State electricity company PT PLN has announced a required investment of US$2.7 billion (Rp44.5 trillion) to develop an additional 1 gigawatt (GW) of geothermal power capacity in the country. 

This move is part of a broader strategy to tap into Indonesia's enormous geothermal potential − the second largest in the world after the United States, with an estimated total capacity of 24.6 GW.

“For geothermal energy, we’ve found that historically the cost to develop 1 GW is around US$2.7 billion,” PLN President Director Darmawan Prasodjo told a hearing with Commission XII of the House of Representatives on Wednesday, May 15, 2025.

Darmawan said that although geothermal power plants (PLTPs) require significant upfront capital, the operational costs are substantially lower, especially due to the absence of fuel costs.

“Geothermal energy demands substantial investment upfront for exploration, development, and plant construction. But once operational, the energy is nearly free − it’s very low-cost,” he noted.

PLN is employing a front-loaded investment model, in which most capital is spent during the early stages of project development. Currently, the company has set up partnerships for geothermal projects totaling 2.3 GW of installed capacity, making Indonesia one of the largest geothermal operators globally.

“Some geothermal projects are already commissioned and operational, supported by both domestic and international investors,” Darmawan cited.

In a broader push for renewable energy, the Ministry of Energy and Mineral Resources (ESDM) has set an investment target of US$1.8 billion (Rp29.5 trillion) for renewable energy in 2025, a 28 percent increase from the 2024 target of US$1.4 billion (Rp23 trillion), according to Eniya Listiani Dewi, Director General of New and Renewable Energy and Energy Conservation at the ESDM ministry.

However, the road ahead remains steep. According to estimates from the Coordinating Ministry for Maritime and Investment Affairs, Indonesia needs an additional US$94.6 billion (Rp1,523 trillion) in investment by 2030 to fully realize its renewable energy ambitions.

Indonesia holds immense renewable energy potential, with solar energy leading the way at 3,286 GW, followed by wind power at 155 GW, and hydropower at 95 GW. Harnessing this capacity, including the promising geothermal sector, is seen as a key pillar in the nation’s strategy to transition to cleaner energy and reduce its carbon footprint.