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Indonesia Potential to Become Global Center for Geothermal Industry

Indonesia is believed to be the center of the world-scale geothermal industry in the future due to its large geothermal potential. But this can be achieved only with serious effort to make the geothermal energy more optimal.

Ahmad Yuniarto, President Director of PT Pertamina Geothermal Energy (PGE), part of Pertamina's Power and New Renewable Energy subholding, said that by becoming the center of the world's geothermal industry, the energy security supported by geothermal energy can certainly be realized. Geothermal is one of the most relevant new renewable energies to become the main energy resource to meet national needs.

"Indonesia has great potential for geothermal because it has abundant resources. The electricity produced from geothermal is also very stable and there is still room for competitive costs. Besides, geothermal energy is very competent as a base load for power plants for any electrical system," said Yuniarto on Monday, August 15, 2022.

According to Yuniarto, to be able to achieve the decarbonization target of geothermal development, there must be extra acceleration from the government as the regulator instead of relying on business actors only. Green hydrogen, for example, as an advanced product of geothermal energy, can provide an extraordinary multiplier effect. However, its development requires a large amount of funds and it is a challenge that we must face.

"We can use geothermal as a green economy to create an effect on Indonesia. This condition would provide more value to our country, but the challenge is to project green hydrogen at an efficient cost," said Yuniarto when speaking at the 11th ITB International Geothermal Workshop 2022.

Some coordinations have been made between PGE and several Ministries for the use of green hydrogen. PGE is now on the stage of seeking strategic partners for the development of the new business. Not only geothermal businesses, partners are also expected to bring technology and funding for the development of green hydrogen.

Green hydrogen is believed to be able to be developed with geothermal potential because its reserves are around geothermal reserves. With large geothermal reserves, Indonesia certainly has a big advantage. "In the future, green hydrogen will not only be in domestic demand but also abroad," he said.

To date, PGE is ranked first in national geothermal management with an installed capacity of 1,887 megawatts (MW). A total of 1,205 MW is managed with partners and 672 MW is self-managed by PGE.

In the Electricity Supply Business Plan, geothermal development is expected to reach 5444.5 MW in 2030 with details of PLN's installed capacity of 1,077.5 MW and IPP of 4,367 MW.

In the next 10 years, PGE targets to increase the installed capacity of clean energy sourced from geothermal to more than double than that of currently operated by PGE alone.

In 2030, PGE targets to increase the installed capacity that is managed directly by PGE to 1,540 MW. "This means that in 2030 PGE has the potential to be able to contribute a potential emission reduction of 9 million tons of CO2 per year, and targets to become the top three geothermal producing companies in the world," said Yuniarto.

Meanwhile, according to Hendra Yu Tonsa Tondang, Vice President of Geothermal at PT PLN (Persero), one crucial problem in geothermal development is the gap in the electricity tariffs and the project's finance. This issue is very essential to the continuity of geothermal business.

There are several instruments to fill or close the gap, including the implementation of a carbon tax, lowering the cost of electricity production in Eastern Indonesia, capital expenditure incentives, government drilling, green/clean energy funds and the implementation of the right technology to increase the success project ratio.

"We know that the government is currently conducting an exploration program, the government drilling," said Hendra.

According to Hendra, NRE electricity tariffs are still higher than fossil fuels. For this reason, government intervention is still very much needed to encourage the maximum utilization of NRE. "We need policies from the government, especially regarding the tariffs. When the tariff is higher than the project implementation costs, the subsidy will increase accordingly," he said.

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