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Developments in Geothermal Energy in Indonesia
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Developments in Geothermal Energy in Indonesia

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Presented by Asclepias Indriyanto, Indonesian Institute for Energy Economics

Presented by Asclepias Indriyanto, Indonesian Institute for Energy Economics

Published in Technology , News & Politics
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  • 1. Notes on the Development of Geothermal in Indonesia Generating Dialogue Clean Energy, Good Governance, and Regulation Forum Singapore, 16-18 March 2008 Asclepias Rachmi S. Indriyanto Indonesian Institute for Energy Economics
  • 2. Geothermal Development (1)
    • Large estimated potential, low realization
    • Most of existing capacity was the result of PD 45/91, which targeted to develop 4500 MW
    • During the Asian Financial Crisis, various geothermal development contracts and price agreements were suspended.
    • They were later renegotiated or cancelled; eventually negotiation agreed on lower price; but still many projects are not progressing.
  • 3. Geothermal Development (2)
    • Recent progress:
    • 2003: Law 27/2003, the only RE governed by its own law
    • 2004: Geothermal Blueprint
    • 2005: Establishment of Directorate of Geothermal Enterprise
    • Supervision & Groundwater Management, to strengthen sector
    • management
    • 2006: Master Plan Study for Geothermal Power Development
    • in Indonesia (funded by JICA)
    • 2007: Exemption of import duties for geothermal exploration
    • equipments and exemption of taxes for exploration activities
    • But SOE are still facing significant hurdles, and low participation of commercial financing and private sector
  • 4. Geothermal Development (3)
    • Challenges:
      • Economics:
        • High initial costs to develop geothermal energy
          • Remote areas, limited infrastructure
          • Drilling deep wells
        • Subsidized prices of fossil-based energy (petroleum fuels, and electricity mostly generated from fossil energy)
        • Environmental benefits are not included in cost calculation
      • Regulations:
        • Alignment of upstream and downstream regulations
        • Required set of implementation regulation for Law 27/2003
        • Alignment with Forestry regulation (national parks, boundary of various forest categories, overlap uses)
        • Role of local government in geothermal undertakings
        • Procedure for tender & licensing
        • Incentive for research & development, improve capacity of local contents
        • Road map & master plan on energy mix is not binding