| Abstract |
Exploration for geothermal energy in Indonesia dates in the 1920s, when the Dutch Government started a country-wide inventory of thermal features, including drilling shallow test wells at Kamojang, West Java. But not until 1972 that a modern geothermal exploration started to take place. The early 1990s saw the awarding of eleven contracts for development of geothermal plants, with a total committed capacity of 3,417 MW and original completion dates between 1998 and 2002. However, as a result of the 1997 - 1998 Asian monetary crisis, the Government of Indonesia (GOI) has to suspend several Independent Power Producer (IPP) projects, including seven geothermal projects. Attempts to resuscitate the cancelled projects and to initiate new geothermal projects have progressed very slowly. Presently, of the total potential of 29,038 MW the geothermal utilization for generating electricity is only 4.7% (1,340 MW). The development of Indonesia's renewable energy resources including geothermal has not been optimum. One of the issues that inhabited the development is the electricity tariff, which suffered from somewhat of a see-saw development. The other major issues impeding Indonesia's geothermal resource development are the inappropriate regulations and uncertainty over implementation of regional autonomy. Many activities have been suspended, since the areas are located in the protected forests, which often are only known after the permits are issued or the contracts are signed. Other crucial issues include overlapping of rights on mining operating areas on one side with the rights of forestry, people's land and others. While in the long run, Indonesia still presents one of the world's most attractive geothermal regions, but the GOI must develop new approaches to maximize its potential by eliminating the hurdles of its development. Indonesia's geothermal industry needs a new legal basis. Investors require confidence that regulatory structures protect their investments. They want legal and business certainty, beginning with an immediate review of existing laws and regulations related to energy and natural resources to bring them into conformity with new requirements of regional autonomy and fiscal decentralization. |