Indonesia Geothermal Energy Market Size, Share Outlook, Growth Analysis Report and Forecast Trends 2026-2030

Indonesia possesses roughly 40% of the world's known geothermal potential, with reserves concentrated along its volcanic island chains across Sumatra, Java, Sulawesi, and the Lesser Sunda Islands. As of 2025, the country has an installed geothermal generation capacity of approximately 2.4-2.6 GW, representing a meaningful step toward its stated goal of significantly expanding renewable energy share in the national mix. The market encompasses exploration, drilling, power plant construction, and operations, supported by a policy framework managed by the Ministry of Energy and Mineral Resources and the national utility PT Perusahaan Listrik Negara (PLN).

• •Indonesia holds an estimated 29 GW of geothermal potential, the largest globally
• •Installed geothermal capacity stands at approximately 2.4-2.6 GW as of 2025
• •The market spans exploration, well drilling, power plant EPC, and long-term operations

Indonesia's electricity demand is rising steadily, driven by population growth, manufacturing expansion, and nationwide electrification programs targeting remote and underserved regions. Geothermal energy is classified as a strategic priority in the country's National Energy Policy (KEN), which targets a 23% renewable energy share by 2025 and net-zero emissions by 2060. Supportive mechanisms, including guaranteed tariffs (FITs), fiscal incentives, and streamlined permitting under the Omnibus Law, have improved project bankability and attracted both domestic and international capital.

• •Rapid industrialization and electrification of rural communities are boosting electricity demand
• •Government mandates targeting 23% renewable energy by 2025 and net-zero by 2060 underpin long-term policy support
• •Fiscal incentives, guaranteed offtake tariffs, and regulatory reforms have improved project economics for developers

Geographically, Java and Sumatra host the bulk of Indonesia's existing geothermal capacity, benefiting from proximity to major population centers and established transmission infrastructure. Sulawesi, the Banda Sea region, and eastern Indonesia (including Flores and Halmahera) represent the next frontier for development, with several projects in the exploration and early development phase. The market is also segmented by project scale, large utility-scale plants (100+ MW) connected to the PLN grid alongside smaller, isolated systems serving off-grid communities and industrial facilities.

• •Java and Sumatra dominate current capacity due to grid access and infrastructure maturity
• •Sulawesi and eastern Indonesian islands are emerging as key frontiers for new project development
• •Projects range from large grid-connected utility plants to smaller off-grid and industrial captive power systems

What are the recent trends and outlook?

The market is expected to sustain its 6.4% annual growth trajectory through 2030, supported by pipeline projects totaling several gigawatts in various stages of exploration, permitting, and construction. Digitalization of reservoir management, advancements in enhanced geothermal systems (EGS) exploration techniques, and increased financing from green bonds and multilateral development banks are shaping the sector's evolution. Indonesia's commitment under the ASEAN Power Grid initiative and growing regional electricity trade agreements further position geothermal as a cornerstone of Southeast Asia's energy transition.

• •The development pipeline includes several GW of projects across exploration, permitting, and early construction phases
• •Enhanced geothermal exploration techniques and digital reservoir management are improving project economics
• •Green financing, multilateral development bank support, and ASEAN regional grid integration are accelerating long-term growth