| Abstract |
Indonesia is located between the eastern end of Mediterranean Volcanic Belt and western side of Circum Pacific Volcanic Belt, and is blessed with abundant geothermal resources. Trial calculations indicate that forty percent (equivalence of approximately 27 GWe) of geothermal energy in the earth's crust is released in the Indonesian archipelago and neighboring areas, which puts the country as the biggest geothermal energy potential in the world. Today, 807 MW Power Plant from geothermal energy have been developed. The developed geothermal locations are distributed in 7 areas: Kamojang, Darajat, Wayang Windu and Salak in West Java; Dieng in Central Java; Sibayak in North Sumatera and Lahendong in North Sulawesi. It is quite apparent that the geothermal resources in Indonesia have been underdeveloped and neglected in spite of their huge potential. The growth rate of geothermal development for electricity in Indonesia was relatively slow until the world oil crisis in 1971. Since then the government stresses on a guideline for energy policy, namely intensification on survey and exploration of energy resources including geothermal and coal; diversification of energy by means of reducing on oil depending utilization and promoting through development utilization and customary use of substitute fuel. For geothermal, the government started to issue the President Decree No.16/1974, President Decree No.22/1981, President Decree No.23/1981, President Decree No. 45 in 1991 and President Decree No.49/1991. These decrees appointed the Pertamina, National Oil Company, to conduct exploration and exploitation and to utilized the steam into energy. The decree also introduced a total project that passes through a system. During this period, private sectors have signed 12 contract areas that are mostly big scale geothermal development and are committed to develop and utilize geothermal energy by 3800 MW electric. Monetary crisis that occurred in mid of 1997 significantly impacted Indonesia economy. Independent Power Producer (IPP) model, that offers a relatively high electricity price and ,thus, giving the private sector high returns, must be reformed. It caused the slow down of geothermal business. To speed up geothermal development, President Decree No. 76 was introduced in 2000. This regulation, however, ws unable to invite investors to the geothermal development mainly because Indonesia was still in economic recovery stage at that time. Recently, the government declared a new Geothermal Law No 27/2003. This Law mainly deregulates the right of regional autonomy, fiscal reform, sanctity of existing contract, and introduces the transparency process and level of playing field, and regulates the geothermal steam field license. The supporting regulation shows that the government will explore and drill two or three exploration wells, and probably an additional production well in order to have a significant impact on the price. It will take over steam field development risk. Tendering by the government will bring in fair competition. The improvement in efficiency, sustainability and productivity should be performed through technology improvement and optimal utilization. Transparency is one of the new government roles promoted to eliminate anti-competitive practices. On the other hand, government also deregulated on the down stream sector of energy by declaring the Electricity Law No.22/2002 as a substitute of Law No.15/1985. This law introduced multi buyer and multi seller of electric power generation and distribution, and prioritized the renewable energy especially for the domestic needs. This can bring in a fair competition and improve the efficiency in electricity sector. However, in order to synchronize these two laws, and its workable for the geothermal development, supporting regulation is needed on the behalf of the government. Since the oil reserve is decreasing, Indonesia needs to balance the energy mix benefits with the clean geothermal energy. The use of renewable geothermal energy would eliminate the dependency on a single source of fossil fuels for the generation of electricity and meet Indonesia's growing energy demand. Therefore, the investment opportunity is present and stands to benefit from developing its abundant and indigenous geothermal resources in order to provide for the country's domestic needs. This geothermal energy of choice will obviously enable Indonesia to export its more portable fuels for much-needed hard currency. Currently, the government and the parliament are preparing an Energy Law following the 2003 National Energy Policy. This law will regulate the use of energy resources in Indonesia |