions precedent for the first drawdown.

The followings are challenges in the due diligence process: a)

b)

c) d) e) f) g)

To gain the same perception of business, compliance and commercial aspects between the financial institutions and PLN translated into the PPA. To have the same perception of business, compliance and commercial aspects between the financial institutions, SERD and contractors (including EPC and Drilling) translated into contracts. To fulfil the conditions precedent for the first drawdown. To accelerate the fulfilment of conditions precedent for the first drawdown. To finalize the due diligence within a limited time. To determine the optimum funding structure for SERD project. To identify the risks to be faced by the project at the early stage together with the mitigation efforts to meet the technical requirements according to the financial institution standards.

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In 2019, Rantau Dedap Geothermal Plant Project Financing received “Renewable Energy Deal of the Year” award from The Asset, one of the financial institutions in Asset Asian Award. 52

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40. 41. 42.

EMR Minister, Mr. Ignasius Jonan attended the Gala Dinner for PT SERD Financial Closing Handover of Souvenir in the Gala Dinner for PT SERD Financing Closing Group photo in Rantau Dedap Geothermal Plant Financing Close Gala Dinner

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Exploitation & Construction Stage EPC and Drilling Tenders 43

43. 44. Integrated Construction/Engineering, Procurement and Construction (EPC) Contract signing for Rantau Dedap Geothermal Plant.

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45. Subsurface team 46. Rantau Dedap Geothermal Plant Well Testing 47. Group photo during SpudIn of the first development well RD-I3

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Challenges in Subsurface Activities

In the exploitation stage with an installed capacity target of 2x49 MW (gross), 128 kg/s High Pressure (HP) and 66 kg/s Low Pressure (LP) steam is required. Such target is expected to be achieved by drilling of 16 exploitation wells that consist of 11 production wells, 1 injection well and 4 production or injection contingency wells. All the wells were planned to be drilled on 4 production wellpads (RD-I, RD-M, RD-M, RD-N) and 2 injection wellpads (RD-E and RD-C). Determination of drilling target became a challenge in this stage. We found many differences in understanding the geothermal system previously obtained from the results of exploration and exploitation drillings. Locations considered to have high temperature are

proven, however such locations had actually less permeability. Besides, the shallow steam zone proven by two exploration wells was actually found not continuous and consistent. In fact, on the other hand, several wells having permeability in such shallow steam zone experiences reduction of pressure along the way to the surface. Consequently, in general, the well design, as well as determination of the depths of the reservoir zone, must be adjusted. Another challenge was the decision-making process during the exploitation drilling programs. The subsurface data obtained from the exploitation wells provided a better view about the drilling sequence. The well heating process actually took a longer time than expected. All exploration wells have the

same permeability as targeted, however the case was different in exploitation stage. There were at least three wells drilled producing high temperature, but they did not have permeabilities. Sometimes, one well must be drilled several times or in a different direction, to achieve the targeted permeability and temperature, although sometimes it could not be successfully achieved as expected. Further, numerical simulation was updated based on the exploration and exploitation well data. Based on the results of such simulation, the production target of 90 MW (net) would be achieved in several months after the operation of the power plant, along with the increase in enthalpy of each production well.

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48. Mobilization of drilling, construction, and power plant equipment

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Challenges in Rantau Dedap Geothermal Plant Integrated Construction Activities It was started in 2018 by the EPC Contractor Rekayasa Industri and Fuji Electric (EPC ReFe) Consortium. The works covered additional 4 KM road from exploration stage, 3 new wellpads (Wellpad L, elevation +2500 masl, Wellpad M, and Wellpad N), and until the operation of Rantau Dedap Geothermal Plant 91.2 MW (net) including Steam Gathering System (SGS) line that connects all production wells where the steam flows through the SGS pipeline to the separator and main steam line to rotate the turbine. Brine water will be channeled through the brine line and reinjected into the earth through injection wells RD-B1 and RD B2. Well drillings for exploitation stage were performed by PT PRA (PT Plumpang Raya Anugrah). The obstacles faced during construction activities in exploitation stage of Rantau Dedap Geothermal Plant were as follows: 1

2

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Performance of REFE EPC Contractor who experienced several obstacles, particularly due to liquidity problems. The delay of payment to local subcontractors/vendors resulted in social issue in the form of road blockage and employee strike. COVID-19 pandemic became a big handicap to achieve the construction target due to infected employees of Rantau Dedap Geothermal Plant in the first outbreak in December 2020 and the second outbreak in July 2021.

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Challenges in Drilling Activities

Rantau Dedap exploitation well drilling campaign commenced in August 2018, followed in series by Muara Laboh exploitation well drilling campaigns. In terms of operation, Rantau Dedap exploitation well drilling was performed almost without interval time after the finalization of Muara Laboh exploitation. 16 wells were planned to be drilled for 2 years of campaign period, with 8 wells to be finalized by each rig. Services like rig, cementing and drilling fluid provisions were individually served by one company for effectiveness and ease of logistics. Several services like directional drilling, drill bits, and fishing-whipstock are called for tenders to ensure the company could get the required quality and availability of the equipment. It created a positive impact on the drilling performance in whole, particularly when drilling became more dynamic. Several wells failed to get the expected permeability, meanwhile some other wells, though indicated to have a permeability, had an insufficient figure, so that they required additional works in the form of open-hole sidetrack – when the casing and cased-hole side track had not been installed on the well hole.

without significant obstacles in terms of timeline. This was also because of the drilling crew directly involved in the works, who are well aware of the drilling objectives and communications, as well as cooperation having been established for a long time. At the end of the campaign period, 14 wells in total were finalized plus 10 sidetrack wells, 1 workover well and two abandoned boreholes with respect to the collapsed casing during cementing of RD-I4 and RD-M5 borehole problem. Total Non-Productive Time (NPT) during Rantau Dedap exploitation drilling campaign was 10%, which was an internal improvement of the total NPT after drilling of 6 exploration wells in Rantau Dedap previously. After the completion of Rantau Dedap exploitation well drilling campaign in February 2022, neither an LTA case, environmental issues, nor company asset damage occured. COVID-19 pandemic brought a big impact on the last two works for RD-L1WO and RD-I4ST where during the period of December 2019 – January 2020 the operation was forced to be interrupted due to the COVID-19 outbreak at the drilling site.

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Availability of equipment and reliability of drilling personnel became key factors to the finalization of drilling activities and some additional works

49. Spud in of the first well RD-I3 50. 51. Development stage well drilling activities performed by PT. Plumpang Raya Anugrah (PRA)

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52, 53. Selection of O&M personnel. 54, 55. Training and OJT for SERD O&M personnel.

O&M Recruitment and Training SERD started the process of recruitment of operation and maintenance workforce at the middle of 2019 by prioritizing candidates from South Sumatra with experience in geothermal industry. SERD implemented mass recruitment for operators and technicians and followed by training program for O&M Trainees. • February 23 – March 1, 2020 in Palembang, 500 applicants were selected out of 6000 applicants to take part in psychometric test, which was a basic technical capability test, and interview with psychologists and SERD’s HR and O&M team members. Top 12 participants have been recruited to follow the training and Onthe-Job Training (OJT) programs prepared to equip O&M trainees with technical capabilities and knowledge on geothermal power plant operation. • The training program was conducted at PPSDM Migas in Cepu, Central Java from November 16, 2020 to January 8, 2021. The training was presented by instructors from PPSDM Migas and SERD internal trainers. The training covered occupational safety and health, environmental management, electrical, mechanical, instrumentation, power generation engineering, and introduction to geothermal industry. A comprehension test was carried out at the end of the training, and as a result, all the O&M Trainees were declared passed.

familiarization with the operation and maintenance of geothermal power plants. The OJT was carried out during the period from February 7, 2021 through May 5, 2021, in which 25 SERD’s O&M personnel joined. • After completing OJT program at Muara Laboh Geothermal Plant SERD’s O&M personnel went through a series of certification such as POP, POM, POU, AK3 Electrical, AK3 General and Hakit certification institute to obtain certificates required for the operation and maintenance of Geothermal Plant. The certification program was performed simultaneously with Pre-commissioning and Commissioning activities at Rantu Dedap Geothermal Plant. • The series of training, OJT and certification activities were designed not only to make the participants understand and able to operate and maintain the Geothermal Plant as a whole, but also to arm them with required certificates according to the prevailing regulations. The objective of this program is to provide a strong mental ‘foundation’ and broadened understanding on the operation of Geothermal Plant before doing their assignment at Rantau Dedap for Pre-Commissioning, Commissioning, COD, as well as operation and maintenance of the Geothermal Plant after COD.

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• Further, O&M Trainees participate OJT at Muara Laboh Geothermal Plant, attended by Supervisors from SERD and O&M personnel. The OJT program was aimed at gaining hands-on experience and

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Commissioning The process of commissioning or testing of the Geothermal Power Plant facilities is a crucial step to demonstrate that the design and construction of the plant complies with the design requirements and ensure utilization of geothermal resources according to the predetermined objectives. The testing of the power plant facilities covers all parts and components of the facilities starting from the supporting systems such as raw water supply, electricity as the equipment mover, and the power plant equipment itself which must be prepared in an integrated manner. The availability of geothermal wells is an important part that must be prepared and planned according to the power plant testing requirements. The power plant testing was performed by Commissioning Team consists of EPC Contractor as the party in charge, SERD Project Team, and SERD O&M team under coordination of EPC Commissioning Team with a standalone organization structure. Relations & Communications Team, both in Jakarta and the SERD Site had played a very important role in overcoming social issues, by communicating with the community affected by the project and PLN tower site land acquisition, and support the implementation of commissioning until COD was achieved.

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The pre-commissioning process started since July 2019, initiated by geothermal production well heating process, and pipeline system heating from all Production Wellpads. These activities involved disciplines of Commissioning Team, which did not only involve Technical Team, but also high commitment from Safety, Environment, Security, Logistics, Communication, Health and Transportation Teams. Cooperation among the Commissioning Team members which consisted multidisciplinary personnel and good multinational workforce from SERD, EPC Contractors members originated from different countries as well as government representatives witnessing the commissioning process, was another challenge. Commissioning works was implemented under tight schedule also heavy rains, cold weather and scorching heat of the sun; however, all these obstacles could be overcome and passed by spirit of cooperation to achieve the goals. Procurement of electricity supply for commissioning is another thing that demanded an extra effort due to the limited supply capacity. Some innovations were made with optimum strategy to utilize available resources, so that the commissioning could continue to achieve the completion target.

Occupational safety and environmental protection supervision was another matter that required high discipline during the commissioning. The commissioning was completed after electricity supply from PLN’s 150 kV grid. The whole commissioning of the power plant facilities, starting from production wells, cooling water circulation system, turbine and generator operation until synchronization to 150 kV grid was well performed. Although during the process there were several technical problems, finally, all were well handled.

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Rantau Dedap Geothermal Plant GIS Switchyard Construction works of 150 kV Overhead Transmission Line (SUTT) connecting Rantau Dedap Goethermal Plant with Lumut Balai Substation of PT. PLN (Persero).

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Construction of Transmission Line Rantau Dedap Geothermal Plant will transmit electricity to Sumatra 150 kV transmission line. This requires a new transmission line of ± 40 km in length, consisting of 115 towers to connect Rantau Dedap Geothermal Plant to Lumut Balai Substation connected with Sumatra 275 kV transmission line backbone owned by PLN. Under the PPA, the development of this 150 kV transmission line was the responsibility of PLN. SERD also played an active role in achieving the completion target on schedule. SERD made coordination with PLN through UIP Sumbagsel (Construction Principal Unit of South Sumatra. The coordination with PLN UIP Sumbagsel was well managed under the same interest to complete the construction in timely manner. SERD assisted PLN in socialization, permits and licenses facilitation and communication with local government and communities in Muara Enim area. Relations Team took an important role in this matter, so that the land acquisition and construction of PLN’s Transmission Towers and Substation could be smoothly and safely performed.

Coordination and cooperation had continued until realization of power back-feeding from 150 kV grid to the switchyard and 150 kV generator set up transformer on June 12, 2021 without significant problems. By the completion of PLN’s 150 kV transmission line and interconnection to the SERD’s power plant, the power plant could complete the commissioning process and be ready for commercial operation. Several obstacles encountered during the construction of transmission line are as follows: a)

Land Acquisition Land acquisition of tower sites and the Rights of Way (ROW) was an important stage for the commencement of transmission line construction. Various issues such as site works interruptions and unreasonable requests frequently happened and caused delays in transmission line construction.

b)

Locations of Towers Tower site locations are scattered in hilly areas, forests, cliffs, rice fields, and coffee plantations belonging to the communities, some of which are unreachable by both vehicles and heavy equipment, so that transportation of materials and work equipment, particularly for foundations and towers had to be done manually by human beings. Besides, the plenty of trees on tower site locations forced us to be very cautious about the risk of being crushed by falling trees.

c)

Weather Extreme weather with high rain intensity and fogs became a handicap in constructing towers. Thunders due to rains made the risk of working at height became higher.

Intensive communication and coordination between SERD and PLN at technical and non-technical levels, whether formally or informally, was successfully proven to have passed the big challenge. This success story was marked with the completion of the transmission line and Substation in a relatively short time without social, security and occupational safety issues. Coordination and technical cooperation during the communication and protection system testing from PLN Substation to the power plant switchyard also continued smoothly. The testing works were done continuously for 24 hours to achieve the target and comply with technical and safety standards.

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58. Construction works of 150 kV Transmission Line connecting Rantau Dedap Power Plant with Lumut Balai Substation of PT PLN (Persero)

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COVID-19 Pandemic In March 2020, WHO declared COVID-19 outbreak as a global pandemic. SERD immediately activated the Business Continuity Plan (BCP) along with establishment of the Company Committee in facing the COVID-19. The first case was found in Rantau Dedap project on July 21, 2020.

spread, which caused delay in the Commercial Operation Date (COD) originally from September to the end of 2021.

In December 2020, SERD experienced the first COVID-19 outbreak. Two clusters of COVID-19 rapidly spread out among employees, making SERD temporarily halted the activities until it was declared free from COVID-19 spread.

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It was recorded that 400 personnel were confirmed COVID-19 positive through PCR swab tests, and they were then evacuated to hospitals in Palembang for further medical treatment and hospitalization. The project finally resumed after temporarily stopped for 1 month by improvement and implementation of tight health protocols, namely: a) b) c) d) e) f)

Screening by means of 5-day quarantine and twice PCR tests for each employee who will enter the project site Coordination with all contractors to prevent the spread of COVID-19 viruses; Sterilization and disinfectant of lodgings, office area and clean-up of all public places; Antigen test random sampling for employees every day; Periodical reporting on the updated condition to the local authority; Restructuring accommodation facilities for quarantine and separation of workers.

After the backfeeding, Rantau Dedap Geothermal Plant experienced COVID-19 outbreak for the second time. SERD had to temporarily stop the project and conduct 3T (Tracking, Testing and Tracing) and evacuated a total of 800 personnel who were confirmed COVID-19 positive through PCR testing method to more than 2,100 workers at the site. Again, the project was halted for 1 month until it was declared free from COVID-19

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Covid-19 Swab Test Screening

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Commercial Operation Date Upon Plant Rated Capacity (PRC) Test Procedure and SOP Document approval by PT. PLN (Persero) as well as issuance of the Operation Worthiness Certificate (SLO) for Unit 1 and Unit 2 from the Directorate General of Electricity (DJK. SERD and EPC contractor could finally start the Net Dependable Capacity testing for 72 hours without interval as a prerequisite for the declaration of the Commercial Operation Date. The completion of Rantau Dedap Geothermal Plant 91.2 MW (net) was far from easy or normal. The natural and technical factors at the site, as well as the COVID-19 pandemic, became handicaps and huge challenges.

Finally, cooperation, steadfastness, and mutual confidence of all Rantau Dedap stakeholders resulted in successful achievement of COD at the end of 2021. Plant Rated Capacity (PRC) test was successfully completed in 72 hours non-stop from December 22 through 25, 2021. Based on the letter from Mega Project and NRE Director of PT PLN (Persero) No. 1165/KIT.06.01/ C01040000/2022 dated January 6, 2022, Rantau Dedap Geothermal Plant was declared as having achieved commercial operation since December 26, 2021 at a capacity based on the PCR test result of 91.185 MW (net).

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60. Picture of SERD Team after Plant Rated Capacity (PRC) test for 3 x 24 hours 61. Picture of SERD President Director with PT PLN (Persero)’s Representatives after the Plant Rated Capacity (PRC) test that marked the Commercial Operation Date of Rantau Dedap Geothermal Plant 91.2 MW.

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62, 63, 64. SERD O&M Activities 65. BOD & Chairman Visit to Rantau Dedap Geothermal Plant Site after COD.

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3

SERD Existence


SERD Existence

SERD’s Awareness of the Environment Compliance with Safety, Health and Environmental Protection Along its journey, from the road and land clearings until construction of the power plant, SERD faced many hurdles related to the aspects of Occupational Safety, Health and Environmental Protection (SHE). SERD had to work hard optimally in implementing the SHE aspects in order to protect the safety of all workers, equipment, environment, and maintain safety and comfort of the communities, as well as conserve the biodiversity around the project area. In addition to natural factors in the form of difficult terrain and high rainfall intensity, SERD also faced another challenge in the form of performance of contractors and subcontractors, particularly in implementing occupational safety and environmental protection culture. Many local workers had zero experience working for companies with specific safety standards and they did not well recognize the hazards at work.

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Initially, they felt uncomfortable applying Company’s SHE standards. However, gradually, after a process of training and development, they could get accustomed to the SHE rules. SERD always complies with the Indonesian Government’s regulations on SHE implementation. Routinely and periodically, SERD conducted activities to comply with SHE applied by the Government by means of internal/external inspections, environmental monitoring (RKL-RPL), and many other activities. This is proven by the SERD’s achievement in receiving Soebroto Award from the Ministry of EMR n 2017 and 2019 for SHE category in Geothermal Pre-Production Phase. To supplement the company with SHE standards, SERD adapted a number of international standards to be applied in the project area, such as the standards of the World Health Organization (WHO), Safeguards from Asian Development Bank, and similar standards with the aim to maintain and improve safety standards for employees, equipment and environment.

Environmental Conservation and Recovery Commitments and Programs SERD have strong commitment to maintain the environment. This commitment is translated into various Company’s rules and programs that is strictly implemented to prevent and minimize the project’s impact on the environment and biodiversity. As the holder of Forestry Land Borrow-and-Use Permit (IPPKH) as well as compliance with the obligations to the lenders, SERD is now conducting rehabilitation of critical land with an intensive planting pattern in an area of 127 hectares within the Bukit Jambul Gunung Patah Protected Forest area in South Sumatra. SERD also commits to maintaining the integrity of the same protected forest having an area of 204 hectares. In performing the activities of protecting and restoring of the environment and biodiversity, SERD fostered cooperation with relevant authorities and employed trained local communities. SERD built a special nursery that consisted of local endemic plants, built wheel wash station to prevent from the spread of invasive plants, grew plants in open and landslide prone areas, built arboreal animal crossing bridge, installed trap cameras, etc. SERD also helped forestry authority to conduct education for protection of biodiversity to the surrounding communities.

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All the above activities are mentioned in the Environmental Management Plan and Biodiversity Offset Management Plan. 66, 67. Fauna around Rantau Dedap Geothermal Plant site

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Environmental Programs

Awards

During whole SERD project timeline, SHE program has been implemented according to the project requirements and best practices in geothermal industry. The objectives of SERD’s SHE program is to control the environment, prevent pollutions, as well as any other forms of hazards to the environment, monitor the environment, rehabilitate the area affected by the project and maintain the environment along with the biodiversity surrounding the project area.

In 2017, SERD received Subroto Awards, as follows: • The First Category in Geothermal Occupational Safety and Health Management (for Geothermal Projects that have not been producing electricity) • The First Category in Geothermal Environmental Protection Management (for Geothermal Projects that have not been producing electricity)

SERD takes samples, makes observations and periodically monitor the parameters and locations agreed in SERD’s environmental permit, including requirements in the AMDAL documents, particularly RKL-RPL documents to accommodate SERD’s commitment to the Government of Indonesia.

Special attention is given to the monitoring of H2S and noise due to their significant potential impacts. Thus, SERD monitors H2S for 24 hours and noise monitoring for 48 hours, which are beyond the mandatory requirements.

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In addition to SERD’s commitment to the rules and regulations enforced by the government, SERD’s monitoring is based on international standards to fulfill SERD’s commitment to the lenders (particularly ADB). The international standards applied by SERD are those adapted by Asian Development Bank (ADB) and the thresholds applied by IFC and WHO.

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Not only performing environmental testing and monitoring, but SERD also emphasizes and makes its utmost endeavors to protect the biodiversity surrounding the project area. SERD, through the involvement of the lenders, is encouraged to implement extensive programs in management, monitoring and rehabilitation of biodiversity. SERD conduct its annual programs such as collaborative patrols jointly with the local forestry office, drone patrols to survey potential land opening, establishment of nurseries using local endemic species, installation of fauna crossbreeding, implementation of Biodiversity Balancing Plan (Rencana Pengimbangan Keanekaragaman Hayati) and many other various efforts. All of those activities are guided and directed based on SERD’s BAP (Biodiversity Action Plan or Rencana Aksi Keanekaragaman Hayati) and BOMP (Biodiversity Offset Management Plan or Rencana Pengelolaan Offset Keanekaragaman Hayati).

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In the future, SERD expects to apply better standards for better environmental achievement, as well as implementation and certification for the project by Environmental Management System under the ISO International Standards.

68. SERD received Subroto Award in 2017 69. Construction of Animal Bridge 70, 71. Wild animals around Rantau Dedap Geothermal Plant site

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SERD’s Commitments to Corporate Social Responsibility Programs Stakeholder Engagement Program and Grievance Mechanism Stakeholder Engagement & Public Consultations

73 social, economic and environmental development.

SERD has social management programs through Stakeholder Engagement Plan covering community engagement program, grievance mechanism, integrated community development program, and Corporate Social Responsibility (CSR) programs. The local community as the key stakeholder directly affected by SERD project must be involved in this project. This community involvement is in the form communication and information, employment opportunity, business opportunity as well as integrated social development programs. By the engagement of the local community, it is expected that harmonization between SERD and the affected community could be created, so as to build a sense of belonging and pride of the community to the project. The success of the Rantau Dedap Geothermal Power Plant Project was affected by the level of public acceptance. Therefore, SERD keeps making best efforts to improve the public awareness of the interests and benefits, either directly or indirectly, from the geothermal energy development for

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SERD continues to perform periodical dissemination and communications. One of the routine activities in the month of Ramadhan is Safari Ramadhan where SERD conducts socialization to the community and, in this special occasion, provides donations, fulfils the needs of mosques and repair their facilities. More than 50 mosques were benefited from this program. To improve the community’s understanding on geothermal power plant operation, in 2013 SERD invited around 50 community members around Rantau Dedap Project to conduct a benchmarking study and site visit to an operated Geothermal Plant of Kamojang managed by PT Pertamina Geothermal Energy. The purpose of this benchmarking study is to provide opportunity for the community to directly see and then believe that a geothermal project is safe, environment friendly as well as sustainable. Besides, the participants could also see the real impacts of CSR programs from a geothermal plant project.

72, 73. Benchmarking Study by the representatives of the community surrounding Rantau Dedap Project to Kamojang Geothermal Plant

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Grievance Mechanism Grievance Mechanism is an effort by SERD to sustainably improve harmonious relationship with the local community by responding to the grievances received. Based on the Grievance Mechanism data, SERD actively responded to and settled social issues that had raised, and prepared integrated social programs suitable to the community’s needs.

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SERD also established a committee consisting of heads of villages and other community leaders, in which they also took part in the Grievance Mechanism management during the project term.

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Information dissemination of Rantau Dedap Geothermal Plant to the surrounding community.

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Corporate Social Responsibility Programs Development of a project, either performed by the government or private entity, will create social and environmental impacts, especially to the Project Affected People (PAP) who lost their major incomes. There will always be a gap between the company’s and the community’s expectations, hardly to be avoided and will frequently happen. It is important to create harmony by narrowing the gap through various well

planned and accountable steps, using Integrated Social Management System and Programs. Various expectations and grievances are analyzed to formulate a proper social mitigation, so that the gap of expectation can be narrowed, and harmony between the stakeholders can be created.

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76. Corporate Social Responsibility Program with Economic Empowerment pillar 77. Corporate Social Responsibility Program with Health pillar 78. SERD appreciated by BKPM for its active participation in the cooperation with Local & Small Medium Enterprises and encouraging empowerment of Local Economy in the Region.

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One of the mitigation to reduce the gap of community’s expectations is by implementing corporate social responsibility programs. In implementing these programs SERD focused on 4 pillars:

Education & Health Programs: • Supporting various activities of health clinics around the project site to prevent the spread of COVID-19 viruses: and support for stunting prevention program. • Donation of sembako (9 basic necessities) as a gift for vaccinated people to accelerate vaccination for the community. • Provision of Facilities and Infrastructure for Education & Training • Provision of Free Medicine and Mass Circumcision • Donation of equipment to prevent from the spreading of viruses. • Conducting blood donor events

Economic Empowerment Programs: • Integrated Social Development Programs with the target of Project Affected People who are mainly coffee farmers through coffee cultivation training programs, including donation of fertilizers and agricultural equipment. • Assistance for coffee farmers in marketing their harvests. • Assistance for Project Affected People in developing agriculture business plan with the target of improving living standards through establishment of institution that enhances economic turnover for the Affected People.

Infrastructure

Community Relations

Programs:

Programs:

• Supporting renovation of worship houses in the vicinity of project site, such as mosques, musalla, Islamic boarding houses • Supporting community’s activities in repairing access roads and access bridges by means of material donation and heavy equipment support • Supporting renovation of local government offices • Repair of poor communal toilets • Repair of water channel for the project affected community

• • • • • •

Participation in governmental and community activities Supporting various sport activities Assisting in cultural activities Supporting commemoration of religious or national holidays Donations of religious facilities (praying equipment) Supporting commemoration of regency, municipality or institution anniversaries

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79, 80, 81.

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Community empowerment activities for strawberry and chili plantings as alternative income sources for the affected community

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82

82.

Women empowerment programs for the project affected people to increase coffee productivity

Livelihood Improvement Program (LIP) – Since 2016 SERD committed on empowering the community – particularly those who are affected by geothermal project through Community Development activities in “Livelihood Restoration Program (Program Perbaikan Pendapatan) also as a part of Integrated Social Development Program (ISDP). The Livelihood Improvement Program (LIP) has been launched in 2016, and was developed with the aim of improving social economic welfare of the Project Affected People. In Rantau Dedap Geothermal Project, it is recorded that 131 households of PAP are coffee farmers categorized as vulnerable. The implementation of LIP covers Project Affected Households. The objective of this initiative is to support the Affected People in rebuilding their livelihoods, finding new incomes, and improving their life quality as a whole in the form of long-term development benefit. This is in line with the International Finance Corporation (IFC) guidance and Asian Development Bank (ADB) policy stating: “Simple recovery of livelihoods may not be sufficient to protect the people affected by the project that is harmful, particularly the impacts in the form of competition for resources and employment, inflation and disturbance to social safety

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net due to the project existence”. For this reason, IFC and ADB are making their efforts to promote improvement of living standards for the people affected by the project. LIP activities for 131 affected families include: • Assistance for coffee farmers to improve their skills in pre-harvest and post-harvest handlings • Providing trainings for farmers to improve quality and taste of the coffee. • Assistance in developing programs for marketing coffee, including its business models. • Increase in production of coffee, both robusta and arabica. Implementation of the program in the first year was focused on improving the coffee quality from the farmers, as assisted by the Rumah Kopi Ranin, the consultant team. In order to prepare and implement the program comprehensively and practically, SERD appointed Anwar Muhammad Foundation (AMF) as the consultant for the program implementation. Based on the Impact Monitoring Report, this training has produced socio-economic improvement for the direct project affected people who took part in. At the end of the program it was expected that Petani Kopi Semendo (Semendo Coffee Farmers) could become Independent Coffee Farmers through a Collective Business Group (KUBE or Kelompok Usaha Bersama).

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CSR Infographic related to SDG

131 people

3 units

1200 kg

400 meter

affected by the project have been monitored in the restoration process

of hand tractors were donated to farmer groups in 3 surrounding subdistricts

Of coffee harvested by farmers in Semendo was given marketing assistance until 2018

clean water channels were repaired in Tunggul Bute Village

7 locations

9 locations

28 km

5 km

of mosques/musalla were renovated to improve their physical condition

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of classrooms in school/Islamic school were renovated/ constructed

Facing Energy Transformation Challenges

of roads in Lahat and Muara Enim Districts were improved

of roads in Lahat District was asphalted

1500 seedings

of mangosteen trees were donated to the community surrounding the project site

182 children Joined mass circumcision program

255 people

Joined free medication program

of firetruck was donated to firefighting and rescue office of Muara Enim District

of manual coffee grinders

of water pump

1 units

1 units

115 packages

115 packages

11 units

20 units

>50 mosques

of COVID-19 preventive equipment (washing basins, masks, etc.) were donated

1 units

of basic necessities

48 units

of culverts were donated

of gabions were donated

of marawis instrument

were visited in Safari Ramadan program

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Testimonies from Stakeholders Marius Local Supplier My name is Marius, a local supplier who has been supporting Supreme Energy since 2014 until now. Thank you for prioritizing us, the affected people, as local manpower. Praise be to Allah, since the beginning of Supreme Energy project in Rantau Dedap, the economic condition of the people in Kota Agung and surrounding areas has been improved. I can say that since many Kota Agung local people were hired by SERD, they could build their own houses. In agriculture, I also took note that SERD has helped groups of farmers and their business. As a member of Kota Agung community, I hope SERD could be steadily advancing and bring positive impacts to our community and the communities of the surrounding areas. I wish the project could go on smoothly without facing any obstacles.

Daniel Local Supplier I could feel the positive impact due to the existence of Supreme Energy Rantau Dedap project. As a local resident, I could get a lot of knowledge that we can use for further development in the future. Before Supreme Energy project started, we have difficult lives. But now, our lives became better. I hope Supreme Energy could get the expected results and we wish to continue cooperating with SERD in the future, so that our lives could become better.

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Muhammad Ramadhan Local Coffee Farmer My name is Muhammad Ramadhan. I am from Segamit. I have agrotourism and coffee plantation business. As a part of the community affected by the project, I have received assistance and trainings in coffee cultivation and care, top-grafting, and good coffee processing techniques. Previously, we apply inherited cultivation culture with minimum processing methods. By the assistance of SERD, now we understand a better way of processing coffee. In old times, coffee was dried on roads and crushed by cars passing through the road. After the training from SERD, now we know how to process coffee in a properly. I hope, later on there will be further trainings from SERD of how to produce high quality coffee with broader marketing network.

Rizal Local Supplier Previously, before SERD exist here, we did not know what is geothermal energy. Thereafter, we were invited to understand and learn how to cooperate by supplying construction materials. Previously, we worked as farmers, but then we got excited when the company came to our community. As we wanted to know more about geothermal energy, and SERD was willing to empower the local communities, we then worked together to support Supreme Energy Rantau Dedap project. When there are road or irrigation damage, SERD involved the community to repair it to remove any obstacles from the project. Before the project existence, the access road to this area was so poor that cars could not pass. We could only ride horses. In early times, the local communities could not bring harvests in a large quantity to market them outside. Thank God, because of SERD, we have no more handicaps in access roads. As a community member, we have enjoyed the improvement of our economic condition due to the existence of this project. The fact is that now young people can have their own houses. We hope this project can continuously grows in the future.

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Susi

Surman Tambunan

Member of Farmer Group around SERD

Native Son of Segamit, Rantau Dedap

After one year joining Livelihood Improvement program implemented by SERD, there have been so many improvements made, particularly in road construction and assistance in the form of supply of fertilizers, pesticides, tarpaulins, and many others. We also had the opportunity to join cooking and coffee plantation trainings a while ago. Because of fertilizer assistance from SERD, our harvests increased. I hope in the future this program can be continuously carried out to provide support to us for successful harvests.

My name is Surman Tambunan, native son of Segamit, Rantau Dedap. I have been working for SERD community in this farming area to have additional income sources other than coffee. So far, Rantau Dedap community only earn money from coffee that they harvest once a year. We were advised by SERD to plant commodities other than coffee, such as fragrant lemongrass, that can be harvested 3 times a year. For other commodities such as chili that we used to plant, thank God, after the development program carried out by SERD, we feel the improvement in the last 2 years.

Rizki Local Supplier I am Rizki Juni. I am working to supply materials for Supreme Energy Rantau Dedap project. I have been working with SERD since 2018 until now. In our opinion, SERD contribution to the local community is tremendous, particularly to the local suppliers who have been supported in terms of economy. I hope SERD project can improve economic welfare of the affected local people, even if it’s indirectly.

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For the marketing, so far, we just relied on local markets. After the chili and onions harvests were abundant for local supply, we started to penetrate other markets such as Pagar Alam or Lahat. The chili and onion plantings also help open the employment opportunity for workers from villages around this area, who can be all employed during harvest time. I hope SERD can continuously develop and assist the communities. If Supreme Energy can support more here in this area, more job opportunities can be created.

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4

Closing


Closing SERD’s Expectation Related to New Renewable Energy Continuous utilization of fossil energy, and increasing needs had caused the non-renewable energy reserve decreased. In Ministry of Energy and Mineral Resources record, Indonesia will run out of oil in another 8 years, while for gas another 21 years and coal 64 years. The Government of Indonesia has decided in the National Energy General Plan (RUEN) concerning energy transition from non-renewable to renewable to target the use of renewable energy 23% in 2025 and 31% in 2050. To support the use of renewable energy, Supreme Energy is committed to assist the government in national energy resilience by developing Geothermal Power Plant as renewable energy through the development of clean energy, that is by minimizing the adverse impact on social, cultural, healthiness and environmental aspects. In going through the process of works and development, SERD follows government regulations and applies international standards. Through this Rantau Dedap Geothermal Power Plant, SERD wishes to provide as much positive impact to the surrounding environment and affected communities in the aspects of economy, education, and health, and able to maximize the potentiality of the community in improving the quality of individuals or families. In a broadened view, SERD hopes that the new government regulations that support New Renewable Energy will be issued, and may stimulate the development of national geothermal energy industry and optimize the potentiality of geothermal energy in this country until it reaches 23.9 GW.

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Expectation for SERD in the Future Mr. Prijandaru Effendi

Executive VP Relations & Support Services The development of Geothermal Power Plants Geothermal Plant in Rantau Dedap was initiated several years after the government issued an assignment for preliminary survey for Rantau Dedap. Total developing time was around 13 years, and at the end of 2021 Commercial Operation Date was achieved. There are 2 heaviest challenges in developing Rantau Dedap Geothermal Plant; the result of geothermal reserve survey which was far below the declared target and COVID-19 pandemic. To handle those challenges, some adjustment had to be made, such as the renegotiation of electricity tariff with PLN as the single buyer and implementation of Business Continuity Plan to prioritize safety of the workers. Consequently, the project delayed and the costs increased. Nevertheless, the motivation we conveyed to all Supreme Energy personnel is that developing geothermal energy means developing the clean and an advanced Indonesia in the future. There are 2 important things in developing renewable energy. First, sustainable energy, and second, emission reduction for healthy environment.

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Geothermal potential in Indonesia is still large, out of 24 GWE geothermal potential, only 2.175 GW was utilized. The government has targeted that in 2060 Indonesia will be able to become a Net Zero Emission country. Something that can replace fossil energy as energy that can work 24 hours for power plants is geothermal energy. However, the obstacle is that developing geothermal energy takes 10-to-12-year time. Several tips based on the experience, geothermal investors should be ready to run marathon and have remarkable endurance in terms of commitment and costs, and foster cooperation with local contractors who have commitment to developing renewable energy and wide network. The key to the success is hard work, commitment, consistency and pray. Thanks to colleagues in Supreme Energy for their support and dedication. Thanks also to the Central Government, Local Government and surrounding communities that have helped much in the development of Rantau Dedap Geothermal Plant. By the continuous efforts, strong determination along with prayers to God, the Creator, there is nothing impossible. I hope in the future, there will be no more sadness, and only happiness remains.

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Hisahiro Takeuchi

Victor van der Mast

There were many challenges that had to be encountered to achieve the development targets and COD of Rantau Dedap Geothermal Plant. The financial institutions that became lenders for this project – JBIC, ADB, and NEXI – have their own lending requirements. COVID-19 pandemic also causes the cost to increase, making the project require new sources of finance. All these things we always discussed and made our efforts to give understanding to the lenders and sponsors to continue supporting this project. To face the obstacles, leadership is very important.

Rantau Dedap area is the most challenging geothermal project in the world – where SERD had to enter a tropical forest by constructing access roads 50 km in length, and established a geothermal exploration center at a height of 2,600 masl. Out of the potential geothermal resource of 220 MW, Rantau Dedap Geothermal Plant actually has only 92 MW geothermal potential.

CFO/Finance Director

After COD is smoothly achieved, my expectation is that the operational activities can continue in a stable manner and Rantau Dedap area can grow more and more. May this Geothermal Plant give contributions to the government’s goal towards the net zero emission and provide benefits to the community.

COO/Operations Director

The challenges include COVID-19 outbreak that affected SERD twice. First, that was in December 2020 and the second that was in July 2021, where SERD had to evacuate 1,600 people. The originally planned rotation system did not work as expected due to the pandemic. A number of workers had no choice that to stay longer in the work locations. Regardless of the magnitude of the obstacles, Rantau Dedap has a very beautiful view. In improving welfare of the community affected by development of Rantau Dedap Geothermal Plant, SERD provided trainings for quality improvement and productivity of commodities such as coffee and strawberry. SERD also provided job opportunities to local residents and job trainings for them. Through the offset program, SERD also replanted the green areas affected by construction of power plant. This is align with the requirements of ADB (Asian Development Bank) as a lender. Fostering good cooperation and making good relationship with various relevant parties, such as sponsors, partners, PLN, Central Government, Regional Government, and local community are important things for the success of the development of Rantau Dedap Geothermal Plant. I hope, on behalf of Supreme Energy, we can export 91.2 MW to PLN and can carry out business expansion. Geothermal energy can be available days and nights, however, the development needs patience to obtain the optimum results.

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Editor & Contributor

Contributors M. Arief Tarunaprawira

Herwin Azis

Muhammad Tarmizi

Amin Asriadi

Gilang Rifki

Ujang Sahrudin

Bima Aryaputra

Jundy Fadhillah

Evans Satya

Abdi Manurung

Editor

Ismoyo Argo

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Facing Energy Transformation Challenges

Meidina Dwisavira

Natalina Soelastyani

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Head Office Menara Sentraya, 23rd Floor Jl. Iskandarsyah Raya No. 1A, Kebayoran Baru, Jakarta 12160 Indonesia relations@supreme-energy.com Phone : +62-21-2788 2222 (Hunting) Fax : +62-21-2788 2333 Website : www.supreme-energy.com


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