Exploration risk still burdening geothermal development in Indonesia

Exploration risk still burdening geothermal development in Indonesia Drilling rig at Sarulla project, Indonesia (source: Sarulla Operations)
Alexander Richter 15 Feb 2016

Geothermal development in Indonesia is still burdened by the exploration risk and in an ideal scenario the government would take as much of exploration as it could to foster investment and development.

In an opinion article in the Indonesian Business Daily, it is talked about that exploration still hampers geothermal development in Indonesia. For the government the goal is to reduce the electricity price from renewable energy sources, while at the same time encourage investment into the development of geothermal energy projects on a larger scale.

At a recent event, Director of the Geothermal Energy and Mineral Resources (ESDM) Saifulhak Yunus said geothermal exploration activities are still to be entirely borne by the developer company. While the risk of failure is very high. According to him, ideally exploration activities were taken over by the government. After that, then tendered to be developed. “The success ratio is only about 50%. The question is whether the government has the money and want to gamble?” he said on the sidelines of the Bali Clean Energy Forum 2016 in Nusa Dua, Bali, Friday last week.

According to him, the government has considered several programs. It is estimated that there will be a breakthrough in the upstream sector where the conditions allow. If the government is willing to bear the cost of geothermal exploration, one can be sure that the development of renewable energy sources will increase. That’s what happens in some countries. Yunus described the development of geothermal power plants in the United States having increased sharply when the government took over exploration activities in the 1980s. However, development has not seen significant growth after the government decreased its activities.