Jakarta – Geothermal energy development in Indonesia is increasingly highlighted as important in achieving net-zero emission targets and strengthening national energy security. Although Indonesia’s geothermal potential is enormous, with reserves of around 23 gigawatts (GW), the utilisation of this energy is far from optimal, reaching only around 10.3% of the total available capacity.
Deputy Chairman of Commission VII of the House of Representatives, Eddy Soeparno, emphasised that accelerating geothermal energy development is urgent to meet emission reduction commitments and ensure sustainable energy security for Indonesia.
“The acceleration of geothermal development is very important, not only to achieve emission targets, but also for national energy security,” Eddy said at a webinar titled “The Important Role of the Geothermal Industry in Transition Policy, Energy Security, and the National Economy” on Thursday, August 29.
However, the geothermal sector in Indonesia faces various challenges, mainly related to high initial investment costs and significant exploration risks. Yudha Permana Jayadikarta, Executive Director of the Indonesian Renewable Energy Society (METI), stated that one of the biggest obstacles is the exploration stage, which is costly and carries high risks.
“Accelerating the ‘Government Drilling’ program is very important to reduce risks in the upstream sector,” Yudha said.
The recent decline in investment in the geothermal sector indicates that the existing regulatory framework has not been optimised. In 2018, investment reached USD 1.18 billion but dropped to around USD 740 million by 2023.
Eddy Soeparno emphasised the need for policy revisions to provide more certainty and attractiveness for investors. He also expressed the commitment of Commission VII of the House of Representatives to finalise the New and Renewable Energy Bill (EBET Bill) and the second revision of Law No. 30/2009 on Electricity.
Meanwhile, National Energy Council Member Dina Nurul Fitria revealed that the installed capacity target of Geothermal Power Plants (PLTP) in the National Energy General Plan (RUEN) is 7.2 GW by 2025. However, until June 2024, the capacity reached was only around 2.4 GW. Dina highlighted the need for policy breakthroughs such as the Geothermal Exploration & Energy Conversion Agreement (GEECA) to encourage the achievement of these targets.
Experience from other countries shows that proactive and comprehensive policies can be a key driver in geothermal energy development. The Philippines, for example, has successfully implemented policies that support investment through fiscal incentives, tax reductions, and the elimination of import duties, which has significantly boosted the development of its geothermal industry.
On the same occasion, ReforMiner Institute Executive Director Komaidi Notonegoro noted that government policy support is crucial to compensate for the limitations of geothermal plant location flexibility and high investment costs. “The experience of countries such as the Philippines, Iceland, and New Zealand shows that the right policy can catalyse renewable energy development,” he said.
In Indonesia, the negative public perception of geothermal development as an environmentally damaging activity remains challenging. Dina Nurul Fitria emphasises the importance of public education in changing this perception.
In conclusion, accelerating geothermal energy development in Indonesia requires a joint commitment from various parties, including the government, the private sector, and the community. Strong policy support, fiscal incentives, and public education are key to achieving future energy security and environmental sustainability.
Eddy Soeparno said that with its potential, Indonesia has a great opportunity to become a leader in clean energy transition in the Asian region. “Indonesia must take concrete steps in accelerating the development of geothermal energy to ensure a sustainable future,” he concluded. (Hartatik)
