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Indonesia is estimated to have the largest geothermal potential in the world – 27,000 megawatts, or roughly 40 percent of total global geothermal resources.  But currently, only 4 percent of that potential is being used to produce electricity.  Even at the current level of development, however, Indonesia is the third largest geothermal producer in the world in terms of installed capacity, following the United States and the Philippines.Many countries around the world are taking a close look once again at geothermal as an energy source that can deliver a “triple win” – clean, reliable, locally sourced – power generation. As previously blogged, a key barrier faced by geothermal developers is raising funds necessary to implement the early, riskier stages of a geothermal project.  In addition, countries such as Indonesia have abundant and cheap fossil fuel alternatives such as coal, which can cost less financially if the environmental and other benefits of a clean energy source such as geothermal are not taken into consideration.

The World Bank has been working closely with the Government of Indonesia to help address these barriers and scale up the development of geothermal.  The government is determined to take advantage of the country’s vast potential, and has embarked on a globally unprecedented expansion of geothermal capacity by 4,000 MW in the short-term.  Significant responsibility for meeting this goal rests with Pertamina Geothermal Energy (PGE), a subsidiary of the state-owned oil and gas company Pertamina.  PGE alone is mandated to develop 1,000 MW of geothermal capacity, which would be the largest expansion in the world by a single company.  To achieve these ambitious goals, though, it is essential to improve the country’s policy and regulatory framework and mobilize significant investments.

For the full story, go to the World Bank's Sustainable Energy for All Blog