Investment into geothermal in Indonesia reaches $163m in Q1 2020
Lumut Balai geothermal plant, Indonesia (source: WIKA)
Alexander Richter
15 Jun 2020
The investment into geothermal development in Indonesia reached $163 million in the first quarter of 2020, staying much behind the government set target of $1.05 billion.
For the first quarter of this year, realisation of investment into geothermal development in Indonesia only reached 15.52% of a $1.05 billion target set by the Ministry of Energy and Mineral Resources.
In its report shared in May of this year, the Ministry of Energy and Mineral Resources (ESDM) recorded that the realization of investment in the geothermal sector in the first quarter of 2020 only reached US $ 163 million or 15.52% of this year’s target. The reason is, there are considerable challenges and risks in geothermal development.
ESDM Ministry’s Geothermal Director Ida Nuryatin Finahari explained that investors need additional incentives to be interested in developing geothermal projects in the country. Moreover, Indonesia has limited infrastructure access to the project site.
“All this time, the construction of access to the location has been charged to the developer. So it has an effect on the tariff and the economics of the project,” Ida said in a virtual discussion forum last week. Furthermore, according to Ida, geothermal potential is also widely spread in conservation forest areas.
This also becomes a challenge because conservation areas are only allowed to develop in geothermal utilization zones. Then, the feasibility of geothermal projects for electricity tariffs is still less economical for the community. “We know that electricity tariffs should not rise. But geothermal development in terms of the feasibility of economic projects cannot be competitive, with higher PLTU prices,” said Ida. Do not stop there, social issues and licensing in the development of the geothermal sector are always there. Moreover, geothermal is also drilling like the oil and gas sector.
“People ask if the drill fails or not like Lapindo. This is often the resistance, worried about damaged land, afraid if there is anything like the Lapindo case,” he said.
However, only 8% has been utilized or only 2,130.7 MW have been installed. The capacity is equivalent to the use of 32,000 BOEPD or 92 thousand BOEPD of crude oil. The realization of steam production from the geothermal sector until the first quarter also reached 28.2 million tons from the target of 112.51 million tons.
While electricity production in the first quarter reached 3,916 GWh or 24.46% of this year’s target of 16,005 Gwh. According to Ida, development in the geothermal sector actually plays an important role in the development of infrastructure in the region as well as the regional economy.
Because the country will also get income from Non-Tax State Revenues or PNBP. “The 2020 PNBP target is IDR 1.4 trillion and IDR 0.261 trillion has been realized. Almost all PNBP goes to the 80% and 20% centers,” Ida said.
Source: Katadata
