Indonesia's Geothermal Energy Potential May Be Tapped from 2014
Good news for Indonesia's geothermal power potential. The Indonesian government is getting closer to issuing a new law that will make it easier for investors to tap the country's huge geothermal energy potential. A committee of Indonesia's House of Representatives (DPR) supports a bill that was proposed by the government, which aims to spur investments in the country's geothermal energy sector through providing a better legal framework. Indonesia is estimated to contain the world's largest geothermal energy reserves.
Despite having 40 percent of the world's total geothermal potential, Indonesia only utilizes about four to five percent of its vast geothermal reserves. The main problem for geothermal energy development in Indonesia is the legal framework. Currently, geothermal activities are lawfully defined as 'mining activities' (Law No. 27 2003), which implies that it is prohibited to be conducted in protected forest and conservation areas (Law No. 41 1999), even though geothermal mining activities have a small impact on the environment (compared to other mining activities). However, about 60 percent of Indonesia's geothermal energy is located in soils beneath protected forest and conservation areas and thus is prohibited to be extracted. The government of Indonesia has only recently realized the potential of geothermal energy in the country and is therefore yet to create a conducive climate, in particular a sound legal framework. If this new bill is approved by a plenary meeting in April 2014 then it is expected to give a boost to the country's geothermal energy exploration and exploitation.
Another important point in the proposed bill is the obligation for geothermal concession holders to "sell a 10 percent interest to regionally owned enterprises or state-owned enterprises after it enters the exploitation stage." This provision intends to secure local participation (and benefit).
The Indonesian government has ambitious intentions to reduce the country's dependency on expensive and exhaustive fossil fuels by making renewable energy an important asset in the country's energy mix:
| Energy Mix 2011 |
Energy Mix 2025 |
|
| Oil | 50% | 23% |
| Coal | 24% | 30% |
| Gas | 20% | 20% |
| Renewable Energy | 6% | 26% |
Source: Ministry of Energy and Mineral Resources
• Visit our section about Geothermal Energy in Indonesia
• Ask our experts about investing in Indonesia's geothermal industry
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