Philippine power giant First Gen has struck a deal with Indonesian conglomerate Sinar Mas to develop geothermal energy resources in the world’s biggest potential market for subterranean power.
First Gen, through geothermal subsidiary Energy Development Corporation, is planning to develop 440 megawatts (MW) of power by tapping underground energy across six sites in West Java, Flores, Jambi, West Sumatra, and Central Sulawesi.
The Philippine company, which is the world’s biggest integrated geothermal firm, enters a market dominated by state-owned Indonesian companies, which to date have exploited just 10 per cent of Indonesia’s total geothermal reserves of around 24 gigawatts (GW).
Seismically active Indonesia has 40 per cent of the world’s reserves of geothermal energy, which is heat stored beneath the earth’s crust. Geothermal is a renewable resource that could cut Indonesia’s reliance on coal. Currently, geothermal contributes to just 4.8 per cent of Indonesia energy mix, while coal contributes 62 per cent.
However, new additions to Indonesia’s geothermal capacity have been snail-paced, with an average annual growth rate of around 40 MW between 2023 and 2024 – far below the 450 MW per cent year needed to meet its national target of 8 per cent of the energy mix by 2030.
Despite Indonesia’s geothermal potential, the industry is challenged by the remote location of underground reservoirs and the costs and uncertainties associated with exploration, land clearing, and drilling.
EDC chief executive Francis Giles B. Puno, who is president and chief operating officer of First Gen, said the partnership with Sinar Mas subsidiary PT DSSR Daya Mas Sakti would help build capacity and knowledge transfer in Indonesia’s geothermal sector.
EDC runs 13 geothermal plants in the Philippines and is planning to drill 19 new geothermal wells in its home market ahead of its 50th anniversary next year.
