Geothermal Energy

Geothermal energy is a relatively environment friendly energy source that is derived from the earth's inner heat. Water that is pumped into the earth by men or by natural causes (rain) is collected at the earth's surface in the form of steam, which can be used to drive turbines for the production of electricity. Exploration costs and the capital cost of the geothermal plant is higher than plants that run on fossil fuels. However, once in use, production costs are low compared to the fossil fuel-fired plants.

Besides electricity generation, geothermal energy can be used for heat pumps, bathing, space-heating, green- houses, aquaculture, and industrial processes.

The table below lists the top five countries that generate electricity using geothermal energy:

  1. United States        3,092 MWe
  2. Philippines        1,904 MWe
  3. Indonesia        1,197 MWe
  4. Mexico          958 MWe
  5. Italy          843 MWe

MWe = megawatt electrical
Source: International Geothermal Association

In recent years the geothermal power market grew significantly, in particular in emerging markets where - due to economic growth - more and more low income and rural communities are connected to the electricity grid. Many governments are also increasingly focused on lessening dependence on expensive and environmentally unfriendly fossil fuels.

Geothermal Energy in Indonesia

Indonesian Production and Consumption of Geothermal Energy

Indonesia is estimated to contain the world's largest geothermal energy reserves. Around 40 percent of total global potential in geothermal energy is located beneath Indonesian soil. Progress in its rate of production, however, is occurring at a very slow pace. Today, Indonesia uses only four to five percent of its geothermal capacity. The main problem for geothermal energy development in Indonesia is the regulatory framework. The government has only just realized the potential of geothermal energy in the country and is therefore yet to create a conducive climate by creating a good legal framework. Currently geothermal activities are lawfully defined as mining (Law No. 27 2003) which implies that it is restricted in protected forest and conservation areas (Law No. 41 1999). About 60 percent of Indonesia's geothermal energy, however, is located in protected forest and conservation areas.

The development of Indonesia's geothermal energy potential is important as the country's electricity demand will increase by around eight percent annually. Currently, Indonesia has one of the lowest electrification rates (66 percent) in Asia, implying that there are around 80 million Indonesians that are not yet connected to the nation's electricity grid. The government intends to raise the role of renewable energy sources in increasing the electrification rate and has set the ambitious target that by 2025 renewable sources will account for 25 percent of domestic energy demand. Around 17 percent is intended to be supplied by geothermal energy.

To reach its ambitious target, the Indonesian government is offering tax incentives for renewable energy project developers (including geothermal energy) and has allocated funds for exploration activities (aiming to reduce exploration risks for the private sector). Currently, over 44 geothermal projects are in development in Indonesia.

The largest reserves of geothermal energy are located in the western part of Indonesia where energy demand is highest: Sumatra, Java and Bali. North Sulawesi makes the most advanced use of geothermal energy for electricity needs: approximately 40 percent of total electricity demand is supplied by geothermal energy.

Geothermal Energy Production of Indonesia