September 20, 2023
JAKARTA – Indonesia is set to miss its target 7.2 gigawatt (GW) of installed geothermal power capacity because of high development costs and a lack of supporting regulation, according to the Indonesian Geothermal Association (INAGA).
INAGA chairman Prijandaru Effendi said Indonesia’s geothermal energy development was moving at a “very slow pace” as the country had only seen an average annual increase of 60 megawatt-hours (MWh) in nationwide capacity over the last 40 years.
“We’re talking two years from today, and for sure it will not happen,” he said in an event hosted by the New Zealand Embassy and INAGA in Jakarta on Tuesday, referring to the odds of Indonesia reaching the 7.2 GW target set for 2025.
Experts told The Jakarta Post that the domestic geothermal industry was hedged in by high development costs and uncertainty about electricity offtake pricing, which clouded the economic prospects for undertaking local projects.
Data from the Energy and Mineral Resources Ministry show that the total installed geothermal power generation capacity in Indonesia was 1.9 GW in 2018. It then rose 21 percent over the next four years to reach 2.3 GW last year.
Prijandaru went on to say that the government had tried to make geothermal energy projects more attractive through Presidential Decree No. 112/2022 on the acceleration of renewable energy development.
However, that decree alone is not enough, he argued, as it still required implementing regulations to improve the economics of geothermal projects and provide legal certainty.
“The energy ministry, supported by INAGA, is currently working on the drafts [for implementing regulations], and hopefully we can complete them very soon,” he said.
Harris Yahya, the energy ministry’s director for geothermal energy that Indonesia still had time to install another 3.3 GW of geothermal energy capacity by 2030, as stated in state-owned electricity company PLN’s latest 10-year Electricity Supply Business Plan (RUPTL).
“The challenges are very difficult for 2025. We are trying to provide more incentives and offer more geothermal working areas to investors,” he told the Post on the sidelines of the same event, adding that the government was in the process of offering two geothermal working areas located in Cisolok, West Java and Bora Polu, Central Sulawesi.
Furthermore, the energy ministry is looking to geothermal energy to supply the green hydrogen industry, according to Harris.
Hydrogen can be used as an emission-free alternative fuel for transportation and industries, for energy storage and other purposes. Its production, however, requires large amounts of energy. If this is done using renewable energy, the resulting product is referred to as green hydrogen.
“Technically, green hydrogen is produced through the electrolysis process, which splits water into hydrogen and oxygen using electricity. So, electricity from geothermal power is used for the electrolysis,” he explained.