Jakarta, MINE – The geothermal industry has an important role in national economic and energy security. Geothermal development and exploitation has the potential to provide positive benefits on overall fiscal, monetary and macroeconomic aspects.
Apart from that, geothermal development also plays an important role in achieving the 2025–2034 RUPTL targets.
The RUPTL document stipulates that by 2034, more than half of the addition of national generating capacity will come from New Energy and Renewable Energy (EBET) plants.
The EBET generator contribution is targeted at around 51% (27.4 GW) to 61.3% (42.6GW) of the total additional capacity. During this period, additional Geothermal Power Plant (PLTP) capacity is targeted at 5.2 GW.
Komaidi Notonegoro, Executive Director of the ReforMiner Institute, said that achieving the geothermal development target may not be easy to achieve.
“Based on data, during 2017-2023 the installed geothermal capacity only increased by around 789.21 MW,” said Komaidi, Wednesday (10/12).
Since operation began in the 1980s until the end of 2023, the total installed capacity of Indonesia’s geothermal power plants has reportedly only reached around 2,597.51 MW, or only around 10.3% of Indonesia’s total resource potential.
Komaidi said, there are a number of risks faced by developers in undertaking geothermal business in Indonesia, including: (1) risk of exploration failure; (2) financial risks due to timing and market structure in the geothermal industry; (3) regulatory and governance obstacles (PJBL, TKDN, licensing, asset ownership, mismatch of government incentives with developer needs); (4) large initial capital requirements; (5) relatively long development duration; and (6) geographical location of geothermal resources in remote areas.
Improving policies in a number of aspects, especially those related to regulations, the attractiveness of the investment climate, and the effectiveness of incentives is needed to strengthen geothermal development.
He said, regarding licensing, for example, the government needs to simplify and ensure licensing for PLTP project development. It is necessary to provide certainty regarding the timing of the process for completing permits for PLTP project development.
He explained that synergy and commitment between ministries and institutions which are part of the implementation of Presidential Decree 112/2022 are also needed.
Regarding the monopsony model of the national electricity market, where the development of geothermal electricity only depends on one party as a single buyer/single offtaker, certainty regarding the timing of signing the PJBL and PJBU is very important.
This certainty is necessary considering that geothermal developers are generally required to complete exploration commitments before they can obtain a PJBL or PJBU.
To speed up the PJBL and PJBU process, the tariff negotiation process should only be carried out for basic prices and escalations that apply during the PJBL and PJBU period.
This is to resolve problems with the provisions of the electricity purchase scheme regulated in Presidential Decree 112 of 2022.
The implementation of a feed-in tariff scheme is also an important instrument to provide price certainty while increasing investment attractiveness. This step can be realized, including by revising or strengthening the provisions of Presidential Decree 112/2022.
The Philippines and Türkiye are countries that have succeeded in implementing geothermal development and exploitation policies optimally. In the Philippines, the availability of good regulatory tools is the main driving factor for the success of geothermal development and exploitation. Among the geothermal development and exploitation policies carried out by the Philippines is that the national electricity transmission company (Transco) provides full connection and distribution for the process of buying and selling geothermal electricity.
The Philippine government has also implemented incentive policies for geothermal development, including through: (1) reducing the share of government revenue; (2) providing fiscal incentives; (3) providing geothermal development data for the private sector; and (4) inventory and identification of potential areas for geothermal exploration.
Meanwhile, Türkiye succeeded in increasing PLTP capacity by around 328.23% during the 2014-2024 period also due to a policy breakthrough. Türkiye’s success in increasing its geothermal power plant capacity from 405 MW in 2014 to 1,734 MW in 2024 is partly because they have perfected the regulatory framework for the development and exploitation of the geothermal industry.
This capacity increase is the result of the implementation of the EBET Law in Türkiye which provides a number of privileges for the geothermal industry, including: (1) implementation of the feed-in tariff policy; (2) accelerating the geothermal generator licensing process; (3) fiscal incentives; and (4) providing guarantees and compensation to investors who experience losses due to policies implemented by the Turkish Government.
Source: www.tambang.co.id
