The Finance Ministry recently issued a new ministerial decree regulating the management of funds for the geothermal sector by state-owned infrastructure financing company PT Sarana Multi Infrastruktur (SMI).
The new decree stipulates that SMI will be able to supply funds to be used for loans, capital or exploration activities to compile data.
“For loans or capital, SMI will supply the funds based on a business corporation scheme with SMI. Meanwhile, [funds] for geothermal data and information will be based on assignments by the Finance Ministry,” a press statement said.
SMI’s funding is expected to help minimize the risks that come with the large investments needed during the exploration stage, which has led to a lack of eagerness from prospective investors.
The government hopes the funds will help with new discoveries, which will eventually increase the use of geothermal for electricity generation.
Indonesia is estimated to have 29 gigawatts (GW) of geothermal potential. However, it still operates geothermal power plants with an installed capacity of 1,698.5 megawatts (MW), but aims to increase it to 1,858.5 MW by the end of the year.
In the long run, the government hopes to generate up to 7,200 MW by 2025, 3.8 percent of the total targeted 23 percent share of the national energy mix for renewable sources.