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ith growing demand for electricity, Indonesia is a country hungry for new energy. New and renewable energy is expected to increase up to 23 percent while oil will be down to 25 percent in the national energy mix of 2025.

Geothermal will be the second biggest renewable project after hydro. State electricity firm PLN’s long-term plan expects to see additional capacity of around 6 gigawatts (GW) from geothermal plants by 2025. Geothermal doesn’t depend on weather and doesn’t require the transportation of fuel like diesel or coal power plants. Geothermal sources also can survive almost forever, unlike coal.

Indonesia is actually the world’s third user of geothermal power plant after the US and Philippines. Sadly, however, there is only 1.3 GW currently operating.

Developing the geothermal field is never easy. Nobody can be sure of finding feasible heat/steam for production. So many owners of geothermal licenses do not develop their fields to the drilling stage. Geothermal prospects often lay on mountainous land, within protected forest areas. If there are projects running nowadays, it is thanks to a joint operation contract scheme involving Pertamina and private contractors as well as PLN as the buyer of electricity.

However, since 2003, the legal framework has changed. There are no joint operation contracts, and a company that holds a concession license must explore, construct and produce electricity. A lot of tasks are added, while risk increases.

Renewables such as geothermal are needed to support sustainable energy. Can the government and all stakeholders find a better business scheme to support its development?

Herlambang Cipta Aji
MBA student, Swiss German University
Serpong, Banten