Geothermal in Indonesia: Government Regulations and Power Utilities, Opportunities and Challenges of its Development

After more than 30 years geothermal development and utilization in Indonesia, since 1978, at which the first geothermal power plant is commissioned in Kamojang, West Java, only 1187.3 MW installed capacity is established. It is caused by the unattractiveness of the use of geothermal rather than diesel, and other sources of energy due to subsidize policy on the primary energy use. Since 1982, geothermal development in Indonesia has been expedited by government regulations that allow the participation of the private sector, both local and international, to attract investors to develop geothermal in Indonesia that may have 27 000 MW electric respectively, the highest geothermal potential in the world. But, no much additional power plant is operated, except the upgrading of the existing combined installed capacity from 807 MW installed in 1997 and a few additional capacity commissioned in 2000, and 2007 to 2009 which is increasing its capacity to 1187.3 MW respectively. The severe economic crisis that started in late 1997 has adversely affected power sector demand and growth in Indonesia. This has resulted in significant delays to several geothermal projects in the advanced exploration and development stages. Changes in the regulatory environment for the geothermal industry and the resolution of the economic crisis are the major issues affecting the growth of the Indonesian geothermal industry.In spite of the issues, increasing in power demand and electricity tariff in the last three years may indicate that business climate has changed being more conducive for investment. In addition, the issuance of new Regulations on Geothermal No.27/2003, Government Regulation on electricity sector Year 2005 and National Energy Policy No.5 Year 2006, Ministry of Energy Decree No.14 Year 2008 and Ministry of Finance Decree No.177 and No.178 Year 2007, keep Indonesia being still interested in doing business in developing geothermal power. It is also a prospective of geothermal development, due to the energy crisis and the increase of international oil price to more than $100/BBL in the middle of 2008. The issuance of those policy may attract the foreign investors to meet the increase of energy demand and PLNs (national electricity company) plan to substitute of Diesel power plant and substitute it with coal fire power plant and or another alternative energy source up 10,000 MW in the near three years. This paper presents current Indonesian geothermal prospective, government regulation and power utilities, outlines the resulting geothermal and energy policies of with geothermal resources and overview the opportunity and challenges in its development in Indonesia.

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Citation Date 2010-01-01T00:00:00

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Original ID 327dc25e-3436-4964-804c-fdbe22c353bd
Index Date 2015-11-18T20:13:19
Original Format ISO-USGIN
Original Version 1.2

Author

Name Surya Darma, Sugiharto Harsoprayitno, Herman Darnel Ibrahim, Agusman Effendi , Agus Triboesono
Organization World Geothermal Congress
Email horne@stanford.edu

Geographic Extent

North Bound 9.647779
South Bound 7.2035564
East Bound -77.16
West Bound -83.05