Can the Government-Supported Exploration Boost Geothermal Investment?
Summary
- The drilling scheme will not be effective in attracting investments. On paper, the government drilling concept does seem appealing because the risk of any exploration failure will be the government’s responsibility. However, in practice, restrictions set by the government make it less impactful.
- The government needs to guarantee that the drilling works. Investors hope for the government’s reassurance that proven reserves of these wells are sufficient. They expect the government, in this case, the Energy and Mineral Resources Ministry’s Geological Agency, to issue the NORC and a feasibility study as a reference during the work area auction.
- Unclear rate regulations will potentially drive away investors. In addition to investor skepticism about the government drilling scheme, the absence of regulations on the NRE electricity rate is also hampering Indonesia's geothermal development. Geothermal developers are currently waiting for the issuance of a Presidential Regulation (Perpres) on the NRE-based electricity rate, including the geothermal one.