Indonesia Expat

Indonesia Aims to Capitalise on Renewable Energy

Puhagan geothermal plant

Indonesia possesses the lion’s share of Earth’s geothermal resources that can be used for renewable energy. Here’s what the government plans to do about it.

Indonesia’s days as a major oil-exporting nation are long gone. Since 2004, oil consumption in the archipelago has exceeded its capacity to produce, and the rate of production is dwindling. In fact, domestic production has been on the decline since as far back as 1991. Although the country may still have large enough reserves of coal to last for several more decades, the real solution to the problem can only be found in renewable energy.

The government has made one of its objectives to increase energy production from renewable resources from the current annual output of 10.7 gigawatts to 21.5 gigawatts by 2019. In November Rida Mulyana, Director General of Renewable Energy at the Ministry of Energy and Natural Resources, said that the country would need a US$36 billion investment to raise production capacity to the level it needs to be.

In the short term, the country’s renewable energy efforts are geared toward hydroelectric power, followed by geothermal energy, solar, and wind. For the long term, however, geothermal is seen as having the greatest potential. This is due to its continuous abundance and the fact that production doesn’t need to wait for the availability of sunlight, wind, or a strong tide.

“The future sustainable electricity grid will need all sources of electricity,” Benjamin Matek, an industry analyst and research project manager at the Geothermal Energy Association in Washington DC told Indonesia Expat. “Geothermal can help balance out the intermittency of solar by acting as a firm and flexible power source.”

Geothermal plant
Geothermal plant CC World Bank

Essentially, geothermal power is extracted from steam that emanates from a reservoir of hot water and molten rocks present in volcanic regions. The steam is then used to generate electricity through turbines. Indonesia’s geology means that these underground reservoirs are plentiful.

According to a report published by the US Energy Information Administration, geothermal offers a capacity factor greater than 90 percent, meaning it loses around 10 percent or less of the energy fed into the generators. By comparison, coal has an 85 percent capacity factor, while hydroelectric has around 50 percent, with solar and wind among the lowest with 25 to 30 percent efficiency.

The Directorate General of Renewable Energy says that Indonesia holds 40 percent of the world’s geothermal energy resources at 299 sites spread out across the archipelago.

The known production potential from Indonesia currently clocks in at 29 gigawatts but only five percent of that is being produced at the moment. The country plans to increase this production from 1.4 gigawatts to 4.9 gigawatts by 2019, or 22 percent of the total renewable energy output. By 2025, geothermal energy production is expected to reach more than 10 gigawatts, provided that the government can execute its plan properly.

However, a report titled Unlocking Indonesia’s Geothermal Potential, jointly published in early 2015 by the World Bank and the Asian Development Bank, puts the 2019 figure at a more conservative 3.8 gigawatts, and for 2025 it estimates 4.6 gigawatts.

Geothermal exploration has been met with doubt and scepticism in Indonesia as the Bali provincial government shut down the Bedugul geothermal project repeatedly between 2005 and 2014. Although the site is expected to generate 165 megawatts of power, adding significantly to the 600 megawatts the island already produces, the local government cited the destruction of four hectares of forests, disturbance to the nearby temples, and the fact that the land is part of a holy site as the primary reasons for its refusal.

“It’s difficult to green-light the continued destruction of what little forests we have left in Bali,” governor Made Mangku Pastika said in 2011.

Geothermal power by Lydur Skulason

Nearly a quarter of Bali’s four million population remains ‘off the grid’ and rolling blackouts are a regular occurrence on the island. To manage the lack of electricity, Bali’s local government opted to acquire additional electricity from its neighbouring province East Java through overhead power lines across the Bali Strait.

It was only in August 2014 that the Indonesian government passed legislation to remove the legal barriers associated with geothermal exploration for electricity generation. Previously, geothermal exploration was classified as mining activity. But with 60 percent of Indonesia’s geothermal resources being located underneath protected forests and conservation areas, operations in those areas are prohibited. The August legislation will make it possible for research and operations to move forward without violating forestry laws and without needing approval from local governments. This means the Bedugul project may get the go-ahead after all.

Companies conducting geothermal research and explorations will also be compensated better by the government than in previous years, and there is now less bureaucracy required to conduct such activities.

Geothermal energy production is “incredibly safe, one of the safest energy technologies out there,” says Matek. However, the investment required to unearth and maximise the potential of geothermal energy is significant.

25 years after its initial announcement, the project to build the world’s largest geothermal power plant in North Sumatra finally got underway in June 2014. The Sarulla plant is a US$1.6 billion joint venture formed in 2006 between Indonesia’s Medco Power, Israel’s Ormat International, the Itochu Corporation, and Kyushu Electric Power Company from Japan. Sarulla is projected to produce 330 megawatts of electricity annually, enough to power 330,000 homes.

Currently, the country’s largest geothermal plant is situated in Pangalengan, West Java. The Star Energy-operated Wayang Windu Geothermal Power Station, located 40 kilometres south of the province’s capital, Bandung, has a total production capacity of 227 megawatts between two units. A planned third unit could bring the total to 354 megawatts, but the project has been stalled since 2013.

National Geographic noted in March that Star Energy could build up to three more plants in Wayang Windu if the company could reach an agreement with the government. A single well could cost US$10 million to drill and Star Energy is asking for a better deal to compensate for its investment and match the guarantee set out by the new legislation. It’s currently receiving less.

In November 2014, President Joko Widodo invited New Zealand to further develop its geothermal technology in Indonesia and asked for assistance in developing geothermal power plants.

New Zealand is among the leading nations in renewable energy, having contributed nearly 25 percent of the world’s geothermal power development since 2010. 80 percent of New Zealand’s electricity comes from renewable resources.

Indonesia is currently third behind the Philippines and the United States in producing geothermal energy. But with 62 projects underway, the country could leapfrog both to become the world leader in geothermal production by the end of the current administration in 2019.

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