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Preliminary Study on Geothermal Direct Utilization for Tea Drying Plant in Malabar, Indonesia

PRELIMINARY STUDY ON GEOTHERMAL DIRECT UTILIZATION


FOR TEA DRYING PLANT IN MALABAR, INDONESIA

T.A. Fauzi Soelaiman1), Ali Ashat1), and Ismail Hasjim2)


1)
Institut Teknologi Bandung, e-mail: fauzi@termo.pauir.itb.ac.id
2)
West Java Mining Office

Abstract:
This paper offers a preliminary study on direct utilization of geothermal energy in a tea
plantation in Malabar, Indonesia. Rough calculation of energy availability has shown that the energy
from hot waste water to be reinjected into the reservoir can provide approximately 10 times the
energy required for withering and drying processes in the tea factory. Therefore it is more than
sufficient to be used to replace the currently use of Industrial Diesel Oil. Furthermore, an economic
analysis of four possible scenarios has shown that the use of direct utilization is feasible and
economically acceptable.

1. INTRODUCTION
Based on a historical note, the entire tea plantation area in Pangalengan was developed by K.
A. R. Bosscha in the year 1896. Currently, all tea leaves from the plantation are processed in 3 tea
factories located in the region called: Malabar, Kertamanah and Purbasari. From the three factories,
Malabar is the largest one with maximum processing capacity of 63 tons of wet tea per day and the
one closest to a geothermal power plant. The tea plantation and the three existing tea factories are
currently managed by PTP Nusantara VIII.

2. MALABAR TEA FACTORY


In this paper, an attempt is made to study the direct utilization of the nearby geothermal energy
for tea drying at Malabar Tea Factory.

2.1. Concession Area


The concession area of Malabar tea plantation covers an area of 2022.11 hectare with the
following detail:
 Crop has yielded tea: 1207.67 hectare
 Crop not yet yielded tea: 101.49 hectare
 Crop has yielded quinine: 7 hectare
 Crop not yet yielded quinine: 22.72 hectare

Meanwhile, the remaining area of the Malabar tea plantation concession is currently utilized
for:
 Factory and housing: 115.03 hectare
 Land not yet cultivated: 147.58 hectare
 Seedbeds: 1.08 hectare
 Utilized by other institutions: 5.53 hectare

2.2. Tea Production

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The tea production of Malabar Plantation between 1955 and 1974 was relatively constant at
about 7500 tons per year. Since 1974, the production has increased to about twice as much. This
increase was achieved by rejuvenation the tea crop by using grafting system on the crop previously
planted with seed system. Due to tea production with grafting system became much more productive,
the rejuvenation of old crop was programmed to be implemented continuously every year until the
entire plantation area has turned into grafting system. Grafting system has a productive period at age
5 until 50 years old.
The amount of tea production strongly depends on season. In rainy season the production can
reach up to 100 tons per day, while in dry season the production will be very low only ranging from
20 to 30 tons per day. According to the production data in year 2002, the production of wet tea during
one year has reached 15,180 tons and after the tea is processed to become dry tea the production
becomes 3,300.5 tons. The bar chart of tea production in year 2003, until September, can be seen at
Figure 1.
MALABAR DRY TEA PRODUCTION UNTIL SEPTEMBER 2003
500

400
1000 Kgs

300

200

100

0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
MONTH

Figure 1. Malabar dry tea production in 2003.

2.3 Tea Processing


Basically, fresh tea leaves picked from the plantation are processed by withering, grinding,
oxidizing, drying, sorting, packing and then keeping them in a storage or distributing them.
The withering process is used to eliminate water content until about 50%. This process is done
by allowing the fresh air from the surrounding to pass through the stacks of leaves. Water content of
the tea leaves in rainy season is usually higher than in dry season so that the withering process also
needs longer time, about 8-10 hours, compared to only 2-3 hours in dry season.
The grinding process is used to grind tea leaves into powder, while oxidizing is used to recolor
the black tea powder into red. The objectives of the processes are to deodorize the leaves and to give
red color if the tea powder is poured by boiling water.
The drying process is usually done by spraying hot air with temperature between 97 – 105oC.
The process is meant to remove the water content of tea powder until less than 2%. Lastly, the
following processes are usually used to produce tea for the market: sorting, packing and at the end
keeping it a store. These tea production processes can be seen clearly at the factory layout as shown
in Figure 2.

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Note:
- Ruang Layuan = Withering Room - Fermentasi = Oxidizing Room
- Ruang Pengeringan = Drying Room - Ruang Pembakaran = Burner Room
- Ruang Sortasi = Sorting Room - Ruang Pengepakan = Packing Room
- Ruang Penyimpanan = Storing Room - Ruang Giling = Grinding Room

Figure 2. Layout of processing locations at existing Malabar Tea Factory.

2.4. Energy Requirement for the Tea Factory


Energy consumption for tea processing is very high. The highest energy consumption is
required in drying process. Another process which requires large amount of energy is the withering
process. As illustration, Malabar tea factory supplies its energy requirement by burning IDO
(Industrial Diesel Oil). The factory consumes 0.38 liter IDO per kilogram dry tea where 0.24 liter is
needed for drying process and 0.14 liter is needed for withering process. The histories of the
consumptions of IDO at the factory are shown in Figures 3, 4 and 5. The estimate of IDO requirement
is 1.25 million liters per year. This amount of IDO (if converted into energy) will be equivalent to 0.6
MW by assuming: density of IDO: 0.84 kg/liter, calorific value: 45.6 MJ/kg and energy conversion
from IDO to become hot air has an efficiency of 40%.

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IDO CONSUMPTION FOR WITHERING PROCESS


MALABAR TEA FACTORY UNTIL SEPTEMBER 2003

70

60

50
1000 LITRES

40

30

20

10

0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
MONTH

Figure 3. IDO consumption for withering process at Malabar Tea Factory.

IDO CONSUMPTION FOR DRYING PROCESS


MALABAR TEA FACTORY UNTIL SEPTEMBER 2003

100
90
80
70
1000 LITRES

60
50
40
30
20
10
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
MONTH

Figure 4. IDO consumption for drying process at Malabar Tea Factory.

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Preliminary Study on Geothermal Direct Utilization for Tea Drying Plant in Malabar, Indonesia

TOTAL IDO CONSUMPTION MALABAR TEA FACTORY


UNTIL SEPTEMBER 2003

200

150
1000 LITRES

100

50

0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
MONTH

Figure 5. Total IDO consumption at Malabar Tea Factory until September 2003.

The energy required by Malabar tea factory can be calculated as follows:


IDO Requirement = 1,254,190 liter/year
IDO Density = 0.84 kg/liter
Mass of IDO = 1,254,190 literx0.84 kg/liter=1,053,519.6 kg/year
IDO Heating value = 45.6 MJ/kg
Total Energy = 1,053,519.6 x 45.6 = 48,040,493.76 MJ/year
Energy Conversion = 40%
Energy rate = 48,040,493,76 MJ/year x 40%
= 19,216,197.5 MJ/year
MW (Mega Watt) = 19,216,197.5 MJ/year/(365 d x 24 h x 3600 s)
= 0.609 MW

High energy requirement becomes significant component in the expense section of the tea
process. As shown in the picture, if the tea price is US$ 1/kg (Rp 8,500,-) while price of IDO per liter
is Rp 1650,- hence the expense of IDO in one year is Rp 1,650,- x 1,254,190 liter = Rp 2.069 billions.
The total earning from sale of tea product = 3,300.5 tons x Rp 8,500 = Rp 28.054 billions. Therefore,
it can be seen that the component of energy expense is about 7.4% from tea selling price.

2.5. Utilization of Geothermal Energy to Replace IDO


Considering that the hot water reinjection line of Wayang Windu geothermal field is situated
relatively close to Malabar tea factory, the idea of replacing IDO by geothermal energy was studied
in general, especially from the economic aspect. Fluid produced from Wayang Windu geothermal
field is a mixture of hot water and steam. After passing the separation process, the steam is directed
into a turbine which turns a generator to generate electricity. Meanwhile, the hot water is directed
through a pipe before returning into the reservoir through reinjection wells. The hot water is usually
at high temperature of about 180oC. The low rate of the hot water was estimated to be 49.5 kg/s. It is
assumed that Wayang Windu power plant generates 110 MW electricity where every MW is
equivalent to 1.8 kg of steam per second. Fluid produced from Wayang Windu field is a mixture of

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20% hot water and 80% steam. So that the amount of hot water equals to 0.25 x 110 x 1.8 kg/s = 49.5
kg/s.
If heat is possible to be extracted from the hot water by lowering the temperature until 150 oC
without introducing any technical problem, e.g. scaling problem, hence, from the 49.5 kg hot water
per second before reinjected can produce energy 6.23 MW according to the following calculation:

MW = m x Cp x ∆T / 103 = 49.5 x 4.2 x 30 / 1000 = 6.23 MW


where:
 m = mass flow rate of hot water, kg/s
 Cp = specific heat capacity of water = 4.2 kJ/kg. oC
 ∆T = temperature decrease = 30oC

Therefore, the amount of energy is about 10 times from the required energy by Malabar tea
factory for withering and drying processes. By flowing 5 kg/s hot water before reinjection and
returning it to reinjection pipeline, the heat that can be extracted will be enough to meet requirement
of energy for withering and drying processes without using IDO as source of heat. However,
economic analysis is required to answer whether the idea is feasible and profitable.
The alternative heat exchangers that can be used to replace IDO with geothermal energy are
shown in Figure 6.

Figure 6. Alternative heat exchangers.

3. ECONOMIC ANALYSIS
It has been explained previously that technically utilization of geothermal energy for tea
withering and drying processes is appropriate to be developed. But it requires economic analysis to
determine whether the development is feasible and profitable. The important economic parameters
which are needed to be predicted are: investment cost, operating and maintenance cost, and
geothermal energy purchasing cost.
3.1. Investment Cost
3.1.1. Investment Cost Component
The major investment costs are for pipes, heat exchangers, fans/pumps and blowers.
- Pipes
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Pipes are required to deliver 5 kg/s of hot water from the reinjection pipeline to the tea factory and
returning it back to the reinjection pipeline. The distance from the reinjection pipeline to the tea
factory is about 500 m so that 1000 m length of pipe is needed. If hot water rate is kept constant at
about 1-2 m/s, a 2½” pipe diameter will be needed. The pipe needs to be wrapped with insulation to
reduce heat loss from the hot water to the ambient.

Estimate of Investment cost


- Pipe = Rp. 180 millions
- Insulation material = Rp. 170 millions
- Aluminum Cladding = Rp. 100 millions
- Supports, turns, valves = Rp. 100 millions
- Civil works, installation, etc. = Rp. 130 millions
Total = Rp. 680 millions

- Heat Exchanger
A heat exchanger is needed to transfer heat from hot water into fresh air so that at the exit of the
heat exchanger fresh air has the required temperature for withering and drying processes.
Referring to a study which has been conducted before, the price of a heat exchanger with 25 tons
per month drying capacity is Rp. 40 millions. For the Malabar tea factory, a heat exchanger with
minimum capacity 15 thousands tons per year or 1.25 thousand tons per month is needed.
Thereby, the price of heat exchanger is estimated to be Rp. 2 billions including the installation
cost.

- Pump
Pump is needed to compensate pressure loss due to friction during fluid flows in pipes and heat
exchangers. Considering geothermal fluid has high temperature, heat resistant special material is
needed as well as to withstand scaling (if scaling occurs) or to withstand fluid with low pH
(generally to avoid the scaling problem, scale inhibitor such as sulfate acid is added to the fluid).
The use of special material of pump will affect the cost of pump significantly. Pump price is
estimated to be about Rp. 50 millions.

- Fan/Blower
To flow fresh air through the heat exchanger, it requires fans/blowers. The number of required
fans is about 40 units. If each unit costs Rp. 1 millions, hence the estimated cost is Rp. 40 millions.

3.1.2 Operation and Maintenance Cost


Operation and Maintenance (O&M) Cost is estimated to be 5% of total investment per year
which will increase 3% gradually every year.

3.1.3. The cost of geothermal fluid purchase


Pricing the geothermal energy in form hot water is very difficult as no one has ever done it
previously. Usually, the sale of geothermal energy is in form of electricity of the steam. Case
examples which are possibly close to the case now are the energy sale contracts for Darajat Unit 1,
Kamojang Unit 1, 2, 3 and Awibengkok-G. Salak Unit 1 and 2. Basically, the steam is paid after
becoming electricity. For this case, steam price is about US$ 30 per MWh. If it requires 6.5 tons of
steam to generate 1 MWh electricity, then to fulfill the energy requirement at Malabar tea factory, it
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requires 0.609 MW x 6.5 tons/MWh = 3.96 tons of steam per hour, or equals to US$ 18.27/hour, or
Rp 155,295,- per hour, or in 1 year the total purchase of energy equals to Rp. 1.36 billions.

3.2. Economic Comparison between Using IDO and Geothermal Energy


Based on cost structures as stated above, an economic analysis can be conducted to evaluate
whether the use of geothermal energy is more advantageous compared to the existing system now
that is by using IDO.

3.2.1. Using IDO (Existing Condition)


When using IDO as energy source, and by assuming project’s period is 20 years, there is no
increase of price of IDO (Rp 1,650,-/litre), O&M cost equals to Rp 70 millions and O&M escalation
rate is 3% per annum, then the Net Present Value (NPV) can be calculated as Rp. -15,201,766,3478,-.
Calculations for the first five years and for year 20 are presented in the following table.

Table 1 IDO Cost and NPV Calculation at Existing Condition


Year 1 2 3 4 5 20
O&M (70,000,000) (72,100,000) (74,263,000) (76,490,890) (78,785,617) (122,745,424)
IDO Cost (2,080,000,000) (2,080,000,000) (2,080,000,000) (2,080,000,000) (2,080,000,000) (2,080,000,000)
Total Cost (2,150,000,000) (2,152,100,000) (2,154,263,000) (2,156,490,890) (2,158,785,617) (2,202,745,424)
NPV (15,201,766,348)

3.2.2. Using Geothermal Energy


When geothermal energy is used to replace IDO, several cost scenarios can be calculated as
follows.

Scenario 1: Base Case


Assumptions:
Escalation of O & M (Operation and Maintenance Costs): 3% per year.
Exchange Rate of 1 US Dollar: Rp. 8500.
Investment Rp. 2.77 billions where pipe investment equals to Rp 680 millions.
Steam price: 3 US cents/kWh.
Life time of project: 20 years.
Discount Rate: 13%
The use of geothermal energy will yield NPV equal to Rp - 11,941,839,171.
The result of calculation of year 0 - 5 can be seen at the table below:

Table 2. Economic Analysis of Scenario 1


NPV ($11,941,839,171.78) rupiahs
O&M Escalation Rate 3% per year
US$ 1 = 8500 rupiahs
INVESTMENT (2,770,000,000.00) rupiahs
Steam Price 30 US cent/kWh
Project Life Time 20 years

Year 0 1 2 3 4 20
Investment (Rp) (2,770,000,000)
O & M (Rp) (138,500,000) (142,655,000) (146,934,650) (151,342,690) (242,860,588.35)
Energy Purchase (Rp) (1,360,384,200) (1,360,384,200) (1,360,384,200) (1,360,384,200) (1,360,384,200)
Total (2,770,000,000) (1,498,884,200) (1,503,039,200) (1,507,318,850) (1,511,726,890) (1,603,244,788.35)

2. Piping Cost Paid by Energy Seller


If the piping cost would be paid by the energy seller (in this case Wayang Windu) as in the cases
where a geothermal field is selling steam to the national electricity company (PLN) and PLN
accepts steam in power plant (steam header), the expense of pipe is taken care by the company
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operating the geothermal field. Hence, the use of geothermal energy will yield NPV equals to Rp
-11,086,344,554 for Malabar tea factory. The result of the calculations for year 0 – 4 and 20 can
be seen at table below

Table 3. Economic Analysis of Energy Buyer for Scenario 2


NPV (11,086,344,554)
O&M Escalation Rate 3% per year
US$ 1 = 8500 rupiahs
INVESTMENT (2,090,000,000.00)
Steam Price 30 US$/MWh
Project Life Time 20 years

Year 0 1 2 3 4 20
Investment (Rp) (2,090,000,000)
O & M (Rp) (104,500,000) (107,635,000) (110,864,050) (114,189,972) (183,241,383)
Energy Purchase (Rp) (1,360,384,200) (1,360,384,200) (1,360,384,200) (1,360,384,200) (1,360,384,200)
Total (2,090,000,000) (1,464,884,200) (1,468,019,200) (1,471,248,250) (1,474,574,172) (1,543,625,582.55)

While IRR accepted by company of energy seller if 34% income tax is applied equal to 129%.
Price of US$ 30/MWh is the ceiling price which is possibly agreed and harmless by Malabar
tea factory as the energy buyer.

Table 4. Economic Analysis of Energy Seller for Scenario 2


NPV 4,812,363,196 rupiahs
O&M Escalation Rate 3% per year
US$ 1 = 8500 rupiahs
INVESTMENT (680,000,000) rupiahs
Project Life Time 20 years

Year 0 1 2 3 4 20
Investment (Rp) (680,000,000)
O & M (Rp) (34,000,000) (35,020,000) (36,070,600) (37,152,718) (59,619,206)
Energy Sale (Rp) 1,360,384,200 1,360,384,200 1,360,384,200 1,360,384,200 1,360,384,200
Depreciation (10%) 68,000,000 68,000,000 68,000,000 68,000,000
Taxable Income 1,326,384,200 1,325,364,200 1,324,313,600 1,323,231,482 1,300,764,994
Income Tax (34%) 450,970,628 450,623,828 450,266,624 449,898,704 442,260,098
Net Cash Flow (680,000,000) 875,413,572 874,740,372 874,046,976 873,332,778 858,504,896
Cum Cash Flow (680,000,000) 195,413,572 1,070,153,944 1,944,200,920 2,817,533,698 16,674,100,236

IRR = 129%
PI = 8.08 IRR 129%
PI = 8.08

NPV 4,812,363,196
3. Geothermal Fluid Considered as Waste Eskalasi O&M
Kurs Dollar
3% per tahun
8500 rupiah
INVESTASI (680,000,000)
If geothermal fluid is assumed as waste and does not have selling value for Wayang Windu, Harga Uap 3 US cent/kWh
Lama Project 20 tahun
and the piping expense will be paid by Wayang Windu, then, from economic point of view at Thn ke- 0 1 2 3 4

least Wayang Windu will only try to take back the investment (piping cost) added with a Investasi (Rp)
O & M (Rp)
(680,000,000)
(34,000,000) (35,020,000) (36,070,600) (37,152,718)
Penjualan Energi (Rp) 1,360,384,200 1,360,384,200 1,360,384,200 1,360,384,200
certain return. If it is assumed that the minimum attractive rate of return (MARR) is 30% Pendapatan kena pajak
Pajak (34%)
1,326,384,200
450,970,628
1,325,364,200
450,623,828
1,324,313,600
450,266,624
1,323,231,482
449,898,704
hence economics of this model shall be as follows: Net Cash Flow
Cum Cash Flow
(680,000,000)
(680,000,000)
875,413,572
195,413,572
874,740,372
1,070,153,944
874,046,976
1,944,200,920
873,332,778
2,817,533,698

Table 5. Economic Analysis of Scenario 3


NPV 666,805,070 rupiahs
O&M Escalation Rate 3% per year
US$ 1 = 8500 rupiahs
INVESTMENT (680,000,000) rupiahs
Project Life Time 20 years

Year 0 1 2 3 4 20
Investment (Rp) (680,000,000)
O & M (Rp) (34,000,000) (35,020,000) (36,070,600) (37,152,718) (59,619,206)
Energy Purchase (Rp) 350,000,000 350,000,000 350,000,000 350,000,000 350,000,000
Taxable Income 316,000,000 314,980,000 313,929,400 312,847,282 290,380,794
Income Tax (34%) 107,440,000 107,093,200 106,735,996 106,368,076 98,729,470
Net Cash Flow (680,000,000) 208,560,000 207,886,800 207,193,404 206,479,206 191,651,324
Cum Cash Flow (680,000,000) (471,440,000) (263,553,200) (56,359,796) 150,119,410 3,337,028,796

From the above calculation, it can be seen that Malabar can buy the steam for price of US$
7.7/MWh. This price can be considered as floor price which is most likely acceptable by the
energy seller which in this case is Wayang Windu.
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4. Other Alternative
It has been known that the national electricity company (PLN) only buys steam after the steam
becomes electricity. Steam bought by PLN has energy content of about 2.8 MJ/kg. After the
steam is utilized by PLN it can be assumed that the steam (which is now in form of condensate
before it is reinjected) does not have energy content anymore. So that in principle, steam sold
to PLN to become 1 MW is equal to 1.8 kg/second multiplied by 2.8 MJ/kg or in term of
thermal heat is equal to 5.04 MW. If Malabar only requires 0.609 MW hence it only needs to
pay for steam equals to US$ 3.625/MWh so that during 1 year the expense of energy purchase
is Rp. 164,379,758,- If the concept of energy sale by Wayang Windu to Malabar can be treated
as this case, the economic analysis is as in the following table:

Table 6. Economic Analysis of Scenario 4


NPV (3,878,367,852.84) rupiahs
O&M Escalation Rate 3% per year
US$ 1 = 8500 rupiahs
INVESTMENT (2,090,000,000.00) rupiahs
Steam Price 3.625 US$/MWh
Project Life Time 20 year

Year 0 1 2 3 4 20
Investment (Rp) (2,090,000,000)
O & M (Rp) (104,500,000) (142,655,000) (146,934,650) (151,342,690) (242,860,588.35)
Energy Purchase (Rp) (164,379,758) (164,379,758) (164,379,758) (164,379,758) (164,379,758)
Total (2,090,000,000) (268,879,758) (307,034,758) (311,314,408) (315,722,447) (407,240,345.85)
IRR 10%
PI = 0.86

NPV (94,785,922) rupiahs


O&M Escalation Rate 3% per year
US$ 1 = 8500 rupiahs
INVESTMENT (680,000,000) rupiahs
Project Life Time 20 year

Year 0 1 2 3 4 20
Investment (Rp) (680,000,000)
O & M (Rp) (34,000,000) (35,020,000) (36,070,600) (37,152,718) (59,619,206)
Energy Sale (Rp) 164,379,758 164,379,758 164,379,758 164,379,758 164,379,758
Taxable Income 130,379,758 129,359,758 128,309,158 127,227,040 104,760,552
Income Tax (34%) 44,329,118 43,982,318 43,625,114 43,257,193 35,618,588
Net Cash Flow (680,000,000) 86,050,640 85,377,440 84,684,044 83,969,846 69,141,964
Cum Cash Flow (680,000,000) (593,949,360) (508,571,920) (423,887,876) (339,918,030) 886,841,595

NPV for Malabar is Rp -3,878,367,853.84 and NPV for Wayang Windu is Rp 94,785,922.
Hence this price possibly will not be acceptable by Wayang Windu because the price is below
the floor price and only produces IRR 10%.

4. CONCLUSIONS
Based on the above economic analysis, the following conclusions can be withdrawn:
 The energy supply at Wayang Windu geothermal area that can be used directly is estimated
as 6.23 MW, or more than 10 times the energy demand of the tea factory which is 0.61 MW.
 The economy analysis shows that direct use of geothermal energy is favorable compared to
using the existing industrial diesel oil (IDO).

5. REFERENCES
 Dickson, M. H., & Fanelli, M., “Small Geothermal Resources-A Guide to Development and
Utilization”, UNITAR/UNDP Centre on Small Energy Resources, Rome, 1990
 Sumotarto, U., “Utilization of Geothermal Energy”, Pre-Conference Course, 6th INAGA
Annual Meeting, Bandung, 2003

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Preliminary Study on Geothermal Direct Utilization for Tea Drying Plant in Malabar, Indonesia

 Dinas Pertambangan dan Energi Propinsi Jawa Barat – LPPM ITB, “Perencanaan
Pengembangan Sumberdaya Panasbumi untuk Pemanfaatan Langsung di Jawa Barat”, Final
Report, 2003.

Workshop on Management and Optimum Utilization of Geothermal Energy, Attace of Education and Culture, Embassy of Rep. of
Indonesia in Manila, Makati City-Manila Philippines, 29 – 30 April 2004 11

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