Indonesia Geothermal Power Market Report and Forecast 2026-2034

Study Period

2021-2034

Market (2025)

USD 2.8 GW

Market (2034)

USD 4.89 GW

CAGR

6.4%

Major Markets Players

PT Pertamina Geothermal Energy Tbk (PGE), Star Energy Geothermal, PT Geo Dipa Energi (Persero), Sarulla Operations Ltd (SOL), PT Supreme Energy and Others

*Note: Partial List Randomly Ordered

Indonesia Geothermal Power Market Key Highlights

Indonesia Geothermal Power Market Insights & Analysis

The Indonesia Geothermal Power Market is anticipated to register a CAGR 6.4% during 2026-2034. The market size was valued at 2.8 GW in 2025 and is projected to reach 4.89 GW by 2034. Indonesia holds the largest geothermal potential globally, estimated at more than 23 GW of resources spread across volcanic belts. This enormous geothermal potential places the country at the center of global geothermal development strategies, particularly as governments and utilities search for reliable baseload renewable energy sources.

Government energy transition strategies are significantly shaping the geothermal sector. Indonesia’s national electricity development plan prioritizes geothermal power because it provides stable baseload electricity unlike intermittent renewable sources such as solar or wind. The government has also introduced exploration incentives, streamlined licensing procedures, and public-private partnership frameworks to attract global investors. By 2025, geothermal energy contributes a notable share of Indonesia’s renewable energy portfolio, with several utility-scale projects operating across Java, Sumatra, and Sulawesi.

Investment momentum is accelerating as energy companies seek to capitalize on Indonesia’s geothermal reserves. International energy corporations and domestic utilities have increased capital allocation toward geothermal exploration and development. Large-scale investments from companies such as PT Pertamina Geothermal Energy Tbk, Star Energy Geothermal, and KS Orka Renewables are strengthening the national geothermal infrastructure. Infrastructure upgrades, drilling technology improvements, and advanced reservoir management tools are enabling operators to unlock deeper geothermal reservoirs with higher efficiency.

Technological innovation is also improving the economic feasibility of geothermal projects. Advanced drilling technologies, reservoir imaging tools, and enhanced geothermal systems are improving project success rates. Digital monitoring and predictive analytics now allow operators to track reservoir pressure, temperature, and production performance in real time. These innovations help extend plant lifecycles and maximize energy extraction from geothermal fields, reinforcing Indonesia’s role as one of the most important geothermal markets in the Asia-Pacific energy landscape.

Indonesia Geothermal Power Market Dynamics

Key Driver: Rising Renewable Energy Demand and Government Energy Transition Programs

Indonesia’s growing electricity demand combined with national decarbonization commitments is a primary driver for geothermal power development. As Southeast Asia’s largest economy, Indonesia’s electricity consumption continues to expand due to industrialization, urbanization, and rising household energy usage. Energy planners are prioritizing geothermal power because it provides reliable baseload energy while reducing reliance on fossil fuels such as coal and diesel.

The Indonesian government has established aggressive renewable energy targets to support its long-term energy transition strategy. Authorities aim to increase the share of renewable energy in the national energy mix to more than 23% by the end of the decade. Geothermal power plays a central role in achieving this goal because Indonesia’s volcanic geography provides vast untapped geothermal reservoirs. National energy policies now include fiscal incentives, feed-in tariffs, and risk mitigation funds to encourage geothermal exploration and development.

Another important factor supporting market growth is increasing international climate financing. Multilateral organizations, development banks, and private investors are allocating capital toward geothermal energy projects in Indonesia. These financial partnerships reduce exploration risks and enable large-scale geothermal plants to reach commercial operation faster. As a result, geothermal power capacity additions continue to expand steadily across the Indonesian archipelago.

Industry Trends: Increasing Investments in Advanced Geothermal Technologies

Technology advancement is transforming geothermal project development in Indonesia. Modern geothermal facilities now utilize advanced drilling technologies capable of reaching deeper reservoirs while maintaining operational safety. Directional drilling and high-temperature drilling equipment allow operators to tap reservoirs previously considered economically challenging. These innovations significantly increase geothermal project viability and improve power generation efficiency.

Another emerging trend is the adoption of enhanced geothermal systems (EGS) and hybrid geothermal technologies. EGS technologies allow energy companies to extract heat from hot dry rock formations that were historically inaccessible using traditional hydrothermal methods. This development dramatically expands Indonesia’s geothermal resource base. Hybrid geothermal plants, which integrate geothermal energy with solar or other renewable technologies, are also being explored to optimize energy production and grid stability.

Digital technologies are becoming increasingly important in geothermal plant management. Artificial intelligence tools and real-time monitoring systems help predict reservoir performance, optimize drilling strategies, and reduce operational downtime. These technologies enable geothermal operators to maximize resource extraction and improve plant efficiency, supporting Indonesia’s ambition to become a global leader in geothermal energy production.

Major Challenge: High Exploration Costs and Geological Uncertainty

Although Indonesia possesses enormous geothermal potential, exploration risks remain a significant barrier for developers. Identifying productive geothermal reservoirs requires complex geological surveys, exploratory drilling, and high-cost testing procedures. Initial exploration wells often cost several million dollars, and the success rate varies depending on geological conditions. These high upfront costs create financial uncertainty for developers.

Geothermal exploration also involves technical risks related to reservoir temperature, permeability, and fluid composition. If early exploration wells fail to confirm sufficient geothermal resources, project developers may face substantial financial losses. This uncertainty discourages some investors from committing to geothermal projects, particularly in remote regions where infrastructure is limited.

Regulatory complexity can also slow geothermal project approvals. Developers must coordinate with multiple government agencies to secure exploration permits, environmental approvals, and land access agreements. While the Indonesian government has made progress in simplifying licensing procedures, regulatory processes can still extend project timelines. Addressing these challenges through policy reform and risk mitigation programs remains critical for long-term geothermal market growth.

Opportunity: Untapped Geothermal Potential Across Emerging Indonesian Regions

Indonesia’s geothermal potential remains largely underdeveloped, presenting substantial growth opportunities for energy companies. Experts estimate that less than 15% of the country’s geothermal resources have been fully utilized. This untapped potential is spread across multiple islands including Sumatra, Sulawesi, and Nusa Tenggara, where geothermal reservoirs remain largely unexplored.

New exploration technologies and government-supported drilling programs are helping developers identify promising geothermal prospects across the archipelago. Infrastructure expansion, including transmission networks and regional power grids, is also enabling geothermal plants to deliver electricity to urban and industrial centers more efficiently. These infrastructure improvements are opening new investment opportunities in previously underserved regions.

Private sector participation is also increasing in Indonesia’s geothermal sector. Independent power producers and international energy companies are forming joint ventures with state-owned enterprises to develop geothermal projects. This collaborative approach reduces financial risk and accelerates project development timelines. As a result, Indonesia is expected to remain one of the fastest-growing geothermal energy markets globally during the coming decade.

Indonesia Geothermal Power Market Segment-wise Analysis

By Power Plant Type:

• Dry Steam Plants
• Flash Steam Plants
• Binary Cycle Plants
• Hybrid Geothermal Plants

Flash steam plants dominate Indonesia’s geothermal power generation landscape, accounting for nearly 48% of installed geothermal capacity in 2025. This technology is widely used because Indonesia’s geothermal reservoirs often contain high-temperature hydrothermal fluids that are suitable for flash steam conversion. In flash steam plants, geothermal water under high pressure is brought to the surface and rapidly depressurized, producing steam that drives turbines to generate electricity.

Indonesia’s volcanic geology provides abundant high-enthalpy geothermal reservoirs, particularly in regions such as Java and Sumatra. These reservoirs produce geothermal fluids with temperatures exceeding 200°C, which makes flash steam technology highly efficient for power generation. Many of the country’s major geothermal facilities, including the Salak and Wayang Windu fields, utilize flash steam systems to produce large volumes of baseload electricity.

In addition to high energy output, flash steam plants offer operational reliability and long plant lifespans. These facilities can operate continuously for decades with relatively stable production levels. The strong performance of flash steam technology has encouraged energy developers to expand existing geothermal facilities and build new plants using similar systems. Consequently, flash steam technology continues to dominate Indonesia’s geothermal power generation capacity.

By Resource Type:

• Hydrothermal Resources
• Hot Dry Rock Resources
• Enhanced Geothermal Systems

Hydrothermal resources represent the leading geothermal resource type in Indonesia, contributing around 63% of geothermal electricity generation capacity. Hydrothermal systems rely on naturally occurring reservoirs of hot water and steam trapped beneath the earth’s surface. Indonesia’s volcanic activity has created hundreds of such geothermal reservoirs across its islands, making hydrothermal resources the most accessible geothermal energy source.

These reservoirs are typically located in areas with high volcanic activity where magma heats underground water. The resulting steam and hot water can be extracted through production wells and used to generate electricity in geothermal power plants. Many of Indonesia’s largest geothermal projects, including those in Java and Sumatra, are based on hydrothermal systems due to their proven reliability and efficiency.

The abundance of hydrothermal reservoirs allows geothermal developers to scale projects quickly once exploration confirms reservoir characteristics. Hydrothermal plants also benefit from mature drilling and reservoir management technologies that reduce operational risks. These advantages ensure that hydrothermal resources will remain the dominant geothermal resource type supporting Indonesia’s geothermal power expansion.

Regional Projection of Indonesia Geothermal Power Industry

• Sumatra
• Java
• Kalimantan
• Sulawesi
• Nusa Tenggara
• Maluku
• Papua

Java dominates the Indonesia geothermal power market, accounting for approximately 39% of installed geothermal generation capacity. The region hosts several of the country’s largest geothermal power plants due to its dense volcanic formations and high electricity demand. Java’s strong grid infrastructure and proximity to major industrial centers make it an ideal location for geothermal power generation.

Many of Indonesia’s earliest geothermal projects were developed in Java because the island contains numerous high-temperature geothermal reservoirs. Facilities such as the Salak, Wayang Windu, and Darajat geothermal fields have been producing electricity for decades. These plants provide stable baseload energy to the Java-Bali electricity grid, which serves the majority of Indonesia’s population.

The government continues to prioritize geothermal development in Java as part of national energy planning. Several expansion projects are currently underway to increase geothermal generation capacity and improve grid reliability. As electricity demand continues to grow across Java’s industrial and urban sectors, geothermal energy is expected to play an increasingly critical role in ensuring long-term energy security for the region.

Indonesia Geothermal Power Market Recent Developments

• 2025: Star Energy Geothermal announced expansion and capacity additions across multiple geothermal projects including Salak and Wayang Windu. The parent company committed approximately USD 365 million to add around 112 MW of geothermal power capacity, strengthening Indonesia’s national renewable energy transition strategy.
• 2025: KS Orka Renewables confirmed a 33 MW expansion at the Sorik Marapi geothermal project, enabling the facility to exceed 200 MW of installed capacity. The expansion strengthens its position as one of Indonesia’s largest baseload geothermal power developments supporting national renewable targets.
• 2025: PT Medco Power Indonesia, through PT Medco Cahaya Geothermal, announced the start of commercial operations of the 35 MW Ijen geothermal power plant in East Java, adding new baseload geothermal capacity to Indonesia’s electricity grid.

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