Policy drift threatens Indonesia’s geothermal boom, Petromindo survey shows

Indonesia could squander its world-class geothermal resource unless policymakers move quickly to cut red tape and lift price caps, the Petromindo Survey Division said in its latest survey. The poll, conducted between 5 May 2025 and 15 June 2025, ranks geothermal as the country’s most dependable clean-power option, with 85.9% of respondents calling it more reliable than any other renewable source. Yet only 5.9% believe current government support is adequate, a gap the Petromindo Survey Division says is “eroding investor confidence.”

High upfront costs, exploration risk and community resistance are the sector’s biggest headaches. A majority — 55% — cite social acceptance as the chief obstacle, while 51% point to capital intensity. Two-thirds add that the electricity price ceiling in Presidential Regulation 112/2022 continues to deter investment.

Regulatory design also draws criticism. Nearly 70% want the Independent Power Producer and Geothermal Exploration and Energy Development Agreement frameworks overhauled, arguing that protracted contract negotiations and opaque risk allocation slow project pipelines. By contrast, 88% say a proposed “power-wheeling” regime allowing private generators to sell electricity through PLN’s grid would improve project economics.

Financiers echo the call for certainty. Project-finance structures remain the preferred funding route (35.8% of responses), followed closely by soft-loan mechanisms (32.1%) — a split that tilts toward concessional debt among respondents with more than a decade of industry experience. Regulatory stability and faster permitting top the wish list for unlocking capital, cited by 51.8% and 50.6% of respondents, respectively.

The Petromindo Survey Division concludes that Jakarta must revisit tariff policy, streamline permitting and deploy risk-mitigation funds if it hopes to meet its 2040 geothermal capacity target. “Developers remain upbeat about the resource, but frustration with policy bottlenecks is growing,” the report warns.

Click this link to download the full survey report: https://petroimg.s3.ap-southeast-1.amazonaws.com/Survey+report+geothermal+in+Indonesia.pdf

The Petromindo Survey and Insights Division provides independent surveys, polling services and data-driven market intelligence across Indonesia’s energy, mining and power sectors, supporting companies, policymakers and investors with evidence-based insights for strategic decision-making. For enquiries on customised surveys, polling or market analysis, contact survey@petromindo.com
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