Indonesia, located along the Ring of Fire, possesses 40% of global geothermal resources, equivalent to 29 gigawatts of electricity. Geothermal energy is vital for the development of a sustainable energy system in Indonesia. This energy can be utilized for Geothermal Power Plants (PLTP), but its utilization in PLTP development has not yet been optimized. Geothermal projects are considered less attractive investments due to their capital-intensive nature, complexity, sensitivity to uncertainty and risk, and the need for ongoing costs to ensure the project’s long-term sustainability.
Marmelia Puja Dewi, a doctoral student in Civil Engineering at FTUI, developed a sustainable financing model for geothermal projects in Indonesia. Her ideas are presented in her dissertation, titled “Development of a Geothermal Development Financing Model to Improve Investment Performance of Geothermal Projects in Indonesia.” Marmelia Puja Dewi’s doctoral promotion was held on July 1, 2024, in the Smart Meeting Room, Dean’s Building, Faculty of Engineering, Universitas Indonesia.
The geothermal development system in Indonesia still faces very high levels of uncertainty and complexity, resulting in suboptimal geothermal development. To develop this geothermal development financing model, Marmelia Puja Dewi used a policy analysis and financial analysis approach combined with Exploratory Modelling and Analysis (EMA) methods. Specifically, this research applied the Exploratory System Dynamics Modelling and Analysis (ESDMA) method.
“The ESDMA method successfully unravelled the complexity and identified critical factors in the geothermal development system. Meanwhile, the Exploratory Financial Modelling and Analysis (EFMA) method successfully identified critical factors in geothermal project investment and simulated a financial model based on Discounted Cash Flow (DCF) under various uncertainty scenarios simultaneously,” explained Marmelia.
The synthesis of the ESDMA and EFMA results showed that the intervention of derisking drilling wells cannot be a stand-alone program, meaning that the electricity tariffs must remain attractive in addition to interventions to mitigate exploration phase risks. This unified program can enhance the attractiveness of geothermal projects. With increased geothermal investment activities in Indonesia, the capacity for PLTP development and the contribution of geothermal energy to the energy mix will also increase, aligning with the National Energy Policy and the Government of Indonesia’s Net Zero Emission targets.
“The results of the institutional model design analysis through a combination of K-Means Clustering, SEM, and AHP methods, shows that bureaucracy can be mitigated more effectively with an institutional coordination model compared to derisking mechanisms through government drilling. For this financing model to be applicable, stable policies are needed to ensure the expected rate of return. These policies should be integrated with other supporting regulations, such as electricity subsidy policies from the Ministry of Finance. This way, during business-to-business tariff negotiations with PLN, a clear time frame and guidelines are already in place. This can reduce or mitigate the risk of geothermal project failure from the start,” Marmelia further explained.
FTUI Dean, Prof. Dr. Ir. Heri Hermansyah, S.T., M.Eng., IPU., stated, “Marmelia Puja Dewi’s research is expected to make a significant contribution to the development of geothermal energy in Indonesia. The financing model she developed can help attract more investors to this sector, thereby accelerating the development of geothermal projects and enhancing national energy security.”
Marmelia Puja Dewi’s dissertation on the Development of a Geothermal Development Financing Model successfully earned her a doctorate in Civil Engineering with a distinction, achieving a GPA of 3.91. She is recorded as the 71st doctoral graduate from the Department of Civil Engineering and the 552nd from the Faculty of Engineering, Universitas Indonesia. The promotion session was led by Prof. Dr Kemas Ridwan Kurniawan, S.T., M.Sc., with Prof. Dr. Ir. Yusuf Latief, M.T., as the promoter and Prof. Dr. Or. Widodo Wahyu Purwanto, DEA., as the co-promoter. The examination team included Ayomi Dita Rarasati, S.T., M.T., Ph.D., Prof. Ir. Krishna Mochtar, S.T., MSCE, Ph.D., IPU., Dr. Surya Darma, Leni Sagita Riantini, S.T., M.T., Ph.D., and Fadhilah Muslim, S.T., M.Sc., Ph.D., DIC.
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