1. Energy and Mineral Resources for People’s Welfare
GEOTHERMAL DEVELOPMENT IN INDONESIA
MINISTRY OF ENERGY AND MINERAL RESOURCES OF REPUBLIC OF INDONESIA
DIRECTORATE GENERAL OF NEW, RENEWABLE ENERGY, AND CONSERVATION ENERGY
Jakarta, December 2nd, 2015
By :
Yunus Saefulhak
Director of Geothermal
“The 2nd Asian Renewable Energy Workshop (AREW) 2015”

2. Energy and Mineral Resources for People’s Welfare
I. CURRENT CONDITION 3
II. POLICY & REGULATION 8
III. DEVELOPMENT PLAN 12
IV. INVESTMENT OPPORTUNITY 15
V. CONCLUSION 20

3. Energy and Mineral Resources for People’s Welfare

4. Energy and Mineral Resources for People’s Welfare
1. Energy has become a basic needs;
2. The Indonesian economy grew by 5-6% per
year with a population growth of 1,2% per
year  Energy Growth 7 – 8% per year;
3. Dependence on fossil energy is still high,
while its reserves are limited;
4. Electrification ratio 2014 is 84,4%
5. The sources of new, renewable energy has
not been optimized yet.
Oil
46 %
Gas
18 %
Coal
31 %
NRE
5%
INDONESIA AS A NET OIL IMPORTER
TOTAL OF PRIMARY ENERGY: 1176 MBOE
ENERGY MIX
PRIMARY ENERGY
(MBOE)
Oil 612
Coal 411
Gas 243
NRE 63
ENERGY: CURRENT CONDITION

5. Energy and Mineral Resources for People’s Prosperity
Oil
32.1%
Gas
22.1% Batubara
29.0%
Geothermal
7.9%
Bioenergy
5.5%
Other NRE
1.7%
Oil
39.1%
Gas
22.1%
Coal
29.0%
Geothermal
4.2%
Hydro
0.9%
Bioenergy
4.7%
Oil
25,0%
Gas
22,0% Coal
30,0%
Geothermal
7.1%
Hydro
2.8%
Bioenergy
9.8%
Other NRE
3.3%
NRE: 9.8%
NRE: 23.0%
NRE: 16.8%
2020: 290 MTOE
2025: 400 MTOE
Hydro
1.7%
2015: 215 MTOE
NRE TARGET IN NATIONAL ENERGY POLICY (KEN)
(GOVERNMENT REGULATION NO. 79/2014 ON NATIONAL ENERGY POLICY)

6. Energy and Mineral Resources for People’s Welfare
 Abundance geothermal energy more than 29 Gwe, distributed in more than 324
locations in almost all regions.
 Total installed capacity 1,438.5 MW or Only less than 5% have been utilized.
 The Government has determined 67 geothermal working (concession) areas for
development, but only nine of them were already produced.
 Under the previous regulations, geothermal operations were banned within
restricted forested areas, which currently are home to an estimated 42% of
Indonesia’s geothermal resources.
 GoI’s target for renewable energy is 23 % of total national energy mix in 2025
 Geothermal contribution is expected 7.1 % or about 6.3 GW of installed
capacity.
 With the additional capacity of 4.9 GW will lead Indonesia as the largest CO2
mitigation country in the world with reduction emissions by 29.36 million ton/
year.
 The propose program will require an investment of at least US$ 20 Billion.
CURRENT GEOTHERMAL DEVELOPMENT

7. Energy and Mineral Resources for People’s Welfare

8. Energy and Mineral Resources for People’s Welfare
Direktorat Jenderal Energi Baru, Terbarukan dan Konservasi Energi
Kementerian Energi dan Sumber Daya Mineral
1. Enhancement, harmonization of policies and regulation on geothermal following:
 Publishing Law No. 21/ 2014 regarding geothermal.
 Composing Government Regulation of Production Bonus; Direct Use Utilization; Indirect
use utilization.
 Completing related Ministry of Energy and Mineral Resources Regulation.
2. Geothermal contribution for 10,000 MW Fast Track Program Phase II in 52 projects as
much as 4,825 MW which is be confirmed on Presidential Regulation No. 04/2010 and
Ministry of Energy and Mineral Resources Regulation No. 40/2014.
3. Government is providing fiscal incentives for geothermal developer including income tax
facility (tax allowance and tax holiday) still for import duty facility and tax on import (Import
Tariff, Value Added Tax/ VAT, Sales Tax on Luxury Goods, and Income Tax for Import).
4. To accelerate geothermal development, government is offering a Preliminary Survey
Assignment to the third party (investor) who can provide “right to match”.
5. Adjustment geothermal electricity selling price against the economy by publishing
Regulation of The Minister of Energy and Mineral Resources No. 17/2014 regarding
Electricity Energy Purchase from Geothermal Power Plant and Geothermal Steam for
Geothermal Power Plant by PT Perusahaan Listrik Negara (PLN).
GOVERNMENT POLICIES FOR GEOTHERMAL DEVELOPMENT

9. Energy and Mineral Resources for People’s Welfare
Indonesian government and House of Representatives are officially publishing the Law No. 21/2014
on geothermal in a drive to open the way for accelerating geothermal projects development. The
new law is expected provide a stronger legal basis for upstream geothermal business, clear
direction, and able to overcome some problems that become barrier of geothermal development.
Overlapping Area with Forestry
Geothermal is excluded from mining activities, which enable geothermal activity is allowed in
forest conservation.
 Price
 Price of geothermal electricity was determined by Government. Pricing policy based on economic
price just recently changed by MR No. 17/2014. The regulation offered energy prices ranged
between 11.8-29.6 cent US$/kWh
Incentives
The government provides fiscal and non-fiscal incentives and also gives special treatments
extended to Business Entity which involved in geothermal business.
 Tender process
 Tender for geothermal projects currently issued by Central Government.
 Tender rules will create more detail, clear, transparent, and accountable, which also regulating
funds placement as exploration commitments.
GEOTHERMAL LAW (1/2)

10. Energy and Mineral Resources for People’s Welfare
 Government and Local Government Authorization
 Because management strategic requires centralized and integrated, the authority to regulate
geothermal for power plant is under the Central Government.
 Authority of permit for geothermal development and tender of geothermal concessions, as well as
controlling and surveillance also on Central Government.
 Authority of direct use geothermal utilization in Central Government and Local Government.
 Local/ Regional Government Expectations
 Instead of participate which can cause the local government become high-risk investment, Local
government will get Production Bonus, partially derived from gross revenue starting from the
first unit has produced.
GEOTHERMAL LAW (2/2)

11. Energy and Mineral Resources for People’s Welfare

12. Energy and Mineral Resources for People’s Welfare
Direktorat Jenderal Energi Baru, Terbarukan dan Konservasi Energi
Kementerian Energi dan Sumber Daya Mineral
Development
Plan
Installed
Capacity
(MW)
Development Plan (MW)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Additional Capacity
(MW)
1.438,5 60,0 37,0 279,0 293,5 808,5 960,0 495,0 354,0 1.084,0 640,0 175,0 565,0
Total
Development Capacity
(MW)
1.438,5 1.403,5 1.440,5 1.719,5 2.013,0 2.821,5 3.781,5 4.276,5 4.630,5 5.714,5 6.354,5 6.529,5 7.094,5
Geothermal development road map to 2025 described on the table:
GEOTHERMAL DEVELOPMENT PLAN TO 2025

13. Energy and Mineral Resources for People’s Welfare
There are 4 (four) ways for new investor for becoming a geothermal developer, namely:
1)Obtain Geothermal Permit (IPB) through GWA tender mechanism.
2)Preliminary Survey Assignment or Preliminary Survey & Exploration Assignment
3)As Lender
4)Services Company
Eksplorasi
Exploration
Survey
Pendahuluan
Preliminary Survey
3G (Geophysic,Geochemical, Geologic)
Sumur eksplorasi (Wild Cat)
Sumur deliniasi
Sumur pengembangan & injeksi
Dev’t & Injection well
Eksploitasi Pemanfaatan
Exploitation Utilization
Pemb. fasiltas lap & penunjangnya
Steamfield & supporting facilities
Operasi produksi
Production operation
Studi
Kelayakan
Feasibility Study
Paling lama 5 tahun + 1 tahun + 1 tahun
Maximum 5 years + 1 year + 1 year
Paling lama 30 tahun/Maximum 30 years
Potensi
Panas Bumi
Geothermal
Potential
Pemerintah
(Government)
WILAYAH KERJA
HASIL SP/PSP DAN EKSPLORASI
Eksplorasi
Exploration
WILAYAH KERJA
HASIL SP ATAU PSP
2) Penugasan/Assignment (BUMN atau BLU)
1) Izin Panas Bumi/Geothermal Permit (BUMN, BUMD, Swasta)
Pemerintah Daerah
(Local Government)
Badan Usaha
(Business Entity)
Pemerintah
(Government)
Pemerintah
(Government)
Pemerintah
(Government)
Badan Usaha
(Business Entity)
Badan Usaha
(Business Entity)
Badan Usaha
(Business Entity)
GEOTHERMAL BUSINESS STAGES (ELECTRICITY)

14. Energy and Mineral Resources for People’s Welfare

15. Energy and Mineral Resources for People’s Welfare
 Development of 4.825 MW electricity from Geothermal in 10,000 MW Fast Track
Program Stage II will require an investment of at least US$ 20 Billion.
 To achieve the targets, international supports are needed in terms of finance,
technology, human resources and technical assistance.
 Foreign’s shares ownership in Geothermal Business is allowed up to 95%.
 Options for new investor to become geothermal developer:
 Preliminary Survey Assignment or Preliminary Survey & Exploration Assignment
 Obtain Geothermal Permit (IPB) through GWA tender mechanism
 Financial Institutions
 Services Company
INVESTMENT OPPORTUNITY

16. Energy and Mineral Resources for People’s Welfare
Income Tax Facility
(Corporate Income Tax)
Import Duty and Tax on
Import Facility
Tax Allowance
1. Net income tax reduction of 30% of the investment value
for 6 years (Investment Tax Credit)
2. Depreciation and amortization is accelerated
3. Imposition of Income Dividend 10%
4. Compensation losses 5 -10 years
Incentives
schemes
1
Import Duty
VAT & Sales Tax on
Luxury Goods
Income Tax on
Imports
FISCAL INCENTIVES POLICY IN GEOTHERMAL SECTOR
2

17. Energy and Mineral Resources for People’s Welfare
Direktorat Jenderal Energi Baru, Terbarukan dan Konservasi Energi
Kementerian Energi dan Sumber Daya Mineral
Year of Commercial
Operation Date (COD)
Ceiling Price (sen US$/kWh)
Region I Region II Region III
2015 11,8 17,0 25,4
2016 12,2 17,6 25,8
2017 12,6 18,2 26,2
2018 13,0 18,8 26,6
2019 13,4 19,4 27,0
2020 13,8 20,0 27,4
2021 14,2 20,6 27,8
2022 14,6 21,3 28,3
2023 15,0 21,9 28,7
2024 15,5 22,6 29,2
2025 15,9 23,3 29,6
Note:
1. Region I : Sumatera, Java, and Bali
2. Region II : Sulawesi, West Nusa Tenggara, East Nusa Tenggara, Halmahera, Maluku, Papua, and Borneo
3. Region III : Region that located in region I and II, with isolated transmision system and fulfillment of electricity is
generated by fuel oil
THE PRICE OF GEOTHERMAL ELECTRICITY
By MEMR Regulation No. 17/2014

18. Energy and Mineral Resources for People’s Welfare
27 GWAs TO BE TENDERED
2015 - 2017

19. Energy and Mineral Resources for People’s Welfare

20. Energy and Mineral Resources for People’s Welfare
1)Indonesia has a huge geothermal reserves as one of the greatest potential in the
world. Unfortunately the utilization remains very low whereas the potential is more than
29 GW.
2)The government has set an ambitious target in which renewable energy is targeted
23% of Indonesia’s energy mix, while geothermal energy is expected to contribute 7.1%
of it.
3)Despite the huge potential, geothermal development is still not as expected. The most
obstacles that faced by the geothermal development is caused by environment
constraint, unattractive energy tariff, unclear and disharmonized policies.
4)Previous Law is considered unable to overcome those barriers, therefore the
government has revise the Law. The new Law is expected will answer the challenges so
that geothermal development can be accelerated to achieve the target.
5)The government has a strong commitment to increase geothermal utilization in order
to support fulfillment of energy security, reduce dependency of fossil fuels, increase the
national electrification ratio as well as contribute to the global issue of reducing GHG.
CONCLUSION

21. Energy and Mineral Resources for People’s Welfarewww.ebtke.esdm.go.id
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