Governing law and regulation
- Law No. 30/2007 on Energy
- Law No. 17/2019 on Water Resources
- Law No. 21/2014 on Geothermal Energy
- Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No. 37/2018 concerning Offering of Geothermal Working Areas, Granting of Geothermal Permits, and Assignment of Geothermal Businesses
Utilization of geothermal energy can be done in two ways, namely through direct utilization and indirect utilization. Indirect utilization is the exploitation of geothermal energy through the process of converting heat and/or fluid energy into electrical energy while direct utilization is the exploitation of geothermal energy directly without converting heat and/or fluid energy into other types of energy for non-electrical needs.
Geothermal exploitation for indirect utilization
Indirect utilization of geothermal energy is used for generating electricity for its own benefit or for public interest. Indirect utilization of geothermal energy can be carried out by legal entities operating in the geothermal sector in the form of state-owned enterprises, regionally-owned enterprises, cooperatives, or limited liability companies and established under Indonesian law and domiciled within the territory of the Unitary State of the Republic of Indonesia (“Business Entities“).
Work area
Geothermal exploitation for indirect use is carried out in an area with certain coordinate boundaries or is called a work area. The working area can be obtained through the auction method, direct appointment, or through the Preliminary and Exploration Survey Assignment (PSPE).
- By auction
The auction is conducted by the Minister of Energy and Mineral Resources in 2 (two) stages. In the first stage, bidders will be determined who meet the qualifications for geothermal exploitation for the completeness of administrative requirements and technical and financial aspects. Then in the second stage there will be a selection of bidders who will be given business permits by the Minister. Later in the second stage, there will be a rebuttal period in which the bidder who feels aggrieved, either alone or together with other bidders, can submit a rebuttal to the Auction Committee for the announcement of the results of the evaluation of the second stage of the cover 1 (one) bidding document. Such rebuttal may be made if the Bidder finds deviations from the provisions and procedures of the auction as stipulated in the Bidding Documents, certain manipulations resulting in unfair competition and/or abuse of authority by the Auction Committee or other authorized officials. In determining the ranking of the potential auction winners, the committee assesses the amount of the Exploration Commitment from the bidders. This ranking will later be submitted to the Minister and then the Minister will determine the winner of the auction for the work area
- By direct appointment
Direct appointment of the geothermal indirect utilization work area can be done if in the first stage of the auction there is only one bidder or only one bidder who meets the qualifications and the auction has been repeated once again. In the direct appointment method, participants will first submit bid documents to the committee and then the committee will evaluate the project development proposal in the bid document. In the event that the project development proposal is declared unfit, the tender committee returns the bidding document for revision. If it is declared eligible, the auction committee will evaluate the Exploration Commitment bid on the second stage of the bidding document in cover 2 (two). If based on the evaluation of the Exploration Commitment offer does not meet the requirements, the participant will be disqualified. However, if the Exploration Commitment in the bid document meets the requirements, the participant will be proposed by the Auction Committee to the Minister to be determined as the winner of the auction.
- By preliminary and exploration survey assignment
In determining the Working Area, the energy ministry determines the Work Area based on Geothermal Data and Information from the Preliminary Survey or Preliminary and Exploration Survey. In conducting Preliminary Surveys or Preliminary and Exploration Surveys, the ministry may assign Other Parties. Business entities are one of the parties who are given the opportunity to be able to carry out PSPE.
Business License
In order to make indirect use of geothermal energy, a business entity must first fulfill a business permit in the Geothermal sector. The business license in the Geothermal sector will later be granted by the government to the Business Entity based on the results of the offer of the Working Area. In the event that Geothermal exploitation activities for Indirect Utilization are in a Forest Area, the holder of a business permit related to Geothermal is required to fulfill a business permit in the forestry sector in accordance with the provisions of the legislation.
Geothermal business permits are determined based on the results of the risk analysis. Business licensing to support business activities in geothermal exploitation includes
- registration of geothermal supporting businesses,
- certification of equipment, installation, welding procedure specification/procedure qualification record and geothermal welder;
- Business Licensing for geothermal exploitation;
- approval of the feasibility study for the geothermal power plant project approval of the
- import of geothermal goods
Risk-Based Business Licensing for geothermal exploitation is carried out through an electronically integrated business licensing system whose use can be accessed via this link. Meanwhile, to find out the Risk-Based Business Licensing Standards in Geothermal Businesses, it can be accessed via the following link.
Geothermal business for direct utilization
Direct utilization of geothermal energy is used for tourism, agribusiness, industry, and other activities that use geothermal energy for direct use. In the event that the direct utilization of geothermal energy is in a conservation forest area, geothermal exploitation can only be used for nature tourism activities.
Direct utilization of geothermal energy can be carried out by individuals or corporations, both legal entities and non-legal entities. In order to make use of them, they must first obtain a business permit related to direct use. Business licenses for direct geothermal utilization are granted by the government, provincial administration or regency/mayoralty regional administrations in accordance with their respective areas of authority. The division of areas under the authority of the central government are:
- Cross-provincial areas including Production Forest Areas and Protected Forest
- Areas Conservation Forest
- Areas Conservation areas in waters
- Sea areas more than 12 (twelve) miles measured from the coastline towards the high seas throughout
- Indonesia Earth for indirect use located throughout Indonesia, including production forest areas, protected forest areas, conservation forest areas, and marine areas.
Meanwhile, the authority of the provincial administration lies in:
- across regencies/municipalities within one province, including Production Forest Areas and Marine Protected Forest Areas
- at a maximum of 12 (twelve) miles measured from the coastline towards the high seas and/or towards archipelagic waters.
For mayoralty/regency administrations, the areas under their authority are:
- mayoralty/regency areas, including production forest areas and
- marine protected areas at a maximum of 1/3 (one third) of the sea area under provincial authority.
Business permits related to direct utilization granted by the provincial administration and mayoralty/regency administrations are carried out in accordance with the norms, standards, procedures, and criteria set by the government. Business licenses related to Direct Utilization are granted after obtaining environmental approval in accordance with the provisions of laws and regulations in the field of environmental protection and management.
