Geothermal power: Indonesia eyes ‘phenomenal’ renewable energy potential - South China Morning Post
Published February 06, 2026
Geothermal Power: Indonesia Explores Vast Renewable Energy Potential
Indonesia is positioning itself to harness its significant geothermal energy potential, which is considered to be among the most substantial in the world. With a geographical makeup that includes numerous volcanoes, the country is exploring ways to capitalize on this natural resource to meet its growing energy demands and transition towards renewable energy sources.
As of now, Indonesia holds the title of the second-largest producer of geothermal energy globally, boasting an installed capacity of around 2,400 megawatts (MW). This figure represents approximately 40% of the world's total geothermal energy production. The Indonesian government is keen on expanding this capacity significantly, with plans to increase it to 7,200 MW by 2025. This ambitious goal is part of a broader strategy to diversify the nation’s energy mix and reduce reliance on fossil fuels.
The Indonesian government has set forth a target to generate 23% of its energy from renewable sources by 2025. Achieving this target is crucial for the country, which is the largest greenhouse gas emitter in Southeast Asia. Transitioning to renewable energy sources like geothermal power is seen as a vital step in addressing climate change and promoting sustainable development.
Investment and Development Opportunities
To facilitate the expansion of geothermal energy, Indonesia is actively seeking domestic and foreign investments. The government has implemented various policies to attract investors, including offering incentives such as tax holidays and streamlined licensing processes. These measures aim to create a more conducive environment for geothermal development, which has historically faced challenges such as high upfront costs and regulatory hurdles.
Several geothermal projects are already in the pipeline across the archipelago. One notable project is the Sarulla Geothermal Power Project in North Sumatra, which is expected to generate 330 MW of power once fully operational. Additionally, the Wayang Windu Geothermal Power Station in West Java is another key project that contributes to the country's geothermal capacity.
Moreover, Indonesia is also exploring partnerships with international companies to enhance its geothermal development capabilities. Collaborations with countries that have advanced geothermal technologies, such as the United States and Japan, are being pursued to leverage their expertise and experience in the field.
Challenges and Solutions
Despite its vast potential, the geothermal sector in Indonesia faces several challenges. One of the primary issues is the high cost associated with exploration and drilling. Geothermal resources require significant investment in geothermal wells and infrastructure before they can generate electricity, which can deter potential investors.
Furthermore, there is a need for improved geological data and mapping of geothermal resources to identify viable sites for development. The Indonesian government is working to address these issues by investing in research and development initiatives aimed at better understanding the country’s geothermal potential.
Another challenge is the regulatory framework surrounding geothermal energy. While the government has made strides in streamlining processes, there are still bureaucratic obstacles that can slow down project development. Continuous efforts to enhance regulatory clarity and efficiency are essential for the growth of the sector.
Environmental and Social Considerations
Geothermal energy is often viewed as a cleaner alternative to fossil fuels, but it is not without its environmental concerns. The extraction of geothermal energy can lead to land subsidence, water depletion, and the release of greenhouse gases. Therefore, it is crucial for Indonesia to implement sustainable practices in the development of geothermal resources.
In addition to environmental considerations, social factors also play a significant role in geothermal projects. Engaging local communities and ensuring their support is vital for the success of geothermal initiatives. The government is focusing on incorporating community development programs that benefit local populations, such as job creation and infrastructure improvements.
Future Outlook
Looking ahead, Indonesia's geothermal energy sector is poised for growth, driven by a combination of government support, international collaboration, and increasing demand for renewable energy. The country’s commitment to expanding its geothermal capacity aligns with its broader goals of achieving energy security and sustainability.
As the world increasingly shifts towards cleaner energy sources, Indonesia's geothermal potential presents a unique opportunity for both economic development and environmental stewardship. With the right investments and policies in place, Indonesia can solidify its position as a leader in geothermal energy production and contribute significantly to the global renewable energy landscape.
In conclusion, Indonesia's exploration of its geothermal energy potential is a critical component of its renewable energy strategy. By addressing the challenges and leveraging its natural resources, Indonesia aims to enhance its energy mix, promote sustainable development, and play a pivotal role in the transition to a low-carbon future.
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