Indonesian Energy Minister proposes measures to accelerate geothermal growth
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The Indonesian government calls on action from both developers and regulators to help accelerate the growth of the local geothermal power sector.
At the opening of the 12th Indonesia International Geothermal Convention & Exhibition (IIGCE), Energy and Mineral Resources Minister Bahlil Lahadalia urged project developers to act quickly on the geothermal concessions that they already hold. On the part of the government, a revision of the current incentive scheme for geothermal power is already being prepared to make investment in the sector more attractive.
In his speech, the Minister emphasized that Indonesia has so far only developed 2776.39 MW of geothermal power generation capacity from its total potential of 23,202.77 MW. With almost 90% of its potential yet undeveloped, the Minister calls for support from investors and developers, as well as regulators.
“There’s no other way to accelerate geothermal implementation to generate electricity or other things. There must be collaboration between entrepreneurs and regulators,” said Bahlil.
The Minister acknowledges that the existing regulations still present obstacles to permit application for geothermal projects, and that there is a need to several regulatory steps to be streamlined.
The commerciality of geothermal projects is also still a concern. Based on current regulations, geothermal energy can be sold at about USD 9.5 cents/kWh. This level is considered inadequate by business players. Thus, preparations are now ongoing to revise Government Regulation (PP) No. 7 of 2017 to promote indirect geothermal utilization, and the Presidential Regulation No. 112 of 2022 to change the purchase price for geothermal power.
Bahlil, however, requested investors and developers to also work quickly on developing the geothermal concessions that have been granted to them.
Granting of WKPs
Announcements were also made during the IIGCE on the granting of permits for geothermal working areas (WKP). Two WKPs were assigned: the Ungaran WKP was assigned to PLN, and the Telaga Ranu WKP was assigned to PT Telaga Ranu Geothermal under PT Ormat Geothermal Indonesia.
Moreover, preliminary geothermal survey and exploration rights for Cubadak Panti were granted to PT Pertamina Geothermal Energy, and the Bituang area to PT Cakrawala Bituang Geothermal under Mitra Cakrawala International (MCI).