U.S. COMPANIES FACE OBSTACLES IN ADB GEOTHERMAL TENDERS

UNCLAS JAKARTA 001025 SIPDIS DOE FOR PI-32 CUTLER AND EERE/ED WALL DEPT FOR EAP/MTS, EEB/ESC/IEC/ENR, AND EEB/IFD/ODF COMMERCE FOR 4430/NADJMI AND 6930/HUEPER TREASURY FOR T RAND AND G RAO MANILA FOR FCS REIDBORD AND TREASURY CURRY STATE PASS TO USTR EHLERS AND WEISEL STATE PASS TO EPA MARK KASMAN E.O. 12958: N/A TAGS: ECON ETRD ENRG EAID ID SUBJECT: U.S. COMPANIES FACE OBSTACLES IN ADB GEOTHERMAL TENDERS ¶1. This is an action request. Please refer to paragraph 7. ¶2. Asian Development Bank (ADB) geothermal tender specifications prevent meaningful participation by U.S. companies. A U.S. company active in the geothermal products market has brought to Post's attention that a requirement that turbine product lines be at least 2 or 3 years old and in regular manufacture within the last 10 years disqualifies most types of geothermal turbines made or remanufactured in the United States. ¶3. David Mendive of Geothermal Development Associates, a geothermal equipment supplier and remanufacturer based in Reno, NV, informed Post that his company was unable to compete in most ADB geothermal tenders, because compatible U.S. technology has not been manufactured regularly within the last 10 years. Mendive confirmed that his company can refit or remanufacture turbines to meet all other technical specifications of most tenders. When asked about the rule, the ADB's Director of Energy and Water Division confirmed the rule serves ADB's goals, because "we are looking for new equipment and not retrofitted equipment. We will not be able to support retrofitted equipment." ¶4. According to Mendive, few U.S. companies regularly manufacture geothermal turbines. Japanese manufacturers dominate the geothermal turbine market, and this equipment is the only type that consistently qualifies under ADB requirements, according to Mendive. In a separate discussion, Indonesia's Director of Geothermal Enterprise Supervision Sugiharto Harsoprayitno observed that Japanese firms have dominated Indonesia's geothermal development in recent years and expressed a desire to broaden the mix of geothermal firms in Indonesia. ¶5. Geothermal experts at the Department of Energy have expressed concerns that the ADB specifications will lock in current technologies and exclude new developments. U.S. companies including UTC and Ormat have developed power conversion technologies for low-temperature applications that could potentially be excluded by ADB's restrictions. The state of geothermal technology is changing rapidly, and in a few years there will likely be new drilling methods, pumps, tools, and conversion technologies. It is critical that specifications such as ADB's do not disadvantage the implementation of these technologies, or handicap U.S. companies that develop them. ¶6. Indonesia is preparing an electricity crash program that will add 10,000 MW of electricity generating capacity, 4,700 MW of which will be geothermal power. This program presents an opportunity to U.S. geothermal developers, but the ADB 10-year rule would put U.S. companies at a disadvantage for projects that receive ADB funding. ¶7. Post requests assistance in addressing obstacles in ADB geothermal tender requirements so that U.S. firms can fully participate in ADB-funded projects. NORTH