Based on the official data, the geothermal potential in Indonesia may reach 28.5GW. However, the total capacity of geothermal power plants across the country only stood at 2.1GW.
Earlier, Minister of Energy and Mineral Resources Arifin Tasrif stated that the ministry continues to attract investors to invest in the new renewable energy sector through the cost recovery contract scheme in the geothermal sector.
He noted that the geothermal sector’s development poses a higher risk than other sectors, so incentives are needed to encourage investment in the field.
Executive Director of the Institute for Essential Services Reform Fabby Tumiwa noted there were a number of obstacles in developing geothermal energy in the country, such as high investment costs due to high exploration and engineering and procurement costs.
It also takes a long development time of up to 11 years to 15 years, Tumiwa said, adding that geothermal price policy has changed six times since 2008.
He said to encourage geothermal utilisation and reduce project development time, the Indonesian government needs to complete a number of things, like a concise and one-door licensing process and a power purchase agreement process.
Geothermal energy has a strategic meaning for Indonesia’s national energy security, which could help to cut down petroleum imports by 100,000 barrels per day by 2025, said the EMR.
It is estimated that the country needs over than US$15 billion in investment to meet its geothermal power capacity targets.