Image: Puhagan geothermal plant.jpg – Wikimedia Commons
Why Geothermal?
Geothermal energy is known for its high availability and reliability. It provides a continuous and sustainable energy supply, which most geothermal power plants run at over 90% availability. Geothermal power plants have a high capacity, typically operating at over 80%, making them reliable for meeting baseload energy demands. [2] It also has an average system availability of 95% or higher, surpassing coal and nuclear plants. [3]
Geothermal energy is generally considered a clean and renewable energy source, and its environmental impact varies depending on the specific application and location. Geothermal power plants emit small amounts of sulfur dioxide (SO2) and carbon dioxide (CO2), but they are significantly less than those emitted from fossil fuel power plants of similar size. Geothermal power plants use scrubbers to remove hydrogen sulfide (H2S) naturally found in geothermal reservoirs, and most plants inject the geothermal steam and water back into the earth, which helps to renew the geothermal resource and reduce emissions from the geothermal power plants. [4]
The initial capital cost of geothermal systems may be higher, but the ‘whole-life’ cost, combining capital and running costs, is favorable compared to conventional systems. Geothermal power plants have low maintenance and operation costs, making them economically viable and stable electricity sources with minimal price fluctuations. [5] Geothermal systems have a long lifespan, with underground loop systems lasting 50 to 100 years, providing free heating and cooling over time and adding value to properties when resold. [6]
Geothermal in Southeast Asia
Geothermal energy is a significant part of the energy mix in Southeast Asia, with a share of around 3-5% of the region’s total primary energy supply (TPES). [1] It is an abundant, renewable and sustainable resource, particularly in Indonesia and the Philippines. They are rich in geothermal energy due to their location along the Pacific Ring of Fire, which is known for its high volcanic activity. This geological setting provides abundant geothermal resources such as hot springs, geysers, and volcanoes that can be harnessed to generate electricity through geothermal power plants. The Philippines is the region’s largest producer of geothermal electricity, with nearly 2 gigawatts (GW) deployed in 2016. Indonesia plans to reach 7.24 GW of geothermal power by 2025 and 9.3 GW by 2035. The government has implemented policies to de-risk projects, provide fiscal incentives, and encourage investment in the sector, positioning itself for substantial growth in geothermal capacity. [1, 2, 3, 4]
Cost of geothermal energy in Southeast Asia
Geothermal energy projects have high overall construction costs due to civil engineering works, site preparation, well construction, and power plant construction. The cost of geothermal projects is mainly dominated by two major components: power plant construction and drilling. In Indonesia, the drilling cost can be more than 50% of the total project cost, constituting a higher cost variation for the geothermal project. [5] The geothermal resources could be located in remote areas with limited or non-existent infrastructure, so infrastructure development, including the transmission line, is needed before exploration begins. The demand for electricity in such a remote area is usually very small. The lack of a reliable and consistent market and the construction and operation of transmission lines could majorly impact the overall project cost. [6] Additionally, maintenance costs for geothermal energy are significant, especially for maintaining wells to ensure optimal power generation efficiency. Failure to maintain wells can reduce flow rates and decrease power generation efficiency, making maintenance costs higher than other renewable energies. [7]
Geothermal energy has a high power generation efficiency, generating electricity 24 hours a day at an average capacity of about 80% to 94%. This high efficiency allows for a quick recovery of the initial capital investment. Indonesia and the Philippines offer financial incentives and investment potential for geothermal energy projects, such as tax exemptions and low-interest financing that help lower the investment threshold or comprehensive geothermal resource mapping and drilling risks that boost private sector investment willingness. [8]
Several challenges in developing geothermal energy in Southeast Asia
Social factors such as public acceptance, awareness, and knowledge gaps can impede geothermal projects. In countries with intensive geothermal development, social barriers are more prominent, affecting the progress of new projects. [9]
Legal issues like environmental regulations, red tape in government processes, and a lack of legal incentives can obstruct geothermal energy development. Overcoming these legal hurdles is crucial for streamlining project approvals and ensuring compliance with environmental standards. [9]
High exploration costs, low selling prices, and a lack of financial support can deter investments in geothermal projects. Addressing fiscal barriers through incentives, tax exemptions, and financial support mechanisms is essential to attract more investments in the sector. [3] Geothermal energy costs are still higher than those of other power plants. In the absence of regulations that require renewable energy, it is highly challenging for geothermal energy producers to compete with the price of coal energy. The dominance of state-owned enterprises in the geothermal sector also limits competition and innovation, hindering progress in the geothermal industry. The government must consider attracting and encouraging more private or foreign investment to make the market competitive. [4]
Technical challenges such as a lack of information/experience, drilling complexities, reservoir management issues, and scaling problems can impact the efficiency and viability of geothermal projects. Overcoming these technical hurdles through advancements in exploration technology and data interpretation is vital for successful geothermal energy development. [9]
By: Hendra WINASTU, SOLEN Principal Associate – IPC panel coordinator
Edited by: (1) Nguyen Duy Hung, SOLEN Director – IPC program director; (2) Kukuh Jalu Waskita, SOLEN Associate – IPC panel member
Date: 11 March 2024
Article#: SOLEN-IPC-0033
(Cre: https://commons.wikimedia.org/wiki/File:Puhagan_geothermal_plant.jpg)
Reference:
[1] IRENA. (2018). RENEWABLE ENERGY MARKET ANALYSIS SOUTHEAST ASIA. https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2018/Jan/IRENA_Market_Southeast_Asia_2018.pdf
[2] Market. (2023). Geothermal projects heat up in Philippines, Indonesia amid energy transition | NEWS. Reccessary. https://www.reccessary.com/en/news/asean-market/geothermal-projects-heat-up-philippines-indonesia-energy-transition
[3] Fourteau, T. (2022). The “Sun Beneath our Feet” – Geothermal power development in Asia Pacific | White & Case LLP. Www.whitecase.com. https://www.whitecase.com/insight-our-thinking/sun-beneath-our-feet-geothermal-power-development-asia-pacific
[4] Koty, A. C. (2022, July 28). An Overview of Indonesia’s Geothermal Energy Sector. ASEAN Business News. https://www.aseanbriefing.com/news/an-overview-of-indonesias-geothermal-energy-sector/
[5] Purba, D., Adityatama, D., Agustino, V., Fininda, F., Alamsyah, D., & Muhammad, F. (2020). Geothermal Drilling Cost Optimization in Indonesia: A Discussion of Various Factors. https://pangea.stanford.edu/ERE/db/GeoConf/papers/SGW/2020/Purba.pdf
[6] Alhusni, H., Satria, T., Perdana, P., Purwanto, E., & Setyawan, H. (2023). Geothermal Business Outlook in Indonesia. https://pangea.stanford.edu/ERE/db/GeoConf/papers/SGW/2023/Habibi.pdf
[7] Cai, J. (2023). Class 3 renewables potential in Southeast Asia: Geothermal energy in Indonesia | MARKET INSIGHT. Reccessary. https://www.reccessary.com/en/research/class-3-renewables-potential-in-southeast-asia-geothermal-energy-indonesia
[8] Wood, J. (2021). Digging into Asia’s Ring of Fire for net zero energy. Spectra. https://spectra.mhi.com/digging-into-asias-ring-of-fire-for-net-zero-energy
[9] Yasukawa, K., Lee, J., Uchida, T., & Song, Y. (2021). Environmental Barriers to Geothermal Development in Eastern and South-Eastern Asia. https://www.geothermal-energy.org/pdf/IGAstandard/WGC/2020/02003.pdf
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