World Bank: funding and legal issues hold back development in Indonesia

World Bank: funding and legal issues hold back development in Indonesia Mount Bromo, Java, Indonesia (source: flickr/ sara marlowe, creative commons)
Francisco Rojas 10 Aug 2015

Geothermal development in Indonesia has grown vey slowly since 2010. The World Bank recommends several measures to speed up the growth and expansion of geothermal in the country.

Despite of massive geothermal potential in Indonesia, development of this resource seems to be advancing slowly. In a recent post in the Jakarta Globe, they cite the recent Indonesian Economic Quarterly published by the World Bank in July highlighting that “despite a 2012 Finance Ministry fund to develop the geothermal energy sector and capital seeding of more than $200 million, the sector has not expanded as expected.” Between 2010 and 2014, only 175 megawatts were added to the national grid

There are plans to develop “44 new plants and triple production capacity to 4000 MW” according to the national government. The same source states that the World Bank “attributes this to several factors, including a hesitancy to invest, and a feed-in tariff that has discouraged the market.”

Legislation allowing to access resources in forest areas was passed late last year and the feed-in tariff meant to bolster the development of renewables did not go as planned since “sellers and buyers were not able to agree on a fixed price”.

Considering the massive growth in energy demand in the country, Indonesia needs to develop local, renewable energy sources faster in order to keep up with demand and avoid slowing down the economy, therefore, “the World Bank has recommended improvements to the tendering process for development, including not allowing areas to be put to tender without certified proof of its geological potential.”

To read more on the subject, please click on the following link.

Source: The Jakarta Globe