Water that is pumped into the earth (by people or natural causes such as rain) is collected at the Earth's surface in the form of steam, which can then be used to drive turbines for the production of electricity.

Geothermal energy is a renewable resource as it exploits the Earth’s interior heat (which is an abundant source) while the water, once used and cooled, is returned to the reservoir. However, it is true that boreholes (of typically at least two kilometers depth) need to be drilled, while specific infrastructure needs to be built to reach the geothermal power plant. And therefore there certainly is a direct and indirect impact of geothermal power plants on nature and on animals’ habitat. Still, compared to (for example) coal-fired power plants we can certainly argue that the negative impact of geothermal power plants on the environment is (quite) limited.

On average, if one digs a 100 meter hole, the temperature at the bottom of that hole is around 2-3 degrees Celsius higher than at Earth’s surface. However, the deeper one digs, the higher the temperature growth becomes (this is called the geothermal gradient). And so, temperatures reach around 65 to 75 degrees Celsius at a depth of 2,000 meters and 90-105 degrees Celsius at 3,000 meters depth (and so forth).

However, there exists great variety in temperatures depending on the exact location in the world. For example, areas with geologically young sediments display a much lower temperature increase. But – and this is very relevant for Indonesia – locations where Earth’s eight major tectonic plates meet (and where there often is volcanic activity), the Earth’s heat is found closer to the surface.

Indonesia is positioned on the boundary of three major tectonic plates, namely: (1) the Indian-Australian, (2) Eurasian, and (3) Pacific plates (and thus the country has many active volcanoes, while also being prone to earthquakes). This implies that one would need to dig less deep in Indonesia to get access to high temperatures, and so this would result in lower costs for the investor.

Besides being used for electricity generation, geothermal power can also be utilized for various heating purposes, such as space heating in residential buildings, offices and greenhouses, fish farming, and bathing.

In the case of electricity generation, high temperature geothermal resources are key (preferably temperatures above 150 degrees Celsius). However contrary to the flash steam plant, a binary-cycle power plant can use lower heats because it transfers heat from geothermal hot water to another liquid. Heat causes the other liquid to turn to steam, and drive a generator turbine. Meanwhile, the medium-to-low temperature resources (below 150 degrees Celsius) are suited for a range of other purposes.

Total global installed geothermal power generation capacity stood at 16,335 MW at the end of 2023, which is an increase of 208 MW compared to the previous year. And so, growth in global geothermal development does continue, albeit at a slow pace. Interestingly enough, and fully in line with its potential, Indonesia plays a big role in today’s geothermal power production, being the second-biggest geothermal power producer (after the United States).

Also noteworthy is that the volcanically active island nation of Iceland now manages to supply nearly all its electrical needs through a number of flash-steam geothermal power plants.

Generally, the exploration costs and capital-intensity of a geothermal power plant are higher than for plants that run on fossil fuels. However, once in use, production costs are low compared to fossil fuel-fired plants.

However, risks are high during the exploration stage of geothermal power plants as there exists an estimated 50 percent chance that exploration fails. This explains why it typically remains quite difficult to find financing for geothermal power projects.

Geothermal Energy in Indonesia

It is over 40 years ago when Indonesia saw its first commercial geothermal power plant coming on stream (namely the 30 MW Kamojang Unit 1 in West Java in 1983). However, further progress has been remarkably slow. In fact, if we take 1983 as the starting point of geothermal power development in Indonesia, then the country only added an average of 60 MW to its geothermal power capacity per year over the past four decades (the number becomes 100 MW, per year, over the 2010-2022 period). For comparison, Indonesia added an average 2,000 MW per year in power capacity from its coal-fired power plants between 2015 and 2020 (coal being easy to extract, cheap, reliable, and abundantly available in Indonesia).

Indonesia is estimated to have between 23.7 GW and 28.5 GW of geothermal power potential under its soil. This range is based on an estimate from Indonesia’s Energy and Mineral Resources Ministry (23.7 GW) and on a statement made by Indonesian Deputy-Minister of State-Owned Enterprises Pahala Mansury (who said the country harbors 28.5 GW in geothermal power potential; a number that indeed circulates in various publications on the Internet, although we don’t know what the exact source of this estimate is).

Indonesia’s geothermal potential (roughly) equals around 40 percent of total global geothermal potential. And therefore, one could certainly argue that Indonesia holds enormous potential. However, so far, Indonesia only managed to tap a small portion of this potential.


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