A major geothermal energy project in Indonesia has taken a step forward with the signing of operation and sales contracts, according to local media.

Indonesia state utility PLN and Pertamina Geothermal Energy are reported to have signed a joint operation contract and an energy sales contract for the Sarulla power project in North Sumatra.

Local media cited PLN President Director Nur Pamudji as confirming that the utility will pay 6.7 cents/kWh for energy from Sarulla, which is being developed by a consortium of Medco Energi, Kyushu Electric, Itochu Corporation and Ormat International

The 340 MW Sarulla project is an important part of the Indonesian government’s plans to expand the country’s geothermal energy sector in the face of rapidly rising energy demand. The plant is expected to start operating in 2016.

The project represents the world’s largest single-contract geothermal project to date and is seen as a bellwether of the investment environment in Indonesia’s geothermal sector.

According to Ormat, the project will consist of three Ormat-designed geothermal combined cycle power plant units that will be constructed over a five-year period.

Indonesia is thought to have a geothermal energy potential of nearly 20 000 MW and the Sarulla geothermal working area is one of the country’s largest and potentially most productive sites.