RI's volcano power could light up the archipelago

RI's volcano power could light up the archipelago

Eric Unmacht, Deutsche Presse-Agentur, Jakarta

Geothermal energy enthusiasts talk about the golden days of
promise for the industry almost like techies in Silicon Valley
about the boom days before the Internet bubble gave way.

"Before, (geothermal) was very, very attractive," said Udibowo
Ciptomulyono, senior officer for primary energy management at the
state-owned PLN electric company, as he eagerly sorted through
stacks of books, maps and reports that give evidence to the
country's vast potential in the field.

"Ten years ago I was the head of a division," Ciptomulyono
said. "Every month we had gatherings and many people would come.
There was so much excitement among investors. Now there's no
department. It's only me."

Indonesia's recent ratification of the Kyoto Protocol in June
could put alternative energies like geothermal back in investors'
scopes, but experts are pessimistic that the industry can realize
its true potential unless a new government emerges to play a more
active role in promoting it.

Home to some 500 volcanoes -- the world's highest
concentration, known as the "ring of fire" -- Indonesia could, in
theory, generate enough geothermal energy to electrify the entire
country.

By using the steam generated by lava flows under inactive
volcanoes, geothermal power in Indonesia could account for more
than 27,000 megawatts of power -- an estimated 40 per cent of the
world's total reserves.

Nevertheless, Indonesia's current electricity generating
capacity from geothermal power is just over 800 megawatts, or
about 3 per cent of its total potential. Indonesia has instead
chosen to rely on fossil fuels to energize the country.

But this wasn't always the case.

In the late-1980s the Indonesian government began to seriously
promote exploration in geothermal energy. At least 11 geothermal
contracts were awarded and some 30 sites were approved for
development in the early 1990s.

The promise of geothermal as an energy source, however, left
largely with the investors who fled after the 1997 financial
crisis, and further diminished with the ouster of former
president Soeharto a year later.

"There was more promise (for geothermal) under Soeharto," said
Riki Ibrahim, Indonesia's representative for the International
Geothermal Association.

"There was good coordination of ministers and they would
implement things," Ibrahim said. "They would think long-term."

The economic and political uncertainty that followed
Soeharto's fall made geothermal energy, which typically involves
long-payback periods, lose a lot of its luster for investors and
officials in the successive chain of governments.

However, with the signing of the Kyoto Protocol, investors are
eligible for millions of dollars in grants under the emissions
credits trading system.

Nonprofit organizations, government officials and members of
the private sector were trying to ensure this incentive is not
lost by planning to launch a Designated National Authority last
week to help companies navigate the cumbersome and expensive
process of applying for the grants.

Nevertheless, experts still remain skeptical about hopes for
geothermal's immediate development as a major energy source for
Indonesia due to what they see as a lack of incentives for the
government.

"What happens depends on the political will," said PLN's
Ciptomulyono.

The incentive to turn to alternatives has historically been
lacking in Indonesia, due to the enormous revenues drawn by the
country's hefty reserves of oil, coal, gas and other highly-
profitable natural resources.

"The companies will enjoy money from the emissions credit and
also the reputation of being a clean company," Ibrahim said.
"Their stock will go very high because people will see them as
sustainable, but what's the government going to get out of it?"

Experts say the government's support of clean, alternative
energy is crucial to lure investors, as electricity is a
difficult commodity to trade and is not a highly-profitable one.

Industry advocates say the government needs to provide
investors with incentives, either in the form of tax breaks or by
covering the financial risk of exploration and data collection as
is often done with fossil fuels.

But industry advocates also say this is unlikely in a
government prone to corruption, due to the financial incentives
for individual officials from existing energy sources.

Given the fact that Indonesia, the only Asian member of the
Organization of Petroleum Exporting Countries (OPEC), became a
net importer of oil just this year, there may be more incentive
in the future for politicians to give geothermal another look.

But for now, experts say it's going to take a peaceful
transition to a new government with less corruption and more
foresight for the country before Indonesians see geothermal
energy illuminating the archipelago.

"I hope the new president will care," Ibrahim said. "We should
be the number one (geothermal energy producer) in the world."