Indonesia to invest heavily in geothermal energy

Indonesia holds 40% of the world’s geothermal power resources, as it is perched on top of the Pacific ring of fire. However of the estimated 27,000 MW potential annual capacity, only 1198 MW have so far been exploited according to Energy Ministry data. The Indonesian government plans to cut oil consumption by up to 25% over the next five years. In order to do this, the Indonesian government plans to increase geothermal power output to 4000 MW, saving 60 million barrels of oil per year, in the second phase of a ‘fast-track’ plan for geothermal energy generation.

In so doing, Indonesia will be able to reduce its dependence on fossil fuels, and could potentially trade the millions of carbon credits that the cleaner energy will generate. Indonesia has been facing a growing energy crisis because of its heavy reliance on fuel oil; with increasing energy diversification they should be able to overcome the shortages and prevent electricity shortages becoming a threat to economic development.

R. Sukhyar, the Head of Geology at the Energy and Natural Resources Ministry, said that the country’s energy road map was calling for 9000 MW of energy to be developed by 2025. This could potentially save up to 4 billion barrels of oil. However, geothermal power is very expensive to install compared to coal fired power plants, costing twice as much. The reason that Indonesia took the opportunity to announce the plans at the World Geothermal Congress was to attract investors, as foreign corporate chief officers in attendance would be ale to get a better understanding of what Indonesia had to offer for investors, according the Energy Minister Darwin Zahedy Saleh.

The second phase of the ‘fast-track’ plan is estimated to cost US$ 12 billion. So far the Indonesian government has made good headway in finding investors for its various projects though. Foreign lenders, including the World Bank and the Asian Development Bank, have pledged funding of up to US$ 400 million. The Indonesian government has already signed up Japanese, North American and Indonesian private companies, as well as state electricity provider PT PLN to build the 340 MW Sarulla project in North Sumatra. PT RMI and Star Energy have also signed a memorandum of understanding to co-operate on geothermal drilling activity in the Pentagalengan area of West Java. Several firms including Tata and Chevron have submitted bids to build a 200 MW geothermal power plant in North Sumatra.

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