An economic expert has lent his support for President Prabowo Subianto government’s plan to leverage geothermal energy as a key component to achieve energy self-sufficiency in Indonesia, intending to offer incentives to attract investment in the sector.
Economist from Yogyakarta-based Gadjah Mada University (UGM), Fahmy Radhi, emphasized that fostering a favorable investment climate is crucial for optimizing geothermal energy development.
“Offering incentives to investors interested in geothermal projects will undoubtedly make the sector more attractive,” Fahmy said on Monday, October 21, 2024.
He pointed out that then President Joko “Jokowi” Widodo previously introduced substantial fiscal incentives for nickel downstream investors, which resulted in significant Chinese investment. Prabowo could adopt a similar approach to prioritize geothermal energy development.
One challenge Fahmy highlighted is the location of geothermal sources, often in mountainous areas with difficult access. He noted that investment is needed not only for power generation systems but also for logistical infrastructure.
Fahmy suggested that the government could help by building necessary infrastructure, such as roads, through central or regional government budgets.
Fahmy also urged the Prabowo Subianto-Gibran Rakabuming Raka administration to maintain a consistent focus on developing renewable energy sources to meet Indonesia’s net zero emission target by 2060.
Currently, Indonesia’s clean energy mix stands at around 12.5 percent, far below the 23 percent target set for 2025.
“If the government consistently supports renewable energy development without interference from oligarchic lobbying, I believe that by the end of Prabowo’s administration in five years, Indonesia could reduce its reliance on foreign energy sources,” Fahmy said.
Prabowo and Gibran were inaugurated as President and Vice President of the Republic of Indonesia for the 2024-2029 term in a plenary session of the People’s Consultative Assembly (MPR) in Jakarta on Sunday, October 20, 2024.
In his inaugural address, Prabowo expressed confidence that under his leadership, Indonesia can achieve energy independence.
He cited the country’s potential in various renewable energy sources, including palm oil, cassava, sugarcane, and corn, as well as its abundant geothermal, coal, and hydropower resources.
“We have ample underground geothermal energy, a vast supply of coal, and significant hydropower resources. My government will focus on achieving energy self-sufficiency,” Prabowo said in his inaugural speech.
