Transcript Development of Renewable Energy in Indonesia: Case of

Notes on the Development of
Geothermal in Indonesia
Generating Dialogue
Clean Energy, Good Governance, and Regulation Forum
Singapore, 16-18 March 2008
Asclepias Rachmi S. Indriyanto
Indonesian Institute for Energy Economics
Geothermal Development

(1)
Large estimated potential, low realization
27,000 MW potential
970 MW installed capacity
253 Identified field
53 Ready for detailed
exploration & exploitation
Unexploited Geothermal Power Potential
1,000 MW under private control
3,000 MW under SOE
Around 50% are in geothermal fields
currently producing electricity or with
confirmed reserves

Most of existing capacity was the result of PD 45/91, which
targeted to develop 4500 MW

During the Asian Financial Crisis, various geothermal
development contracts and price agreements were
suspended.

They were later renegotiated or cancelled; eventually
negotiation agreed on lower price; but still many projects
are not progressing.
Geothermal Development

(2)
Recent progress:
2003: Law 27/2003, the only RE governed by its own law
2004: Geothermal Blueprint
2005: Establishment of Directorate of Geothermal Enterprise
Supervision & Groundwater Management, to strengthen sector
management
2006: Master Plan Study for Geothermal Power Development
in Indonesia (funded by JICA)
2007: Exemption of import duties for geothermal exploration
equipments and exemption of taxes for exploration activities

But SOE are still facing significant hurdles, and low
participation of commercial financing and private
sector
Geothermal Development

(3)
Challenges:
– Economics:
• High initial costs to develop geothermal energy
– Remote areas, limited infrastructure
– Drilling deep wells
• Subsidized prices of fossil-based energy (petroleum fuels, and
electricity mostly generated from fossil energy)
• Environmental benefits are not included in cost calculation
– Regulations:
• Alignment of upstream and downstream regulations
• Required set of implementation regulation for Law 27/2003
• Alignment with Forestry regulation (national parks, boundary of
various forest categories, overlap uses)
• Role of local government in geothermal undertakings
• Procedure for tender & licensing
• Incentive for research & development, improve capacity of local
contents
• Road map & master plan on energy mix is not binding