W

ith the increasing prices of fuel, diesel and premium grade in particular, the government has to find other sustainable and environmentally friendly alternatives.

Solar power, wind energy, biofuel and geothermal energy seem to have not been taken seriously. This is probably due to inconsistent regulations, red-tape, technology, coordination between misnistries and capitalization of the projects, which lack investment from foreign investors.

The potential of geothermal energy sources in Indonesia is around 40 percent, the world'€™s largest. This is due to geographical conditions including volcanoes and tectonic lithospheres. Unfortunately only 4 percent (1.341 gigawatt [GW]) has been utilized. This country is the third user of geothermal energy after the US and the Phillipines. It is to be noted that the geothermal technology was mastered in Indonesia in 1928. Geothermal is neither exportable or transportable. It should be used for electricity generation, as stated by the Indonesia Association of Geothermal in February this year.

Geothermal energy projects carried out by the goverment since 2005 have developed very slowly: 2005: 852 megawatt (MW), 2006: 852 MW, 2007: 982 MW, 2008: 1,052 MW, 2009: 1,189 MW and 2010: 1,189 MW. The report noted that the potential of geothermal energy in this country accounts for 29,308 GW with the concentration in West Java and Lampung, South Sumatra, while realization is only 1,189 MW.

Around half of the potential of geothermal energy is located in forest areas that include 29 locations in conservation forests '€” 3,428 MW or 10.9 percent '€” and 52 locations in protected forests '€” 8,410 MW or 19.6 percent. Geothermal energy is predominatly intended for electricity generation, managed by PT PLN, the government-owned electricity company, for the development of industries, transportation and households.

In short, for the development of the economy. Investors are supposed to directly negotiate with
PT PLN regarding the pricing of electricity in particular. Inspite of technical problems and administrative encounters, 2017 has been set as the target to utilize geothermal energy as primary source of energy instead of gas and coal.

Using coal to generate electricity will produce 810 million tons of emissions by 2030 or seven times more than 2005, which means greater greenhouse gasses and increased global warming. Experts have seen the effects of global warming, particularly a significant decrease of agricultural food production and rising sea levels. While geothermal energy is relatively the cleanest, with no dirty gas emission.

If the government continues to use oil as the main source of energy for electricity generation the subsidy for electricity will become a heavy burden on the government budget. According to a recent report, the 2013 subsidy for electricity was set at Rp 95 trillion (US$9.59 billion). The subsidy will increase even more if the economy continues to grow at, for example, 6.5 percent in the coming years. Chances are the development of electric vehicles, smelters in the mining industry will be hard to reach.

Let bygones be bygones. The Energy and Mineral Resources Ministry is planning to undertake a survey on geothermal projects in North Sumatra with a capacity of 3,110 MWs expected to be in operation by 2015, 2016 and 2017, with investment of around $1.7 billion, in cooperation with Japanese companies. The other project in East Nusa Tenggara occupies 21,330 hectares and involves a financial survey of between $800,000 and $1.5 million. Another project, also in West Java, will be developed on 67,420 hectares of the Galunggung mountain area.

The key words to ensure optimum and utilization of geothermal energy sources in this country are, thus, deregulation, coordination and win-win solutions for investors.

The writer is former head of the Bilateral Division at the Mining and Energy Ministry.