Indonesia Sees Potential Geothermal Projects 1GW by 2030

JAKARTA (TheInsiderStories) – Indonesian government could manages one gigawatts (GW) of geothermal projects in 2030, said the official on Tuesday (02/18). The potential showed on the roadmap developed by the energy and mineral resources ministry

The country itself has considerable geothermal energy potential with capacity 25,300 megawatts (MW), but only 2,130 MW has been absorbed as a source of electrical energy. As reported by local media, the director at the ministry, Ida Nuryatin Finahari said, her office is still developing the right concept and regulations to attract more interests in exploration and investment in the geothermal sector.

Earlier, the EMR minister, Arifin Tasrif stated, his party continues to attract investors to invest in the new renewable energy sector through the cost recovery contract scheme in the geothermal sector. He noted, the development in the geothermal sector has a higher risk than development in other sectors, so incentives are needed to encourage investment in the geothermal sector.

Based on the official data, the geothermal potential in Indonesia reaches 28.5 GW. However, the total capacity of geothermal power plants across the archipelago only reached 2.1 GW. 

According to executive director from Institute for Essential Services Reform, Fabby Tumiwa, there were a number of obstacles in developing geothermal energy in the country, such as the high investment costs due to the high exploration and engineering and procurement costs.

“The development time is long, it takes 11 years to 15 years,” he told Bisnis on Tuesday (02/18) by adding there are also inconsistent policies and regulations to implement the program.

He gave an example, the policy of geothermal prices has changed six times since 2008. The consistency of these policies and regulations is needed. He adds, limited financing options and licensing processes sometimes hampered the industry.

Tumiwa asserted, to encourage geothermal utilization in Indonesia, the government needs to complete a number of things, like a concise and one-door licensing process including a short power purchase agreement process so the project development time can be cut.

The government, he continued, also needs to take over exploration risk. Moreover, he noted, the exploration costs are quite expensive around US$4 million to $7 million per well and the company also spends an average of 15 to 20 percent of the total investment costs for exploration. “Those who are capable of exploration are companies that have large capital and large equity,” he claimed.

Former vice president, Jusuf Kalla, also had criticized the slow progress of geothermal power plants in Indonesia. Though the second largest geothermal power user in the world has quite a long experience.

Not only geothermal, he also assessed the development of other renewable energy is also slow. For decades, he noted, the new renewable energy reached 8,000 MW included hydropower, including some of it, wind, but the bio-thermal power plant has been no progress.

Therefore, the Vice President urges the EMR ministry, state utility company PT Perusahaan Listik Negara and other stakeholders together to solves the problem.

The director general at EMR ministry, F.X. Sutijastoto said, geothermal energy has a strategic meaning for national energy security through the substitution of imported petroleum which is around 100,000 barrels per day until 2025. Petroleum itself is used to make Diesel Power Plants.

While, products derived from petroleum include LPG, aviation fuel, avgas, kerosene or kerosene, gasoline, diesel, asphalt, and paraffin. In terms of operational effectiveness, geothermal can be operated up to 90 percent with an operating time of 30 years. Compare with coal which is only effective 60 percent of capacity.

For diesel-electric power, it is even effective only 30 percent of capacity, and the operating time is only 10-20 years. Sutijastoto has announced, Indonesia needs over than $15 billion in investment to meet its target of reaching the geothermal power capacity targets.

He conveyed, “Until now only 1,948.5 MW or 7.8 percent of the geothermal potential is utilized.”

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