Indonesia's Geothermal Sector: Key to Energy Sustainability

Jakarta, INTI - Home to approximately 40 percent of the world's geothermal resources, Indonesia is positioned to leverage its geothermal energy sector to meet ambitious energy sustainability goals. As the second-largest producer of geothermal energy globally, Indonesia aims to further expand this renewable energy source, crucial for its transition to sustainable energy.

Geothermal Energy: Indonesia's Renewable Powerhouse

Geothermal energy, harnessed from the Earth's internal heat, involves using steam from underground hot water reservoirs to power turbines and generate electricity. Indonesia's location on the Ring of Fire, an area with significant seismic activity, makes it ideally suited for geothermal energy development. The country boasts an estimated 23.7 gigawatts of geothermal capacity spread across 300 sites.

Despite these vast resources, the geothermal sector faces several challenges, including regulatory hurdles and infrastructure deficits, particularly in remote areas where geothermal reservoirs are often found. Nevertheless, the government has set ambitious targets to increase geothermal production capacity to 5,000 MW by 2025.

Strategic Plans for Geothermal Development

The Indonesian government is committed to expanding geothermal energy. According to the General Plan for National Energy (RUEN), the country aims to achieve 7.24 gigawatts of geothermal power by 2025, requiring an investment of around $15 billion, and 9.3 gigawatts by 2035. However, achieving these goals has proven challenging. As of June 2020, officials projected reaching about seven gigawatts of geothermal power by 2030, five years behind schedule.

Currently, Indonesia has an installed geothermal power capacity of approximately 2.28 gigawatts, compared to the United States, which leads with 2.6 gigawatts. The broader renewable energy target is for renewables to constitute 23 percent of electricity generation by 2025, up from the current 12 percent, with a pledge to become carbon neutral by 2060.

Overcoming Market and Regulatory Challenges

The development of geothermal energy in Indonesia is hindered by several market and regulatory challenges. Geothermal energy remains significantly more expensive than coal, which constitutes about 60 percent of the country's electricity production. The government continues to subsidize coal, making it difficult for geothermal energy to compete on price.

New coal plants are still under development, indicating that coal will remain a key energy source for some time. Without regulations mandating the use of renewable energy, geothermal producers face an uphill battle against the more economically favorable coal energy.

The Path Forward

Despite these challenges, Indonesia's geothermal sector holds immense potential. The government and industry stakeholders must address regulatory and infrastructural barriers to unlock this potential fully. Increasing investment in geothermal exploration and development, along with favorable policies, can accelerate progress towards the nation's energy sustainability goals.

By harnessing its vast geothermal resources, Indonesia can lead the way in renewable energy, ensuring a sustainable and secure energy future.