With the world’s focus on climate change and renewable energy, Indonesia, possessing 40% of global geothermal resources, is poised to make significant advancements. The nation’s substantial geothermal reserves, primarily located on Sumatra and Java islands, present an opportunity for Indonesia to lead in sustainable energy production. Indonesia’s geothermal energy, derived from the Earth’s crust, is particularly advantageous due to its location on tectonic plates.
Indonesia’s Geothermal Energy at Cop28
The ongoing Cop28 climate conference in Dubai has spotlighted Indonesia’s potential in geothermal energy. Marit Brommer, executive director of the International Geothermal Association, emphasizes Indonesia’s unique geothermal capabilities. However, there’s a divide among experts about achieving ambitious energy generation targets, considering the costs of exploratory drilling and current government support levels. Despite this, Indonesia is leveraging Cop28 to attract green investment, essential for its role as the world’s sixth-largest carbon dioxide emitter.
The Indonesian government and the Asian Development Bank are discussing the early closure of a coal plant. President Joko Widodo’s approach to Cop28, focusing on implementation rather than ambition, has been cautiously optimistic. PGE, Indonesia’s largest geothermal company, is at the forefront of these efforts, introducing new carbon-credit projects and planning significant capacity expansion.
Advantages and Challenges of Geothermal Power
- Advantages: Geothermal power offers significant environmental benefits, producing minimal carbon emissions and providing consistent energy output regardless of weather conditions, unlike solar and wind power.
- Challenges: Despite its potential, geothermal energy in Indonesia faces hurdles, including the prevalence of cheap fossil fuels and regulatory challenges. However, a shift towards green energy is underway.
In 2022, geothermal power plants generated 2,360 megawatts of electricity in Indonesia, with plans to increase this capacity significantly. PGE’s recent funding efforts and partnerships with Chevron and Mubadala Energy indicate a robust push toward expanding geothermal energy output.
Indonesia’s Renewable Energy Investment and JETP
Indonesia’s $20 billion Just Energy Transition Partnership (JETP) underscores its commitment to rapidly growing renewable energy sources, including solar, wind, geothermal, and hydropower. By 2030, solar and wind are projected to generate 14% of Indonesia’s electricity, with geothermal and hydro contributing 22%. This growth is critical, though ambitious, and requires substantial development in both variable and dispatchable renewables.
State involvement in geothermal and hydropower projects has been significant, with entities like Geo Dipa and Pertamina playing key roles. The JETP investment plan suggests prioritizing these dispatchable renewables, given their proven track record and existing infrastructure. Foreign partners in JETP are also keen to boost solar power investment in Indonesia through pro-market reforms.
Pertamina plans to add 600 MW of new geothermal capacity by 2028, reflecting the sector’s growth potential. The recent PGE IPO, which raised significant capital, demonstrates the domestic market’s support for geothermal development, indicating that JETP funding is not the sole financial resource for these initiatives.
Geothermal Development Strategy
- Exploratory Drilling: The JETP investment roadmap suggests the Indonesian government undertake drilling programs to identify viable geothermal sites, a task suited to companies like Geo Dipa and PGE.
- Long-term Vision: Despite the current focus on geothermal energy, solar power is envisioned as a major future electricity source due to its lower construction and operational costs.
Enhancing Geothermal Capacity
- International Partnerships: Collaborations with global energy firms like Chevron, Mubadala Energy, and Masdar from the UAE are crucial in enhancing geothermal technology and funding.
- Domestic Focus: While international partnerships are vital, Indonesia’s domestic focus, particularly on geothermal energy, remains a priority. The experience and infrastructure already in place through state-owned enterprises like Pertamina and PLN provide a solid foundation for expanding geothermal capacity.
Indonesia’s renewable energy strategy, particularly in geothermal power, is a complex yet promising endeavor. The nation’s significant geothermal resources, coupled with government and private sector initiatives, position it as a potential leader in sustainable energy. However, achieving these ambitious goals will require overcoming financial, technological, and regulatory challenges. The outcomes of Indonesia’s renewable energy efforts could have far-reaching implications for global climate change mitigation strategies.
For more detailed information on Indonesia’s renewable energy plans and geothermal potential, you can refer to the Just Energy Transition Partnership (JETP) report.