The Geothennal Energy Policy Perspective: Case Studies and Future Development in Indonesia

Abstract

With Indonesiaís abundant geothermal resources, and being renewable and environmentally ftiendly, geothermal energy could contribute significantly to the Governmentís energy diversification policy. Government policies and economic situation have strongly determined geothermal development in Indonesia. Before economic turmoil hit the country in 1997, around 15 geothermal projects with a total contract capacity of 3,500 MWe were in various stages of rapid development, and the future seemed to be promising. The majority of these projects were then postponed, and development has not advanced significantly due in large part to depreciation of the Indonesian currency. As the Governmentís subsidy on fossil fuel consumption has been reduced recently, geothermal energy has now become more competitive compared to other energy sources with regard to the optimisation of the available energy resources in the most cost effective and productive manner. Constructing a strong legal base for taxes and economic incentives for geothermal developers as well as promoting development schemes based on the best engineering practice will enhance future development. Small scale modular or staged development is suitable to meet the demand in off-grid rural areas in Indonesia for the future development.