Indonesia Has Abundant Geothermal Resources, So Why Is Only 11.6% Being Utilised?
JAKARTA — Indonesia’s geothermal energy use remains far below its available potential, despite development having been under way for a century. Of an estimated 24 gigawatts (GW) of potential, installed geothermal power plant capacity stands at just 2,776 megawatts (MW), or around 11.6%.
According to data from the Geological Agency of the Ministry of Energy and Mineral Resources (ESDM) in August 2026, Indonesia’s geothermal potential is spread across 368 locations. This means around 88.4% of the country’s geothermal resources have yet to be developed into power generation capacity.
Fahmy Radi, an energy economics expert at Gadjah Mada University (UGM), said the large amount of untapped potential showed the need to accelerate geothermal investment and exploration. He identified three main issues that needed to be addressed: the economics of electricity tariffs, the availability of supporting infrastructure and fiscal incentives.
“Our geothermal potential is still considerable, but it has not been explored optimally. That is the challenge,” Fahmy said in a statement received on Monday (26 October 2026).
The first issue concerns project economics, particularly geothermal electricity tariffs. Fahmy said the tariff arrangements needed to give developers certainty while also taking account of the country’s electricity supply requirements.
He said dialogue between the government, developers and other stakeholders was needed to find a tariff structure suited to the characteristics of geothermal investment. Geothermal development requires spending on exploration and drilling before a power plant can begin operating.
The second issue is the availability of supporting infrastructure, including roads providing access to project sites. Developers have so far also had to bear the cost of building such infrastructure, increasing investment requirements.
Fahmy said the central and regional governments could take a larger role in providing basic infrastructure. Such support is expected to reduce the initial investment burden and improve the viability of geothermal projects.
The third issue concerns fiscal incentives, including the possibility of tax exemptions for investors. Such policies are considered necessary to make investment more attractive given the substantial capital required for geothermal development.
“Without those three measures, I think it will be very difficult to utilise geothermal energy,” Fahmy said.
Meanwhile, demand for geothermal electricity is expected to rise as the energy transition advances and the country seeks to reduce its dependence on fossil-fuel power plants. Fahmy said geothermal electricity had market potential for both households and industry. “That means there is clearly a market,” he said.
The opportunity is reflected in PLN’s 2025–2034 Electricity Supply Business Plan (RUPTL). Of the planned 69.5GW increase in power generation capacity, 42.6GW is to come from new and renewable energy (EBT), including an additional 5.2GW of geothermal capacity.
Developing this capacity will require long-term investment from the government and businesses. One of the companies involved is PT Pertamina Geothermal Energy Tbk (PGEO), which manages 15 geothermal working areas with total installed capacity of 1,932MW.
Of that total, 727MW is operated directly by the company, while 1,205MW is managed under Joint Operation Contracts. Overall, PGEO’s managed capacity is equivalent to around 70% of Indonesia’s national geothermal capacity.
PGEO aims to increase its directly operated capacity to 1GW by 2028 and 1.8GW by 2034. The targets form part of geothermal development plans to support the expansion of power generation based on EBT.
The year 2026 also marks a century of geothermal development in Indonesia, dating back to the drilling of well KMJ-3 at the Kamojang Crater in West Java in 1926. The well produced dry steam consistently and became one of the early milestones in the national geothermal industry.
Fahmy said the centenary should be used to set clearer priorities for developing domestic energy resources. He said the country’s considerable geothermal potential needed to be matched by investment-supportive policies so the resource could make a greater contribution to energy self-sufficiency.
“Renewable energy development is a necessity that must be pursued continuously and without delay,” Fahmy said.