Home Blog Indonesia’s Geothermal Energy: A 2025 Investment Guide Business Setup | ESG Advisory | Indonesia Indonesia’s Geothermal Energy: A 2025 Investment Guide InCorp Editorial Team 22 January 2025 5 minutes reading time Table of Contents Market Overview of Indonesia's Geothermal Energy Sector 12 Geothermal Projects Open for Investment in Indonesia Challenges Facing Indonesia's Geothermal Sector The Future of Indonesia's Geothermal Energy Tap into Indonesia's Geothermal Energy Sector with InCorp Indonesia is a global leader in harnessing geothermal energy. The country is known to hold 40% of the world’s geothermal reserves and ranks second globally in installed capacity. This renewable resource aligns with the nation’s sustainability goals and energy transition efforts. By 2025, Indonesia’s geothermal sector has thrived, driven by government incentives and growing global investment, becoming a key part of its renewable energy strategy. Let’s review Indonesia’s geothermal energy market, investment opportunities, challenges, and future outlook. Market Overview of Indonesia’s Geothermal Energy Sector According to Energy and Mineral Resources Minister Bahlil Lahadalia, Indonesia’s geothermal sector has attracted USD 8.7 billion in investments in the last ten years. The construction of geothermal power plants (PLTPs) has grown eightfold, making Indonesia the world’s second-largest geothermal producer, with 2.6 GW of installed capacity. Furthermore, Indonesia holds an impressive 24 GW of geothermal potential, making up 40% of global reserves. The development of these resources has created nearly 900,000 jobs and contributed IDR 16 trillion (about USD 1 billion) to the economy each year. In addition, geothermal energy in Indonesia is crucial for reducing 17.4 million tons of carbon emissions annually and advancing the country’s goal of achieving 23% renewable energy in its energy mix by 2025. Installed Capacity of Geothermal Energy in Indonesia According to Statista, as of 2023, Indonesia’s geothermal energy capacity reached approximately 2.6 thousand megawatts, a steady increase from the previous year. With nearly 40% of the world’s geothermal potential, Indonesia remains a critical player in the global renewable energy landscape. READ MORE:Indonesia’s Path Towards Sustainable Development GoalsBuilding a Sustainable Future: Carbon Taxation on Coal Use in BusinessesEmbracing The Future of Sustainable Electronic Industry in Indonesia 12 Geothermal Projects Open for Investment in Indonesia The Indonesian government announced at the 2024 UN Climate Change Conference (COP29) in Baku, Azerbaijan, that it promotes geothermal energy development by offering 12 major investment projects. These projects require a total investment of around USD 2.14 billion (IDR 34 trillion) and include a mix of large-scale and small-scale ventures across the archipelago. Lahendong Phase 7 and 8 (2 x 20 MW) – North Sulawesi, by PT Pertamina Geothermal Energy. Sarulla Phase 2 (50 MW) – North Sumatra, by Medco/Ormat/Kyushu/Itochu. Ijen Phase 2 (30 MW) – East Java, by Medco/Ormat. Salak Phase 7 (55 MW) – West Java, by Star Energy Geothermal Salak. Ulumbu (30 MW) – East Nusa Tenggara, by PT PLN. Candradimuka (40 MW) – Central Java, by PT Geo Dipa Energy. Bukit Daun (30 MW) – Bengkulu, by PT Pertamina Geothermal Energy. Klabat Wineru (40 MW) – North Sulawesi, by PT Ormat Geothermal Indonesia. Hu’u Daha (60 MW) – West Nusa Tenggara, by Vale/Antam. Lahendong Bottoming Co-Generation (15 MW) – North Sulawesi, by PT Pertamina Geothermal Energy. Lumut Balai Bottoming Unit 1 and 2 Co-Generation (20 MW) – South Sumatra, by PT Pertamina Geothermal Energy. Ulubelu Small-Scale Co-Generation (30 MW) – Lampung, by PT Pertamina Geothermal Energy. Challenges Facing Indonesia’s Geothermal Sector Despite its immense geothermal potential, Indonesia’s energy sector needs help maximizing this resource. High costs, market competition, and regulatory barriers continue to slow progress, even as the government works to address these issues. Tackling these challenges is critical for ensuring the sector’s growth and contribution to the renewable energy goals. High Costs and Uncertainty Indonesia’s 23.7 GW geothermal potential spans 300 sites, yet exploration is costly and risky. Once expensive drilling is completed, developers often need more certainty about energy output. Remote areas with the most resources need more infrastructure, increasing development costs and logistical challenges. Competition with Cheaper Energy Sources Due to subsidies and low costs, coal dominates 60% of Indonesia’s electricity production. Meanwhile, wind and solar are becoming more affordable, while geothermal energy struggles with high production costs. Without innovation, the government may prioritize other renewable sources. Limited Market Competition State-owned enterprises, notably PT Pertamina Geothermal Energy, control 82% of geothermal production, stifling innovation. Reforms like the Omnibus Law aim to attract foreign investment and introduce competition, but the sector remains tightly regulated. Infrastructure Gaps Geothermal-rich regions lack electricity networks, hindering energy distribution. Poor connectivity, especially in remote areas like Riau, limits the potential of even the most promising projects. Policy Barriers Despite incentives, weak mandates to replace coal with renewables slow geothermal growth. While reforms are encouraging, stronger policies are needed to level the playing field for geothermal energy. The Future of Indonesia’s Geothermal Energy Indonesia aims to reach 7 GW of geothermal capacity by 2030, five years behind its original 2025 goal. According to Fabby Tumiwa, executive director of the Institute for Essential Service Reform (IESR), with annual additions of 200-300 MW, it needs more than 500-600 MW annually. Despite delays, Indonesia’s geothermal sector has immense potential. Progress can be accelerated by addressing policy gaps, enhancing incentives, and adopting innovative technologies. Achieving the 7 GW target will require stronger collaboration between the government, private investors, and environmental stakeholders. Guide to Doing Business in Jakarta Mailchimp Free eBook Indonesia Business Insight Contact Full NameEmail I have read InCorp's Privacy Policy and agree to InCorp using my information provided to contact me about related content, and services.*Subscribe Tap into Indonesia’s Geothermal Energy Sector with InCorp Indonesia’s energy sector’s future relies on sustainable solutions, particularly geothermal energy. Although progress has been slower than anticipated, the commitment to expanding its renewable energy portfolio remains strong. Achieving the 7 GW target by 2030 will necessitate collaboration across various sectors, innovation, and strategic investments. For businesses looking to participate in this green revolution, InCorp can offer you with: Company Registration Services will help you establish your foothold in Indonesia. Business Advisory Services to craft strategies for impactful market entry. Fill out the form below to drive Indonesia toward a greener and more sustainable future. Read Full Bio Verified by Ales Cina Consulting Manager at InCorp Indonesia Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights. Frequently Asked Questions What requirements are needed if my Indonesian company registers the product? Register the product with BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). The type of testing and document requirements depend on the type of product you want to register. Also, the time frame for registration could vary between 3 to 15 months. Can you have a nominee arrangement when setting up PMA? A nominee arrangement is an arrangement that uses another person’s name as a subject. In Indonesia, it is prohibited. This restriction aims to prevent situations where a company is owned by one party but beneficially owned by another. According to the law, any nominee agreement between a local party and a foreign investor is deemed null and void. Does a PMA company in Indonesia have to meet certain criteria before it can distribute dividends? Dividends can be distributed from company net profits after allocating reserves, depending on a positive profit balance. Approval from the general meeting of shareholders is necessary. Interim dividends may be distributed if specific requirements are met. What duties do investors have when they own shares in a company that has been liquidated? Shareholders must appoint a liquidator during the shareholders’ meeting approving liquidation. If no liquidator is appointed, the Board of Directors assumes the role. Creditors can submit claims within two years of the liquidation announcement, provided there are proceeds available. If proceeds have been distributed, shareholders must return them proportionally to settle creditor claims. Whereas employee termination packages vary based on employee status, service years, and reason for liquidation. Get in touch with us. Lead Form Newsletter Full NameEmailPlease provide corporate email where possiblePhone NumberOffice SetupWhich city are you planning to expand into?JakartaSemarang/Central JavaBali/LombokBatam/SumateraSurabaya/East JavaOther ProvincesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Package (20% OFF)[SPECIAL PACKAGE] Product Registration + License Holder (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (25% OFF) + Office Space (Private Office 30% OFF)[SPECIAL PACKAGE] Company Registration + Investor KITAS (25% OFF)[SPECIAL PACKAGE] Accounting + Tax Services+ Annual Fintax Report (20% OFF)[SPECIAL PACKAGE] Payroll Services for Executive Role (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (20% OFF) + Office Service (25% OFF)[SPECIAL PACKAGE] Company Registration + Micro Finance Services (25% OFF)[SPECIAL PACKAGE] Property Assistance: Due Diligence + AJB Purchase/Lease Agreement (25% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesServices Company Registration Renting Virtual and Serviced Office Business and Import Licenses Corporate Recovery and Insolvency Closing of Company (Dissolution) Land and Property Ownership Shelf Company Local NomineeServices Accounting and Tax Reporting Audit and Review Transfer Pricing Compliance Tax RefundHuman Resource Sub Services Payroll Outsourcing Employer of Record Recruitment and HR Establishment Employment ServiceServices Business Visa Work Permit and KITAS Dependent Visa (Spouse and Family) OtherBusiness Visa Subservices Business Visa Visit Visa Visa ExtensionServices Medical Device Beauty (Skincare and Cosmetic) Food and Beverage Health Supplement Household Product Halal Certification TrademarkServices Legal Consultation Legal Agreement Service Due Diligence and Background Check Company Documents RevisionBusiness Advisory Business Advisory Services ESG Reporting & Advisory Internal Audit Risk ManagementMore Services Market Research and Analysis Local Distributor and Partner Bank AccountMessageSubmit What you’ll get A prompt response to your inquiry Knowledge for doing business from local experts Ongoing support for your business Disclaimer The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website. More on Business Setup Market Insights: The Rise of Data Centers in Indonesia Read more Income Taxation System in Indonesia: A Comprehensive Guide 2023 Read more Discovering the Future of the Coal Mining Industry in Java Read more