Geothermal power accounts for about 6% of Indonesia's energy generation, with the government aiming to increase this to 8% by 2030. (Photo: PLN)
As part of the Pacific Ring of Fire, Indonesia and the Philippines possess rich geothermal resources, and both governments are actively investing in their development.
However, the high risks associated with geothermal projects limit financing, and local concerns over safety and environmental impacts have become key barriers to the industry’s growth.
ASEAN geothermal potential estimated to grow tenfold
Geothermal energy, which is not weather-dependent, has a long lifespan, low maintenance requirements, and can provide low-carbon energy around the clock. However, much of its potential remains untapped. Indonesia and the Philippines are the world’s second and third-largest users of geothermal energy after the United States, yet Indonesia has only developed 10% of its geothermal reserves, while the Philippines has developed just 8%.
In Indonesia's energy mix, geothermal contributes around 6%, with a government target to increase this to 8% by 2030, making it the second-largest renewable energy source after hydropower. Currently, geothermal energy is used both for heating and power generation, with the government introducing co-generation technology to convert excess heat into electricity, thereby improving energy efficiency.
In the Philippines, geothermal already accounts for the largest share of renewable energy, contributing 14.6% of the country’s energy usage. The government aims to double the installed capacity to 1.5 GW, nearly doubling the current scale.
With growing demand for renewable energy worldwide, the International Energy Agency (IEA) projects that geothermal power generation in Southeast Asia will reach 276 million MWh by 2050, a tenfold increase from 2020.
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Palinpinon Geothermal Power Plant. Geothermal energy is the largest renewable energy source in the Philippines. (Photo: Energy Development Corp.)
Two major challenges in geothermal development
One of the reasons geothermal energy still has significant room for growth is the high risks and costs associated with early-stage development, which make it difficult to attract investment. Shigeru Yamamura, an energy expert from the Asian Development Bank (ADB), stated that developers' biggest challenge is they cannot financially take100% of the exploration risks themselves.
To address the financing issue, the Philippine government has introduced a geothermal auction policy and established a fund aimed at raising $250 million to help developers reduce risks. Indonesia has incorporated geothermal into its energy transition development plan, with the government promising to shorten project approval times and increase the return on investment for geothermal projects. The state-owned utility company, PLN, has also responded to the policy by pledging to accelerate geothermal development.
However, securing sufficient funding is not the only challenge; the concerns of local communities must also be addressed. In Indonesia, several fatal incidents of natural gas leaks in geothermal areas over the past five years have raised safety concerns among residents.
In the Philippines, there are worries that geothermal development could lead to land degradation, prompting developers to pay royalties to local indigenous groups. Both countries are considering regulatory reforms to remove these barriers and unlock the vast clean energy potential beneath the ground.
Source: AP, Asian Power, The Inquirer
