Current State of The Geothermal Development in Indonesia and Government Policy (2007)

Indonesia has abundant potency in geothermal resources. It has 257 prospect areas, more than 2,000 MW proven reserved, almost 1,000 MW for probable reserved and 10,000 MW still in possible status reserves. With more than 220 million populations, the demand rate of electricity in Indonesia is more than eight percent per annum. Combination of them is becoming perfect reason to develop geothermal in this country. Both direct use and indirect use of geothermal must be developed in parallel to bring about prosperous society. For indirect use, not only big scale but also small to medium scale plant have to start to develop because both of these and direct use will be able to bring more national investor and domestic society involved.

Law concern in energy, the stronger regulation than the president decree 5/2006, is urgent to be issued to achieve national objective in energy. And government regulation as implementation of the law 27/2003 and guidance for central and local government is required to be approved by president soon. These government regulations must have clear objective and simplicity in procedures to attract new investment.

Almost all barriers related to the government so that government plays more roles in geothermal development in Indonesia. Awareness and consciousness of all government institution are essential necessity to be able to remove all the barriers. Comprehensive and suitable regulations are needed to be implemented steadily in order to achieve national geothermal road maps target. The system that combining between fixed or incremental price and bidding purchase system will suit to Indonesia’s condition to accommodate government and investor interest. And simple sharing income system, which will be regulated by government regulation, is needed as economic and law certainty and to accommodate local government interest.