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61 Int'l J.L. & Mgmt. 2 (2019)

handle is hein.journals/ijlm61 and id is 1 raw text is: The current issue and full text archive of this journal is available on Emerald Insight at:


Received 22 October 2017
Revised 26 April 2018
Accepted 30April 2018

International Journal of Law and
Vol.61 No.1,2019
pp. 2-16
©Emerald PublishingLimited
DOI 10.1108/JJLMA-10-2017-0248

New geothermal law and its
implications for geothermal
development in Indonesia
Agus Hermanto
Universitas Negeri Semarang, Indonesia, and
Laser Narindro
Bima Nusantara, Jakarta, Indonesia
Purpose - This paper aims to investigate the new geothermal law and its implications for geothermal
development in Indonesia.
Design/methodology/approach - This paper investigates new geothermal law and its
implications for geothermal development in Indonesia by using comparable law article to discuss this
development. All the data are obtained from literature studies based on the history and background,
ownership and access, investment and risks, electricity market and re-policies, environmental
regulations and community participation around the geothermal resources.
Findings - Geothermal industries in Indonesia need assurance and clear legal basis to be developed.
Geothermal investors, whether foreign or local, need policy assurance and good business structures that can
create a secure investment environment. Furthermore, a good relationship with international cooperation agency
needs to be improved to establish knowledge transfer regarding technologies and information about exploration,
production and geothermal development. This is essential to further develop the geothermal utilization and
prepare Indonesia to be the country with the biggest reduction in CO2 emission in 2025. New geothermal
regulation (Law No.21 Year 2014) has facilitated the geothermal activities. After the issuance of this regulation,
the activities can be done at conserved, production and conservation forest. Moreover, the public service agency
(BLU) or state-owned enterprise (BUMN) assignment scheme can boost the geothermal industries development.
Originality/value - Indonesia has huge geothermal resources because of its geological condition that is
located at volcanoes path, also known as Ring of Fire. According to 2017 ESDM data, Indonesia's
geothermal potentials are almost 30 GW and are distributed to 331 potential points. However, only 5 per cent
of those potentials (1,643.5 MW) have been utilized to date. The huge potentials can be utilized optimally to
support the Government's plan in achieving the energy security. Therefore, policies that regulate geothermal
utilization is strategically essential for Indonesia's future.
Keywords Indonesia, Geothermal development, Geothermal management, New geothermal law
Paper type Research paper
1. Introduction
This paper aims to investigate the new geothermal law and its implications for
geothermal development in Indonesia. Indonesia was a country with the fastest economic
growth in South East Asia within this past few years. Besides, the population is expected
to grow to more than 260 million of people in 2017. The economic and population growth
will lead to increased energy demands; however, the energy supplies growth cannot
compensate the energy demands. As a result, rotating power outage becomes a common
phenomenon which gives negative impacts for both economy and community. To solve
this problem, the Government of Indonesia creates a priority program of 35,000 MW
power plant development.

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