Asep Sugiharta, an official at the Ministry of Forestry, said that a new bill has been submitted to Indonesia's parliament (DPR) which is expected to open up the potential for geothermal power development in Indonesia. Currently, geothermal exploitation is lawfully defined as a 'mining activity' (Law No. 27 2003) and therefore prohibited to be conducted in protected forest and conservation areas (Law No. 41 1999), even though geothermal mining activities have a relatively small impact on the environment (compared to other mining activities).
As about 60 percent of Indonesia's geothermal energy is located in conservation areas, it therefore seriously blocks the development of the country's geothermal potential. The new bill, which is expected to become in force in April 2014, will separate geothermal development from mining activities.
With about 40 percent of total global geothermal energy potential, Indonesia is estimated to have the world's largest geothermal energy reserves. Indonesia's largest reserves are located in the western part of the country (Sumatra, Java and Bali). However, the country only taps about four to five percent of its geothermal potential as exploration as well as exploitation are hindered by law.
Development of geothermal energy in Indonesia is important as the country's electricity demand increases by around eight percent annually. Currently, Indonesia has one of the lowest electrification ratios (77 percent) in Asia, implying that around 55 to 60 million Indonesians are not connected to the nation's electricity grid yet.