License Required for Geothermal Companies in Indonesia – Indonesia has possibly the highest geothermal power potential of any country, with geothermal resources estimated at 28,000 megawatts (MW). Geothermal power in Indonesia is an increasingly significant renewable energy source. As a result of its volcanic geology, it is often reported that Indonesia has 40% of the world’s potential geothermal resources.
With the achievement of 1,924.5 MW, Indonesia is ranked second in the world after the United States in utilizing geothermal energy, shifting the second position previously occupied by the Philippines – Quote from Wikipedia.
Geothermal energy, which is a relatively environmentally friendly energy source, comes from the inner heat of the earth to generate electricity. The Indonesian government has high hopes for geothermal energy. To further encourage the development of geothermal energy, the government has issued laws such as Law no. 21 of 2014 which is a change from the policy of Law no. 27 of 2003. The important point of the revision is that geothermal power plants are no longer classified as mining operations.
The New Geothermal Law was proposed by President Susilo Bambang Yudhoyono in August 2013. It contains a new provision that is more industry-friendly than the previous law on geothermal, Law no. 27 of 2003 (Law 27/2003).
The law also specifies the price of geothermal energy in three different regional divisions, each with a different benchmark price. The Indonesian government has also made other efforts to make investment in geothermal energy more attractive. The Geothermal Fund Facility (GFF) provides support to mitigate risks and provides information on the relatively high upfront costs for geothermal development.
Before further discussion of the above, do you know ‘’What is geothermal energy?”
Geothermal energy (or geothermal energy) is a relatively environmentally friendly energy source because it comes from the heat within the earth. Water pumped into the earth by humans or natural causes (rain) is collected to the earth’s surface in the form of steam, which can be used to drive turbines to produce electricity. The exploration costs as well as the capital costs of geothermal power plants are higher than other power plants that use fossil fuels. However, once they start operating, production costs are low compared to fossil fuel power plants – from: indonesia-investments.com
What Licenses are Required for Geothermal Company Activities?
The permits currently required for a company, both foreign and local, to carry out supporting business activities in each of the energy subsectors are as follows:
- For the oil and gas sub-sector (O&G), the O&G Support Business Capability Letter (SKUP) issued by the Directorate General of Oil and Gas of the Ministry of Energy and Mineral Resources;
- For the Mineral and Coal (M&C) sub-sector, the Mining Service Business Permit (IUJP) is issued by the Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources (DGMC) through the Investment Coordinating Board (BKPM);
- With regard to the electricity sub-sector, the Electricity Support Services Business License (IUJPTL) issued by the Directorate General of Electricity, Ministry of Energy and Mineral Resources through BKPM; and
- For the geothermal sub-sector, Geothermal Registration Certificate (SKT Geothermal) is issued by the Directorate General of New and Renewable Energy and Energy Conservation of the Ministry of Energy and Mineral Resources (Ditjen EBTKE) through BKPM.
Apart from the above-mentioned permits, other licenses are required to run a supporting business related to:
- Construction, which also requires a Construction Service Business Permit (IUJK) issued by the Ministry of Public Works and Public Housing (MoPWH) through BKPM; or
- Industry, which also requires an Industrial Business License (IUI) issued by the Ministry of Industry (Kemenperin) through BKPM.
Undang-Undang Cipta Kerja / Omni Buslaw Cuts Geothermal Permits.
The Minister of Energy and Mineral Resources (ESDM) said that simplifying geothermal licensing will be carried out. Licensing in the form of direct use will all refer to the Standard Procedure and Criteria Norms (NSPK).
Geothermal regulations related to the simplification of geothermal business licensing arrangements. Geothermal exploitation is carried out by the Central Government, Provincial Governments and Regency Governments in accordance with their respective authorities.
Find out firsthand what is required for the licensing requirements that must be had for companies in the Geothermal Industry in Indonesia.
For more details, you can contact us Indoservice regarding the legality or licensing of companies in Indonesia.
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