Now Even Big Oil is Getting in on the Geothermal Boom in Indonesia

Chevron is about to join Israeli geothermal pioneer Ormat in drilling for geothermal energy in what clean-energy investor Al Gore has described as the world’s first potential “geothermal superpower” – Indonesia.

Ormat is building a 330 MW geothermal plant in Indonesia’s North Sumatra, and has invested in other Pacific Rim nations too. It just landed a deal in New Zealand and invested in Alaska and Chile last year. Now Chevron plans to try its luck in Indonesia too. It has just drilled 84 wells two miles down beneath the Indonesian rainforest, to tap not oil, but steam that’s trapped in the world’s richest store of volcanic energy.

“There are synergies between oil and geothermal and it makes sense for us to exploit that,” Stephen Green, Chevron’s VP of policy, and government told Bloomberg in an interview in their Jakarta office.

Multinational companies from GE to Tata are leading an investment boom in Indonesia that may climb to more than $30 billion, as the result of major boosts for clean energy promised by President Susilo Bambang Yudhoyono.

Until as recently as 2008, Indonesia was a member of OPEC. It was an exporter of oil. But by 2004, its domestic demands were already outpacing supplies, and the nation began looking very seriously at alternative energy sources.

With a fast-growing population putting pressure on energy supplies, and a real commitment to a rational clean energy policy, tiny Indonesia is poised to produce three times as much geothermal power as the entire US. President Yudhoyono needs to supply energy to an economy that is growing at 6 percent a year.

To date, Indonesia has tapped just 4 percent of its potential. Orders on hand would add 2.5 GW of capacity. But this is just the beginning of a well thought out plan. By 2025, it plans a staggering 9.5 GW, which is enough to supply fully one third of the nation’s electricity – from just one renewable resource alone. Each GW of geothermal capacity installed is expected to cost $2 billion. But this is a one time expense, as, like with other renewable sources, the fuel is free.

This investment by Chevron marks the first real evidence of interest in making the switch from finite dirty fossil energy extraction to a potentially limitless supply of clean renewable energy, by an oil company. It looks like Ormat is showing the way.

Image: Flikr user Pet-r

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