SECTOR REPORT: GEOTHERMAL
Modest geothermal growth to persist in Asia There are very few growth drivers expected over the coming years, even in particularly tectonically-active areas.
Wayang Windu Geothermal Plant in Indonesia
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sia Pacific’s geothermal sector has reached a standstill following the impacts of the COVID-19 pandemic. This is despite the rising demand for geothermal power amidst carbon neutrality pledges of several corporations and countries over the past years. Whilst opportunities for the market are continuously appearing, recent actual growth was driven by only a few markets due to geographical restrictions and the indiscernible amount of pandemicrelatedconstraints on activity. Fitch Solutions Infrastructure and Power & Renewables Analyst Daine Loh noted that the chances of geothermal faring in these pledges are dependent on the location of resource potential. “We have only really seen this dynamic playing out in New Zealand, as its geothermal sector might benefit from its goal to achieve 100% renewable energy (including hydropower) by 2030; a target that has recently been brought forward by five years from 2035,” Loh said. A report from Fitch Solutions forecasts that by 10 years, New Zealand will be the fifth-largest market globally in terms of installed geothermal 16 ASIAN POWER
capacity. It expects the country’s geothermal capacity to grow by 302 megawatts (MW) and account for just under a fifth of total electricity output. “We highlight further upside risks for growth in the market as the New Zealand government has set a goal of reducing the role of coal- and gasfired generation in the power mix by boosting geothermal, wind, solar, and biomass power generation,” the Fitch Solutions report reads. For most, the market has to be met with caution amidst issues on supply chain disruptions, financial headwinds, and the interruption of business activity from the pandemic. In Asia Pacific, geothermal’s recovery will be driven predominantly by Indonesia and the Philippines, two of the region’s geothermal giants based on power generation capacity, despite issues these markets currently face. A key priority Despite modest geothermal growth of Indonesia, government-led exploration drilling is being initiated in multiple working areas. According to Institute for Energy Economics and Financial Analysis (IEEFA) energy finance analysts, Putra
China remains the world leader in respect of total hydropower installed capacity with over 370 gigawatts
Adhiguna, Elrika Hamdi, and Sam Raynolds, the campaign is expected to help lower the risk for potential investors, and to narrow the gap between investor expectations and the power purchase price which could be afforded by the state utility company, PT Perusahaan Listrik Negara (PLN). “This new development is also followed with a rising interest in utilizing slim-hole exploration wells to lower cost and further mitigate the exploration risks,” the analysts said. The three analysts also noted that tariffs remain a key challenge, and investors are waiting for the issuance of presidential regulation on renewable energy tariffs which will likely define the future outlook for Indonesian geothermal market. In 2020, the Indonesian ESDM Ministry has postponed the auctioning of new working areas whilst awaiting the new regulation and expanding available geological information on the working areas. A number of expansion plans have been noted on the existing areas such as the 70 MW expansion by Star Energy Geothermal and 110 MW plan by Geo Dipa Energi. There are also talks of a plan to construct a geothermal holding
