JAKARTA, Indonesia — Geothermal energy presents a compelling energy solution for nations like Indonesia and the Philippines, known for their abundant geothermal resources. This clean energy source operates continuously and occupies minimal land, making it a favorable alternative as governments pivot away from heavily polluting fossil fuels.
However, a significant portion of geothermal potential remains unrealized across these nations. The challenge lies in financial constraints, regulatory hurdles, and community opposition that have hindered the progress of this promising energy source. Fortunately, improvements in financing options and domestic regulations are underway, yet experts assert that further efforts are necessary to unlock the considerable clean energy reservoir lying beneath the Earth’s crust.
Countries such as the United States, Indonesia, and the Philippines boast high geothermal potential, primarily situated in tectonically active areas. Here, hot water or steam is naturally transported to the surface through volcanic processes or can be accessed through shallow drilling. “We’re essentially standing on our own sun, which we can get clean, reliable energy from,” noted Marit Brommer, CEO of the International Geothermal Association, highlighting the immense opportunity available.
Geothermal power plants are praised for their reliability, as they can provide a constant energy supply that meets baseline demand, unaffected by changing weather conditions. Additionally, these plants boast prolonged operational lifespans and require minimal maintenance. This trend suggests that geothermal energy use could expand significantly; projections indicate that in Southeast Asia, geothermal power generation is anticipated to skyrocket tenfold from 2020 to 2050, with an output of 276 million megawatt-hours expected according to the International Energy Agency.
Indonesia and the Philippines, located on the seismically active “Ring of Fire,” are the second and third largest geothermal energy consumers globally, respectively. While the United States tops the list, Indonesia utilizes less than 10% of its vast geothermal reserves, contributing merely 6% to its total power supply. Conversely, the Philippines has developed approximately 8% of its geothermal capacity, which now accounts for 14.6% of its overall energy usage and stands as the largest renewable energy source in the country.
Both nations are working to enhance their geothermal energy production as they transition away from fossil fuels. Indonesia plans to increase geothermal power generation to at least 8% by 2030, positioning it as the second-largest renewable source after hydropower. Meanwhile, the Philippine government is pursuing several initiatives aimed at nearly doubling its geothermal capacity by adding around 1.5 gigawatts.
Nevertheless, the exploratory phases of geothermal development—where preliminary tests and drilling occur to assess the sites’ viability—tend to be expensive and risky, complicating financing efforts for developers. “That’s the most difficult part for developers, because they cannot shoulder the entire exploration risk on their own,” emphasized Shigeru Yamamura, an energy expert at the Asian Development Bank.
Climate financing remains scarce for most Southeast Asian nations. A recent assessment indicated that only 9% of available finance for the region, which includes both Indonesia and the Philippines, is directed toward geothermal projects.
A 2024 ASEAN energy report suggests that “blended finance,” which combines public and private funding along with grants and green bonds, could help overcome this financing gap. The Philippine government is also launching green energy auction programs for geothermal projects and is laying groundwork for a “smart green grid plan” designed to prioritize renewable energy, crucial for attracting banks to lend to private developers. Such developments are seen as encouraging advancements in policy to facilitate investment, according to Yamamura.
In Indonesia, President Prabowo Subianto has underscored the significance of geothermal energy in the country’s energy transition. The Ministry of Energy and Mineral Resources is focused on expediting permit approvals and exploring strategies to enhance investment returns for geothermal projects. Moreover, the state electric utility company is committed to elevating geothermal energy initiatives.
Furthermore, the World Bank is supporting this effort with a $150 million loan aimed at mitigating early exploration risks, supplemented by a $127.5 million contribution from the Green Climate Fund and the Clean Technology Fund.
Even with secured funding, local opposition can impede progress. In Indonesia, there have been protests from residents concerned about safety and environmental hazards, especially after reports of gas leaks at several geothermal sites in recent years. Additionally, some communities are unaware of the benefits geothermal energy development may bring, according to Timothy Ravis, a doctoral student focusing on global development at Cornell University.
Similar issues have arisen in the Philippines, where indigenous groups have demanded royalties from a company over land degradation issues related to geothermal development. Experts urge governments and corporations to engage communities near geothermal projects, ensuring that such developments provide equitable benefits. “We need to demonstrate that this development benefits all people, not just the corporations,” Brommer stated. “It’s not merely about being a good neighbor; it’s about being the best neighbor and actively collaborating with communities to respect their aspirations.”