Geothermal as (Non) Alternative Energy in Indonesia

Written by:
Herlambang Cipta Aji MBA Student Swiss German University

With growing demand of electricity, Indonesia is surely a country hungry for new
energy. Just recently in early June 2016 BP announced its statistical review on
world energy and shows Indonesia primary energy consumption already
increased by 3,9% from 2014-2015; which growth is bigger than China, Australia,
and total Asia Pacific.
If Indonesia consumption last year was 195,6 Million tonnes oil equivalent (Mtoe),
it seems that growth towards 282 Mtoe in 20251 as predicted by International
Energy Agencies in 2013 is not unrealistic.
To overcome the nature of new powerplant development which needs a long lag
time for construction, since 2009 PLN issued its longterm plan for energy supply
(RUPTL) which latest edition of RUPTL 2016-2025 just recently published last
week.
The portion of New and Renewable Energy are expected to increase up to 23%
while Oil are reduced to 25% in the national energy mix 2025. This trend is just in
line with Arif Fiyanto opinion on Jakarta Post 26 May 2016 that more than half of
new powerplant in the world are renewables.
Geothermal will not be alternative power source anymore, it will be second
biggest renewable project after hydro.
RUPTL expects additional capacity around 6 GW from geothermal plant (PLTP) up
to 2025, which is already 17% from plan 35 GW.
In term of availability, geothermal is better compared to others because doesnt
depend on weather and doesnt need any transport of fuel like diesel or coal
powerplant. Geothermal source also can survive almost forever, unlike coal
which reserve is only 9 Bio ton (with 400 Million ton production per year, only last
for 20 years). For sure, with the implementation of new geothermal powerplants,
Indonesia will have more clean and sustainable source of energy.

Indonesia is actually worlds third bigger user of geothermal powerplant after US

and Philipines and the potency is even bigger. However sadly, there is only 1,3
GW currently operating, what is actually happening?
Developing geothermal field is never easy. There are so many risks that few can
afford. Its exploration is typical with oil which relies on very deep drilling, until
two or three kilometers underground.
Cost is big, but nobody can be sure if they can find heat/steam feasible for
production. And unlike oil in Indonesia, there is no cost recovery system. So
many owner of geothermal license doesnt develop their field until drilling stage.
Companies also has to deal with land issue. Not only with community, but also
with forestry area. Geothermal prospect are often lays on mountainous land,
within a protected forest area.
If there are successfull running project nowadays, it is thanks to the scheme of
Joint Operation Contract involving Pertamina, private companies as contractors,
and also PLN as the buyer of electricity. However since 2003, the legal
framework of its business changed. No joint operation contract, and company
who apply and hold the concession license must explore, construct, and produce
electricity. A lot of tasks is added while risk getting higher. Up till now there is no
company succeeded to bring the project until production.
Geothermal is no more an alternative energy, its position is getting important.
We still need fossil fuels, but renewables such as geothermal is also needed to
support a sustainable energy. Can government and all stakeholders reach a
better business scheme to support its development?