Two geothermal working areas change hands as the government moves to shorten the licensing path

Bahlil Lahadalia, Minister of Energy and Mineral Resources, issued decisions granting two geothermal working area permits. PT PLN receives the Gunung Ungaran working area in Central Java. PT Telaga Ranu Geothermal receives the Telaga Ranu working area.

The announcement was made on 19 August 2026 at the Indonesia International Geothermal Convention and Exhibition in Jakarta by Eniya Listiani Dewi, Director General of New and Renewable Energy and Energy Conservation, who thanked the minister for releasing the permit decisions.

Two preliminary survey and exploration assignments were issued alongside them. PT Pertamina Geothermal Energy takes Cugudang Panti. PT Cakrawala Bituang Geothermal takes the Bituang area. A survey assignment differs from a working area permit, granting the right to investigate first without immediately granting the right to develop, and it typically precedes the designation of a working area by several years.

The gap these permits are meant to close

The figures that give the announcement its weight are the national ones.

Indonesia's geothermal resource is put at 23,202.77 megawatts. Installed capacity stands at 2,776.39 megawatts. That leaves approximately 88.4 percent of the resource undeveloped, and it is a gap that has persisted through many years of policy attention.

The reason is not geology and it is not interest from developers. Geothermal has a distinctive risk profile. The expensive work, exploration drilling, comes before anyone knows whether a field will produce commercially. A developer can spend heavily and find nothing. Unlike solar or wind, where the resource can be measured from the surface with reasonable confidence, geothermal requires drilling several kilometres into the ground to establish what is there.

Solar developers can survey a site with instruments. Geothermal developers have to drill to find out, and the drilling costs the same whether the answer is yes or no.

That asymmetry is why working area allocation matters more here than in other renewable technologies. A working area permit is what allows a developer to carry exploration risk with some prospect of recovering it, because it secures the right to develop whatever is found.

It also explains why the same convention week produced an agreement on bottoming units at Ulubelu and Lahendong, which add capacity at fields already proven and producing. Those two routes address opposite ends of the same problem. Bottoming units extract more from geology already confirmed, at low risk and quickly. New working areas confront unconfirmed geology, at high risk and slowly, and they are the only route to capacity beyond what existing fields can yield. A programme that relies on one and neglects the other either runs out of easy gains or never starts the difficult ones.

What is on offer next

Beyond the two permits issued, the ministry set out the pipeline for 2026.

Five further working areas are being prepared, with combined reserves of roughly 304 megawatts and planned development capacity of about 145 megawatts. They are Hamiding at 50 megawatts, Danau Ranau at 40, Songgoriti at 40, Oka Ile Ange at 10 and Gunung Sirung at 5.

Seven preliminary survey and exploration areas are also being readied, holding a total resource of around 321 megawatts and possible reserves of about 247 megawatts, distributed across Sumatra, Lampung, Sulawesi and Maluku.

The individual capacities are worth noticing. At 5 and 10 megawatts, Gunung Sirung and Oka Ile Ange are small by the standards of utility generation. They are not small relative to the island systems they would serve, where the alternative is usually diesel. A 10 megawatt geothermal unit on an eastern island displaces the most expensive electricity in the country, which is a different economic proposition from adding the same capacity to the Java and Bali grid.

Licensing is the constraint being addressed

The most consequential item was not a permit at all. The ministry is revising its regulations to compress the licensing process into a single auction stage.

Anyone who has followed Indonesian geothermal will recognise why that matters. The staged process, in which developers move through separate approvals as exploration progresses, has added years to project timelines and introduced uncertainty at each transition. Compressing it changes the risk calculation for every project in the pipeline, not only the ones being offered now.

Time is not a neutral cost in this sector. Exploration capital is spent early and earns nothing until a plant is generating, so every year of delay compounds against the eventual return. A project that would be attractive with a six year path to first power can become unfinanceable with a ten year one, without anything changing about the resource underneath it. Licensing reform is therefore a financing measure as much as an administrative one.

Against that, the ministry targets non tax state revenue from geothermal of Rp2.6 trillion in 2026, up from Rp2.46 trillion realised in 2025. Investment is targeted at USD 1.1 billion for the year, rising to as much as USD 2.2 billion, roughly Rp39 trillion, if the new auctions proceed. Eniya linked the revenue target directly to drilling activity, saying the ministry was committed to delivering Rp2.6 trillion because a great deal of drilling has to be done.

Sirkularium's read for government and public institutions

Three observations follow.

The first concerns where the exploration risk sits. Licensing reform shortens the path but does not change who pays if a well comes up dry. Instruments that share early exploration risk, whether through government funded resource confirmation, drilling guarantees or staged public participation, are what move geothermal from a sector with permits available to a sector with projects financed. The licensing change is necessary and it is not sufficient on its own.

The second concerns matching the small working areas to the systems that need them. Oka Ile Ange and Gunung Sirung will not attract the same developer interest as a 50 megawatt field near a strong grid. Yet they sit where electricity is most expensive to supply. Auction design that recognises the higher value of displaced diesel, rather than treating all megawatts as equivalent, would make these areas viable rather than leftover.

The third concerns the resource figure itself. Quoting 23,202.77 megawatts of potential against 2,776.39 megawatts installed is accurate but incomplete, because resource estimates include prospects that have never been drilled and whose commercial viability is unknown. The honest planning number is smaller and more uncertain. Public institutions setting targets against the headline resource should be clear which portion is confirmed reserve and which remains a geological estimate.

What to watch next is publication of the revised licensing regulation, the auction schedule for the five working areas, and whether the exploration assignments at Cugudang Panti and Bituang convert into working area permits in due course.