Geothermal as the Solution for Indonesia’s Electricity Shortage: How Does Indonesia’s Political Condition and Policies Affecting It?

Topics: Energy development, Geothermal power, Electricity generation Pages: 10 (3645 words) Published: November 27, 2009
Geothermal as the Solution for Indonesia’s Electricity Shortage: How does Indonesia’s Political Condition and Policies affecting it?

Introduction

The current condition arises within Indonesia is the electricity shortage. This can be seen as numbers of black outs happens in every part of Indonesia’s region of which conducted due to save the electricity reserves. Such problems happen because as an abundance country in which very rich with natural resources, including the source of potential energies that can be generated as electricity, Indonesia’s electricity production concentrates more on the conventional thermal sources—oil, natural gas and coal. By looking at the world reserves of these conventional thermal sources, Indonesia’s oil reserve is only 0.6 percents from total world reserve, Indonesia’s gas reserve is only 1.4 percents and coal reserve is only around 3.1 percents from the total world reserve. Thus, we cannot say that Indonesia is poor in fossil fuel energy, indeed. However, we are very far than rich of it. But then, the cliché condition is that we put fossil fuel as a primary resource to produce electricity (look at Table 1 and Table 2). Malla (1993) stated that the fossil fuels provide at least 59% of total energy consumption in 1974 to 63% in 1992 (excluding Vietnam). This dependence on fossil fuels is greatest in relatively more developed economies (based on country’s per capita GDP) in South East Asia (SEA) such as Brunei, Indonesia, Malaysia, Singapore, and Thailand, where over 80% of all energy needs for power generation in 1992 are provided by fossil fuels, compared with about 45% in less developed economies (for e.g., Myanmar, Philippines, and Vietnam). And that is what has leaded us to electricity shortage today[1]. Moreover he also stressed out that among the type of fossil-fuel intensities; Indonesia has the highest average oil intensity during the period of 1983-92. Though later Indonesia then makes a generation-mix of fossil-fuel with coal and natural gas (look at Figure 1) as Indonesia’s production on oil decreases in the following year (Figure 2), still the portion oil intensity in producing electricity is still high. Moreover, according to Tumiwa (2008) oil is no longer dominate primary energy supply but it share still consider high and likely to continue in the next few decade and will still be an issues for Indonesia’s energy insecurity. Based on the Energy Infomation Administration report (2007), during 2004, Indonesia generated 112.6 billion kilowatt-hours (Bkwh) of electricity, of which 86 percent came from conventional thermal sources (oil, natural gas, and coal), 8 percent from hydroelectric sources, and 5 percent from geothermal and other renewable sources. In addition, even with such mix of fossil-fuel with coal and natural gas (or known as the conventional thermal resources) Indonesia will still face the electricity shortage if we put a lot of portion to these sources as they are also limited, look at Table 3. Tumiwa (2008) stressed that to Indonesia, the renewable sources is the one that offer huge potentials to solve its problem of electricity shortage or insecurity. One of them is Geothermal. Thus, this paper will analyze more of this sources and assessing whether how does this situation viewed by the investors: Is there a business opportunity there? Though its is unlikely possible for a government to open entire this market, as it will contradict to the Indonesia’s legislation, but is there a business opportunity possibilities opens in form of partnerships for example that being stresses in this paper. And how does Indonesia’s political situations through its policies associated with geothermal development to create possible business opportunity for investors to take part in Indonesia’s geothermal development? The organization of this paper is as follows. The next part will be the choice of alternative energy, the reasons and the...

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Source: Malla (1993)
Table 2: Total Fossil Fuels Consumption (thousand toe) for Selected Years and Average Annual Growth Rate (AAGR) for Fossil Fuels, 1974 -1992 (%).
[pic]
Source: Malla (1993)
Source: (Tumiwa, 2008)
Table 4: Renewable Energy Industry Risk Overview
Source: Deloitte Department of Energy Development (2008)
Table 5: Indonesia’s Electricity Demand Growth Prediction[2]
Figure 1: Indonesia Evolution of Electricity Generation by Fuel, 1971-2005
[pic]Source: OECD/IEA (2007)
Figure 2: Indonesia’s Oil Production and Consumption, 1986-2006
[pic]
Source: OECD/IEA (2007)
Figure 4: Indonesia’s Primary Challenges in Electricity Sector
Source: Praptono (2008)
Figure 5: Indonesia’s Projected Additional Generation Capacity[3]
[2] Cited from Praptono (2008)
[3]Cited from Praptono (2008)
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