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Governance Obstacles to Geothermal Energy Development in Indonesia

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  • Matthew S. Winters
  • Matthew Cawvey

Abstract

Despite having 40 per cent of the world’s potential for geothermal power production, Indonesia exploits less than five per cent of its own geothermal resources. We explore the reasons behind this lagging development of geothermal power and highlight four obstacles: (1) delays caused by the suboptimal decentralisation of permitting procedures to local governments that have few incentives to support geothermal exploitation; (2) rent-seeking behaviour originating in the point-source nature of geothermal resources; (3) the opacity of central government decision making; and (4) a historically deleterious national fuel subsidy policy that disincentivised geothermal investment. We situate our arguments against the existing literature and three shadow case studies from other Pacific countries that have substantial geothermal resources. We conclude by arguing for a more centralised geothermal governance structure.

Suggested Citation

  • Matthew S. Winters & Matthew Cawvey, 2015. "Governance Obstacles to Geothermal Energy Development in Indonesia," Journal of Current Southeast Asian Affairs, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 34(1), pages 27-56.
    • Handle: RePEc:gig:soaktu:v:34:y:2015:i:1:p:27-56
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    1. Setiawan, Andri D. & Dewi, Marmelia P. & Jafino, Bramka Arga & Hidayatno, Akhmad, 2022. "Evaluating feed-in tariff policies on enhancing geothermal development in Indonesia," Energy Policy, Elsevier, vol. 168(C).
    2. Satya Widya Yudha & Benny Tjahjono & Philip Longhurst, 2022. "Unearthing the Dynamics of Indonesia’s Geothermal Energy Development," Energies, MDPI, vol. 15(14), pages 1-18, July.
    3. Dissanayake, Sumali & Mahadevan, Renuka & Asafu-Adjaye, John, 2020. "Evaluating the efficiency of carbon emissions policies in a large emitting developing country," Energy Policy, Elsevier, vol. 136(C).
    4. Chelminski, K., 2018. "Harnessing the Ring of Fire: Political economy of clean energy development finance on geothermal development in Indonesia and the Philippines," Cambridge Working Papers in Economics 1804, Faculty of Economics, University of Cambridge.

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