T

he government is seeking to streamline business permits in the geothermal sector in an effort to attract investments and achieve its target of a sevenfold increase in the portion of electricity generated by renewable sources in the next 10 years.

Under a recent Energy and Mineral Resources Ministerial Regulation, which named geothermal a priority sector, the geothermal industry is entitled to priority investment services and investors can obtain necessary permits within three hours at the Investment Coordinating Board (BKPM), a privilege other industries already enjoy.

The three-hour service aims to speed up the various permit processes to create a business-friendly environment in selected industries.

Further, geothermal investors are also entitled to the one-stop service at the board, in which documents like the geothermal business license and temporary electricity supply permit can be completed without visiting other related institutions.

BKPM director of agribusiness and natural resources investment planning Hanung Harimba Rachman said the board in cooperation with the Energy and Mineral Resources Ministry was seeking to further streamline doing business in the sector.

“We are currently in talks with the ministry to determine other permits that can be delegated to the BKPM,” Hanung said on the sidelines of the Fourth Indonesia International Geothermal Convention and Exhibition at the Jakarta Convention Center on Thursday.

Indonesia’s geothermal potential is 29,000 megawatts (MW), but the country has only utilized 1,494 MW, about 5 percent.

The government is aiming for a sevenfold increase in renewable energy by 2025 to 7,156 MW, about 23 percent of the total potential.

An investment of up to US$5 million per MW is needed to achieve the target.

Industry players have thus far been reluctant to develop geothermal energy due to the costly exploration process compared to coal and gas. A complicated bureaucratic process and uncertain returns have also discouraged companies.

“We will continue to facilitate and further ease investment in geothermal because it one of the government’s main priorities,” Hanung said.

Separately, Energy and Mineral Resources Ministry director for geothermal Yunus Saefulhak said the ministry was currently in the middle of a study with the Japan International Cooperation Agency (JICA) and British consultant services Arup to determine a new tariff regime for the industry.

Under a feed-in tariff, investors are paid a cost-based price for the energy they supply. Thus, renewable energy can be developed and investors can still enjoy a return.

In the current system, investors must negotiate the feed-in tariff with state electricity company PLN, which can take up to years before the two parties agree on an amount beneficial for both.

“We will determine a new feed-in tariff that is more economically beneficial for investors,” Yunus said at the same occasion.

Yunus said the government has identified 69 geothermal blocks, but only nine have active operations.

Until 2018, the government is set to auction 30 geothermal working blocks across the country with a total potential of 3,332 MW in reserves.

The working blocks are located in Hamiding Mountain in North Maluku with a potential 265 MW in reserves, Ranau Lake in South Sumatera with 210 MW and Bonjol in West Sumatera with 200 MW, among other places.