Indonesia's Geothermal Development - Where Is It Going?

Abstract

Indonesia's geothermal resources are among the largest in the world, with around 40 percent of the total geothermal resources worldwide. In order to utilize this enormous energy potential, the Government of Indonesia ("GOI") has intensified its efforts to encourage geothermal power development. As Indonesia's Deputy Minister for Energy and Mineral Resources said recently that GOI is still hopeful to reach the goal of 7,100 MW in geothermal power generation capacity in Indonesia by 2025. With installed capacity of currently 1,450 MW, this seems to be rather ambitious goal and would need adding 800 MW per year from to day until 2025. This paper will discuss the geothermal resources development in Indonesia that have not come online as quickly as planned, despite huge geothermal resources and a raft of regulatory incentives to move away from a fossil-fuel-based economy and commitment to deliver electricity to the people of Indonesia. The discussion includes review of geological, technical and non-technical hurdles of geothermal energy development as well as evolution of laws and regulations designed to overcome the hurdles. However, recently issued geothermal pricing policy has impounded interest for new investment on geothermal energy development.