Volcano Power

This August, in a bid to bolster its latent geothermal energy industry, Indonesia passed new laws that allow geothermal exploration in protected areas such as forests.

Located in the Ring of Fire—a string of volcanoes and fault lines around the Pacific Basin—the archipelago has estimated potential geothermal resources of up to 29 GW. State power utility PT Perusahaan Listrik Negara (PLN), by comparison, has a total capacity of about 6.5 GW in its Java-Bali operations area.

Yet the fledgling geothermal sector has been slow to develop, and not just because the coal-rich country’s plans to electrify its 17,000 islands have long been limited by geographical challenges. Experts blame costs associated with geothermal technologies and frequent changes in the regulatory framework, as well as a general lack of qualified human resources.

Another prominent setback has been that most geothermal resources lie in protected mountain and forest areas, where mining is forbidden. However, the new law stipulates that exploration for geothermal energy and development of plants is no longer considered mining. The law also shifts the power to authorize projects from local entities to the central government.

This will mean that developers can work in the country’s vast tracts of protected land and possibly harness power from its 130 volcanoes (Figure 8), estimated to hold about 40% of the world’s geothermal potential.

This June, to make the industry more attractive to investors, the Ministry of Energy and Mineral Resources also issued new rules that require PLN to buy power generated from geothermal power plants operated by independent power producers.