The Progress of Geothermal Energy Resources Activities in Indonesia

Abstract

Indonesia comprises more than 200 volcanoes located along Sumatra, Java, Bali and the islands of eastern Indonesia, which is known as 'The Ring of Fire'. This has given rise to large concentration of high temperature geothermal system. With the combined high and low enthalpy geothermal resources, the potential estimated by Directorate General of Geology and Mineral Resource is about 27,000 MW. In relations to the resource, the Government of Indonesia (GOI) is planning to utilize this big energy resource as a leading alternative energy to substitute fossils that may be fulfilling Indonesia's growing demand for electric power during the 21st century.
PT Pertamina (Persero) reported that Indonesia is surrounded by 21 locations (2,795 MW) of prospective geothermal energy in which 10 locations (1,205 MW) planned to develop and operated by developers while 11 locations (1,590 MW) are still waiting for the new bidding. The current locations with total capacity of as a minimum 807 MW consists of Darajat (145 MW), Dieng (60 MW), Kamojang (140 MW), Gunung Salak (330 MW), Sibayak (2.0 MW), Lahendong (20 MW), and Wayang Windu (110 MW).
The severe economic crisis that started in late 1997 has adversely affected power sector demand and growth in Indonesia. This has resulted the failure of achieving targeted installed capacity of about 3000 MW by the year 2006. The degenerative situation is shaped by the inability of PLN to meet the decline of local currency by a factor of 5 relative to the US$ which influence even more to the electricity purchase contracts prepared by PT Pertamina and its joint operating partners. In addition, changes in the regulatory environment for the geothermal industry are the major issues affecting the future growth of the Indonesian geothermal industry.
For the purpose of energy recovery, GOI is setting a strategy to prepare Indonesia to become independent in meeting its energy requirement. In geothermal sector, GOI continues to encourage investors by offering confidence (GOI has gradually increased the national electricity tariff, and assessed a differential electricity tariff structure by region to support electricity infrastructure investment with regards to the needs of the region).
Following the establishment of the Policy on Geothermal, Indonesian Legislative Institution already issued the Law on Geothermal - UU No. 27/2003 - that focuses on the importance of geothermal energy utilization on top of the utilization of other renewable energy, and on the law protection towards the investor for the maximum use of Indonesian geothermal energy. In line with the new regulation, GOI is planning to have a total Geothermal Power Plant Installed Capacity of 6,000 MWe by the year 2020.
In addition, National Electricity General Plan (Rencana Umum Ketenagalistrikan Nasional/RUKN) assumed that up to 2006 geothermal power plant is expected to occupy the 3rd position on the Java-Bali power plant enhanced arrangement and, it is currently producing as a minimum 807 MW. Thus, the opportunity to develop geothermal power plant in Indonesia is still widely open.
Finally, in regard to investment substance GOI also expected to be able to maintain Indonesian country risk, to set up competitive basic electricity price, to determine market-demand currency rate, to arrange clear fiscal regulations, and to implement contract sanctity.