Incentivizing geothermal energy business with G20 collaboration

Abstract

Indonesia has an abundance of geothermal energy potential (29 GWe) and becomes the second-largest geothermal power plant installed capacity after the United States. Geothermal is the most reliable renewable energy due to its highest capacity factor. It works as the base load in the electric grid. Unfortunately, the installed geothermal power plant was only approximately 6.3 % in 2018. Although the Government of Indonesia (GoI) has already given and supported in terms of financial incentives, regulation, technical assistance, it could not boost geothermal development significantly. Recent geothermal based electricity generation cost is rising, especially for the greenfield, caused by rising exploration cost could lead to geothermal development unfavorable, especially for affordability policy in Indonesia energy. All the incentives could not yet accelerate geothermal development significantly due to the risk and cost of geothermal exploration. Facing the fact that exploration cost tends to rise over time, G20 collaboration should be able to reduce the risk and cost associated with geothermal exploration with effective incentives. This paper aims to provide solutions and recommendations regarding exploration cost reduction through geothermal technology research and development with an emphasis on cost and risk reduction among G20 collaboration. The proposed incentives are then constructed for Indonesia’s requirement to meet geothermal conditions and requirements from the trilemma energy aspect, especially for geothermal technology to reduce exploration cost and risk. The proposed incentives also deal with human resource development for improvement in learning rates to have better technology adoption and acquisition by using SWOT and Policy Gap Analysis.