Investment in Indonesia’s geothermal sector is heating up this year, with renewed interest from global investors. After years of moderate activity, the shift toward green, eco-friendly energy has captured the attention of financiers, many of whom are now moving away from fossil fuels to invest in sustainable alternatives.
The Director of State Wealth at Indonesia’s Ministry of Finance, Meirijal Nur, reported that several capital sources are eyeing investment opportunities in Geo Dipa, including state investment funds, foreign investors, and philanthropic contributors.
Because of this influx, PT Geo Dipa Energi (Persero) currently has no immediate plans for an Initial Public Offering (IPO), though it remains a possible option to raise additional capital.
Geothermal Sector’s Contribution to National Revenue
PT Geo Dipa energy contributes significantly to Indonesia’s annual revenue—averaging IDR 200 billion. Geo Dipa is a state-owned enterprise under the Ministry of Finance (95% ownership) with the remaining 5% held by the State Electricity Company (PLN).
“We contribute our profits/deposits to the state of IDR 200 billion a year. But it may fluctuate due to changes in production levels each year.” said Director of of Business Development and Exploration, PT Geo Dipa Energi Ilen Kardani, quoted from investor.id in a media briefing in Bandung on Thursday (7/11/2024) evening.
As outlined in Presidential Decree No. 49 of 1991, geothermal enterprises are required to pay the government 34% of their Net Operating Income into a geothermal account at Bank Indonesia.
In addition to general tax obligations, companies must also provide a production bonus, amounting to 0.5% of their gross revenue, directly to the local governments in Dieng and Patuha, where their geothermal working areas are located, as stipulated in the Ministry of Energy and Mineral Resources Regulation No. 23 of 2017.
Strategic Investment Partnerships in Green Energy
Ilen highlighted that Indonesia’s tax incentives are appealing to investors and should be implemented promptly to support geothermal growth.
“Nearly every month, we receive proposals for geothermal partnerships. The global transition to green energy is creating a prime opportunity for us,” he stated.
Looking ahead, Geo Dipa aims to partner with strategic investors and take advantage of green financing options.
“Our strategy is to strengthen alliances with investors who can support the development of geothermal energy. We see strong potential for green loans, which are increasingly being offered,” added Meirijal Nur, quoting infobanknews.com.
Currently, over ten geothermal projects in the Dieng region, including Units 3 and 4, have secured funding. With the global shift towards green energy and the possibility of a carbon tax, Ilen is optimistic about geothermal’s growth potential, as it aligns with the increasing demand for clean energy.
Growing Investor Interest and Future Targets
Interest from investors has been strong, particularly for geothermal projects in Patuha and Dieng, and the sector is expected to see continued growth over the next decade. Indonesia, with the second-largest geothermal reserves worldwide after the U.S., has an installed geothermal capacity of 2.3 gigawatts (GW), placing it among the global leaders in renewable energy.
PT Geo Dipa Energi also plans to increase its geothermal energy mix from the current 120 GW to 260 GW over the next two years, targeting a 10% share of the national energy mix. Investor interest in these projects is largely driven by a focus on green energy development.
“Fortunately, we’re already operating within the green energy sector, unlike others still focused on fossil fuels, so we’re a primary destination for green energy investment. If a carbon tax is introduced, we expect green energy investments to thrive even more,” Ilen stated, quoting kontan.co.id.
Infrastructure Development to Support Investor Influx
Geo Dipa has established a competitive position in the international geothermal market. According to Ilen, the company has already sold carbon credits worth USD 10 million, even as the project remains in early stages, signaling significant potential in the global carbon market.
However, to fully accommodate investor interest, Indonesia still needs further development in its foundational infrastructure. While there’s no shortage of investor interest in Indonesia’s green energy sector, enhanced infrastructure will be key to efficiently managing new investment flows.
Sources: investor.id, infobanknews.com, kontan.co.id
Image source: pexels.com
