Indonesia is intensifying development of its world-leading geothermal resources, with installed capacity projected to reach 3.7 gigawatts by the end of 2025, according to ProSpace Indonesia’s Renewable Energy Outlook. This represents a 32% increase from 2023 levels, cementing Indonesia’s position as the second-largest geothermal power producer globally.
Fifteen new geothermal projects are currently under development, with combined investment values exceeding $4.8 billion. The government’s Geothermal Drilling Fund has proven effective in mitigating exploration risks, funding 23 successful exploratory wells since its establishment.
“Geothermal represents Indonesia’s unique competitive advantage in the renewable energy transition,” explains Hendra Nugraha, Geothermal Energy Specialist at ProSpace. “It provides consistent baseload power that complements intermittent solar and wind resources while utilizing Indonesia’s natural volcanic geography.”
Technology advances have reduced development costs by approximately 15% since 2020, while improved drilling techniques have increased success rates from 72% to 83% over the same period. Binary cycle plants, which can generate electricity from lower-temperature resources, are expanding the viable resource base.
Environmental impact assessments have become more sophisticated, with particular attention to conserving forest areas around geothermal sites. Carbon credit mechanisms increasingly support project economics, with certified emissions reductions valued at approximately $28 million in 2024.
Progress remains slower than targeted due to complex permitting processes and challenging terrain at many sites, issues being addressed through regulatory reforms.
For geothermal sector analysis: Phone: +62 21 5799 8989 Email: info@prospaceindonesia.com Follow @prospace.indonesia on Instagram for updates