Indonesia\u2019s geothermal industry is considered to have long-term\ngrowth prospects despite global sentiment weighing on the stock market.\nThe country has geothermal potential of around 24 gigawatts (GW), but\nonly about 11 per cent has been developed, leaving substantial scope to\nadd power-generation capacity.<\/p>\n
The Korea Investment and Sekuritas Indonesia (KISI) research team\nsays geothermal development is also supported by demand for\nlow-emissions electricity that can provide a reliable supply. Unlike\nrenewable sources that depend on weather conditions, geothermal power\nplants can provide baseload electricity around the clock.<\/p>\n
Under the Electricity Supply Business Plan (RUPTL), the government is\ntargeting an additional 5.2 GW of geothermal capacity by 2034. KISI\nsays, however, that tariff certainty remains a key factor in the\ndevelopment of geothermal projects.<\/p>\n
\u201cThe main obstacle to geothermal development is not geology, but\ntariffs,\u201d KISI\u2019s research team said in a statement on Wednesday (21\nOctober 2026).<\/p>\n
One listed company in the sector is PT Pertamina Geothermal Energy\nTbk (PGEO). KISI says the company\u2019s prospects should be assessed in\nlight of its electricity sales contracts, operational performance,\nfinancial position and delivery of development projects.<\/p>\n
KISI notes that around 96 per cent of PGEO\u2019s revenue comes from\n30-year contracts with state-owned electricity utility PLN. The\ncontracts use take-or-pay arrangements covering 69\u201390 per cent,\nproviding long-term revenue certainty.<\/p>\n
\u201cFor PGEO, around 96% of revenue is contracted with PLN for 30 years\nunder a take-or-pay scheme of 69\u201390%. This means cash flow does not fall\nwhen the index declines,\u201d KISI\u2019s research team said.<\/p>\n
In the first half of 2026, Pertamina Geothermal Energy (PGE) recorded\nrevenue of US$235.027 million, up 14.7 per cent from the same period a\nyear earlier. Net profit reached US$79.605 million, an annual increase\nof 15.48 per cent.<\/p>\n
Operational performance also grew. From January to September 2026,\nPGE\u2019s geothermal electricity production reached around 4,114\ngigawatt-hours (GWh), up 9.8 per cent on the same period last year.<\/p>\n
The cumulative Equivalent Availability Factor (EAF) reached 98.51 per\ncent through September 2026, exceeding the company\u2019s target of 92.20 per\ncent.<\/p>\n
In the first half of 2026, PGE managed 727 megawatts (MW) of\ninstalled capacity independently. The company reported an EBITDA margin\nof 78.3 per cent and a net-debt-to-EBITDA ratio of 0.1 times.<\/p>\n
PGE\u2019s balance sheet showed equity of US$2.006 billion, with cash and\ncash equivalents of US$656.6 million as at June 2026. KISI says\nfinancial strength, contract structures and debt levels are important\nindicators of the resilience of geothermal businesses.<\/p>\n
PGE is developing several projects, including Lumut Balai Units 3 and\n4, Hululais Units 1 and 2, and Lahendong Units 7 and 8. The company is\ntargeting installed capacity of 1 GW by 2028, rising to 1.8 GW by\n2034.<\/p>\n
KISI nevertheless cautioned that several factors could affect PGEO\u2019s\noutlook. One is the pending revision of Presidential Regulation No.\u00a0112\nof 2022 on tariffs for renewable electricity.<\/p>\n
Other factors include the execution of the Hululais project and\ndevelopment of a 45 MW co-generation project. Investors should also\nmonitor the company\u2019s public shareholding, or free float, of 3.9 per\ncent, which needs to be increased gradually, as well as changes in\ninterest rates and the rupiah exchange rate.<\/p>\n
Sentiment in the stock market came under pressure after Morgan\nStanley Capital International (MSCI) announced on 16 October 2026 a\nproposal to reclassify Indonesia from an Emerging Market to a Standalone\nMarket. The proposal is under consultation until 30 April 2027, with a\nfinal decision due no later than 30 June 2027.<\/p>\n
KISI says the proposal has contributed to risk-off sentiment among\ninvestors. The Jakarta Composite Index (IHSG) reportedly fell by 11.57\nper cent, while pressure from foreign fund outflows could continue\ngradually until April 2027. \u201cThe market tends to be selective towards\nstocks with clear cash flows and low debt,\u201d KISI\u2019s research team\nsaid.<\/p>\n
KISI stressed the importance of distinguishing share-price movements\ndriven by market sentiment from changes in a company\u2019s fundamentals.\nBefore making investment decisions, investors are advised to consider\ninstalled capacity, plant utilisation, electricity contracts and\ntariffs, EBITDA margins, and debt levels.<\/p>\n
According to KISI, financial and operational performance should be\nassessed alongside project development strategy and industry prospects.\nShort-term share-price movements remain subject to various market\nfactors, making the timing and direction of any recovery uncertain.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesias-geothermal-potential-reaches-24-gw-with-significant-scope-for-development-1792587134", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }