Faced with looming energy crises in their developing economies, power-hungry Indonesia and the Philippines are looking deep into the earth for a solution.
Both are in the so-called Pacific Ring of Fire, an area peppered with volcanoes and home to the world’s biggest reservoir of geothermal power. “When I think of Indonesia and energy, I think geothermal. Indonesia has more than 500 volcanoes, of which 130 are active,” Lester Brown, president of the Washington-based Earth Policy Institute, told CLSA Asia-Pacific Markets in a speech in June.
That may be changing though as soaring oil prices, surging demand and creaking infrastructure in the power sector make it all the more urgent for both Indonesia and the Philippines to find ways to exploit their geothermal reserves. But unlocking the potential is proving difficult.
Geothermal projects involve drilling wells deep into the earth to tap steam or hot water to power turbines. Not all of the challenges are terrestrial in nature. It’s a capital-intensive process made worse by tortuous red tape and other stumbling blocks in places such as Indonesia and the Philippines.
Indonesia’s Bedugul project, set among volcanoes on the Hindu enclave of Bali, aims to develop up to 175 MW of power, or roughly half of the resort island’s needs. But the project is now on hold because local residents fear it could damage a sacred area and affect water supplies from the nearby lakes.
Most of Bali’s power is currently supplied from neighbouring Java island via an undersea cable. Supporters say the project is essential to meet growing electricity demand in the resort island, which is at the heart of Indonesia’s tourism industry.
In the Philippines, currently the world’s second-biggest geothermal producer behind the United States, one of the main obstacles to developing the reserves is the high acidity associated with active volcanoes, which can corrode the pipes.
That would make it hard for the Philippines to achieve its goal of raising geothermal capacity from an existing 1,931 megawatts to 3,131 MW by 2013, and overtaking the United States as top global geothermal producer, he added.
Geothermal power accounts for around 18 percent of the Philippines’ energy needs. Catherine Maceda, spokeswoman for the Renewable Energy Coalition, a group promoting the use of alternative energy, also warned that the Philippines needed to push through a renewable energy bill to provide greater incentives and clarity.
While President Gloria Macapagal Arroyo has earmarked the bill as urgent, political bickering is holding up its passage.
Electricity networks in the Philippines and Indonesia, with a combined population of 316 million, are already under strain.
Philippine power demand is estimated to be growing at an average rate of 4.8 percent a year, while Indonesia has suffered power blackouts with razor-thin supply cushion when demand peaks.
Indonesia currently supplies just 850 MW of an estimated 27,000 MW potential from geothermal, or about 3 percent of its current power output.
While the government wants to focus on using more coal-powered stations to meet energy needs, Energy Minister Purnomo Yusgiantoro has said power from geothermal could reach 9,500 MW by 2025.
Despite the setbacks and stalled projects, high energy prices are providing the spur for firms to look at geothermal again, and several are keen to expand their existing operations or bid for fresh projects in Indonesia under a new government framework. Reuters