Utilization Gap of Indonesia Geothermal Energy | Magnet to Global Investor Attention

By - CEM Team

Holding a significant 40 percent of the world's total geothermal reserves, Indonesia – the largest South East Asian economy currently utilizes only 5 percent of its geothermal energy capacity. With a population of 225 million plus, Indonesia is the most populous South East Asian country and fourth most populous country in the world.

Indonesia is focusing on leveraging its strength in this sector to generate clean and renewable energy. At the 4th Indonesia Geothermal Convention & Exhibition (IIGCE), Vice President Kalla mentioned and emphasized the need of transitioning to renewable sources of energy both from cost and environmental perspectives.   

Indonesia, despite having such a significant reserve of this energy source suffers from frequent blackouts in industrial areas and outside the more developed islands of Java and Bali which are the main business hubs of the country. Current electrification ratio in Indonesia stands at 81%, leaving behind a major chunk of 225 million of total population to survive in crunch of this basic necessity of life. Indonesia's total primary energy consumption grew by 43% between 2003 and 2013.

Amidst the growing population and electricity demand of the country, government has set a target to increase the nation's power capacity by 35,000 MW in the next couple of years. Of this the total geothermal installed capacity is targeted at 7200 MW within a decade, with current total installed capacity of 1500 MW and an additional 750 MW being constructed. Country plans geothermal energy to comprise 23% of country’s energy mix by 2025. Current percentage been very small holds significant opportunities for investors as Indonesia’s total energy demand is closely linked to its economic expansion.  

There have been increasing investments and efforts by Indonesian government towards geothermal energy sector, with four geothermal power plants getting operational in 2016 with a combined total capacity of 215 MW and a combined total investment value of USD $860 million. Furthermore, the government awarded two geothermal work areas (through tenders) to state-owned Pertamina Geothermal Energy (Gunung Lawu) and to the consortium consisting of Optima Nusantara Energi and Enel Group Power Energy (Way Ratai). The Indonesian government also tasked state-owned utilities company Perusahaan Listrik Negara (PLN) to develop two geothermal areas (Ulumbu and Mataloko) in eastern Indonesia. (Source: Indonesia Investments)

The IIGCE, which has the theme “Innovative Breakthrough to Achieve 7000 MW Geothermal Development by 2025” in this year's edition, is the event where policymakers, investors, developers and specialists assemble to discuss the future development of geothermal energy in Indonesia and abroad.

Source : News, Indonesia Invetsments