T

he government is seeking to maximize the utilization of geothermal energy, which currently accounts for only 5 percent of the country’s energy generation.

The potential for geothermal energy currently amounts to around 29,000 megawatts (MW), of which only 1,494 MW is actually utilized.

The government is preparing a number of policies to encourage and boost geothermal exploration, to reach a target of 7,156 MW from renewable energy, about 23 percent of the total potential. An investment of up to US$5 million per megawatt is needed to achieve this target.

Industry players have been reluctant to develop geothermal energy due to the costly exploration process compared to coal and gas. In addition to the expense, excessive red tape and uncertain returns have further discouraged development.

Newly appointed Energy and Mineral Resources Minister Arcandra Tahar said challenges existed not only for businesses, but also for the government.

It is seeking to make major changes in business processes, improve human resources and increase the use of high-end technology in the geothermal industry.

Arcandra said the government was preparing several regulations, through which it would determine a fixed price for geothermal energy and provide a business-friendly climate by eliminating complicated permit processes.

It will also guarantee the purchase of geothermal energy by state-owned electricity firm PLN. It will provide assistance as well in the land-acquisition process, which firms say is one of the main difficulties in the field.

“We will do our best to support the development of geothermal energy for the development of Indonesia,” Arcandra told hundreds of stakeholders in his speech at the 4th Indonesia International Geothermal Convention and Exhibition on Wednesday.

The government recently issued a regulation outlining benefits for local administrations.

The regulation, issued in July, stipulates that geothermal contractors must channel 1 percent of revenue from each geothermal steam sale to local administrations and 0.5 percent of revenue from each electricity sale.

Indonesian Geothermal Association (API) chairman Abadi Poernomo said the regulation could help address some of the main problems faced by contractors, including locals’ objection to their projects.

“Local residents have a ‘not-in-my-backyard’ attitude, regardless of the fact that we want to develop renewable energy,” Abadi said on the sidelines of the exhibition.

The association acknowledged that the government has shown greater commitment to developing geothermal energy in the last few years, but still called for improvements in the business process.

The API recommends the establishment of an institution to oversee the development of renewable energy, including geothermal, and to distribute government subsidies.

“This is not just for the comfort of investors. The country needs renewable energy and to achieve the target of 7,000 megawatts by 2025, the government must facilitate and encourage businesses,” he said.

Vice President Jusuf Kalla in his opening speech said Indonesia had abundant fossil and renewable energy sources, but was among Asia countries with the lowest electrification ratio at 80 percent.

“We have so many resources and many businesses are interested in investing. What we need are better regulations and planning,” Kalla said.

The need to develop geothermal energy has become more pressing after Indonesia submitted its Intended Nationally Determined Contributions, a national document submitted to the UN Framework Convention on Climate Change (UNFCCC) ahead of last year’s Paris climate talks.

In the document, the government hopes to achieve a carbon-emissions reduction target of 29 percent by 2030.