US$12 billion to develop 4 GW of geothermal power in Indonesia by 2014
The Philippines has targeted over 1.4 GW of increased capacity by 2030
The rapid expansion of geothermal electricity and heat production will be dominated by accelerated deployment of conventional high-temperature hydrothermal resources in the period leading up to 2030, according to the “Technology Roadmap: Geothermal Heat and Power” report by the International Energy Agency (IEA).
The roadmap says the deployment of low- and medium-temperature hydrothermal resources in deep aquifers will also grow quickly, reflecting wider availability and increasing interest in their use for both heat and power.
By 2050, more than half of the projected increase will come from the exploitation of ubiquitous hot rock resources, mainly via enhanced geothermal systems (EGS). The report concluded that substantially more resources will be needed for research, development and demonstration in the next decades to ensure EGS becomes commercially viable by 2030.
Although estimates vary on how much geothermal capacity will be developed in the next five to ten years, conservative figures put it at 2–4 GW with an average cost of US$4 billion per GW.
Some experts believe the Indonesian government’s intention to accelerate the development of geothermal capacity to 3,977 MW by 2014 will require US$12 billion in investments.
To promote geothermal resources, the Indonesian government has implemented a series of laws and regulations. In 2003, it streamlined the regulatory process by which exploration permits were granted to developers in competitive bidding. The country also exempted equipment imported for geothermal development from certain taxes and customs duties.
According to the latest “International Market Overview Report” by the Geothermal Energy Association (GEA), last year, the government required its state-owned utility PT Perusahaan Listrik Negara (PT PLN) to buy electricity from geothermal plants at the maximum price of US$0.97/kWh.
This price, however, can be increased by 2 to 3 cents per kWh outside of the main islands of Java and Sumatra. Nevertheless, many experts agree that the resources available make projects feasible at even US$0.88/kWh and lower.
Udibowo Ciptomulyono (photo credit: GPA Photo)
At the GeoPower Indonesia & Philippines conference held in Jakarta in June, Udibowo Ciptomulyono, president commissioner of PT PLN Geothermal, a subsidiary of PT PLN, reported that the National Energy Council has reaffirmed the government’s commitment to the renewable energy industries in general, and geothermal specifically.
“In the past, economic concerns diverted attention from the national energy policy and limited the means of intervention. However, that is about to change. Although renewable energy investment is often capital intensive, the environmental benefits will be tremendous for Indonesia, which is the third largest greenhouse gas emitter among developing countries in the region.”
According to the GEA report, most geothermal systems in Indonesia are considered high-temperature and ideal for electricity generation with low exploration risks. At present, 276 potential fields have been identified for development (see table).
Geothermal energy resources in Indonesia, 2009 
Source: Directorate General of Mineral Coal and Geothermal Indonesia 2009
The development of convective hydrothermal systems at depths of 1.5 km to 2 km is the main priority as these are still easily accessible and in abundance.
The IEA report says hot rock resources are believed to offer potential in Sumatra, Kalimantan and Papua but only in the long term. Thus, the technological priorities are to map hydrothermal potential more extensively and combine in one database geothermal data and data from oil and gas exploration.
The Philippines update
The Philippines gets 17% of its electricity supply from geothermal power plants and is the second largest geothermal energy producer in the world. As of 2010, 1.8 GW of geothermal power capacity had been installed.
According to research firm Frost & Sullivan, the Philippines has targeted over 1.4 GW of increased capacity as part of its long-term renewable energy plan up to 2030, with 1,020 MW of new installations expected to come online between 2015 and 2020.
The government has taken steps to facilitate the development of its geothermal resources by the private sector. It has initiated major structural reforms through the privatisation of National Power Corporation’s geothermal generating assets. The government also divested its interests in PNOC-Energy Development Corporation, the national geothermal development company opening up this sector for the entry of new players.
The Geothermal Energy Association’s “International Market Overview Report” indicates that the government approved six geothermal power contracts for Pan Pacific Power Philippines Corp and SKI Construction Group Inc last year.
Elsewhere, Maibarara Geothermal Inc has begun developing its Maibarara geothermal project, which is expected to bring 20 MW of geothermal electricity online in 2013.
The Energy Development Corporation (EDC) is rehabilitating its Bacon-Manito, Palinpinon and Tongonan geothermal power plants in the country to ensure ongoing geothermal generation there.
Vincent Villegas, vice-president of business development of EDC, which owns and operates four geothermal facilities in the Philippines with a total installed capacity of 1.15 GW and has drilled more than a thousand wells, pointed out that, while EDC continues to develop geothermal and wind projects in the Philippines, the company is also pursuing long-term business opportunities elsewhere, such as in Indonesia.
“Indonesia is in the process of harnessing its geothermal resource potential. As such, as the world’s largest integrated geothermal developer with over three decades of geothermal expertise, EDC is interested not only in building partnerships with potential developers but also to share the expertise in geothermal exploration and development to deliver a clean and sustainable source of energy for Indonesia.”
• Case study: Wayang Windu, Indonesia (Click thru to read)