Indonesia’s Geothermal Race: Why Supply Chain and Regulation Will Decide Who Wins
Introduction
Indonesia holds the world’s largest geothermal reserves—over 23 gigawatts of untapped potential. The government’s latest energy plan aims to add 5 GW of new geothermal capacity by 2034, requiring more than US$26 billion in investment. On paper, this looks like a golden opportunity. In reality, the race to unlock Indonesia’s geothermal future is as much about logistics and alignment with regulatory frameworks as it is about technology.
For EPC contractors, investors, and developers, success is rarely decided by drilling rigs or turbines alone. The real obstacles are hidden: evolving regulatory frameworks, remote volcanic terrain, and community engagement. A project delayed six months due to documentation gaps can cost millions in additional financing, while poor supply chain planning can leave critical equipment stranded far from its destination.
This is why the winners in Indonesia’s geothermal boom will be those who partner with supply chain teams that do more than move cargo. The most competitive players are those who can navigate compliance, manage transport through extreme geography, and build trust with local communities—turning high-risk projects into bankable ventures.
The Geothermal Opportunity: Big Numbers, Bigger Risks
New tenders are opening in Gunung Lawu (195 MW), Sipoholon Ria-ria (35 MW), Telaga Ranu (85 MW), and Wapsalit (46 MW).
International partnerships are forming—like First Gen (Philippines) and Sinar Mas, with up to 440 MW of projects across Java, Flores, and Sulawesi.
Financing flows are growing—ADB recently approved US$92.6 million for the Muara Laboh project in West Sumatra.
But the risks grow just as large. Every megawatt of geothermal capacity costs around US$5 million. Delays, compliance failures, or community pushback can quickly erode profitability. For developers and EPCs, the question isn’t just how much geothermal capacity Indonesia can build, but who can actually deliver it on time and within compliance.
The Triple Challenge Facing Geothermal Projects
1. Evolving Regulatory Frameworks
Indonesia’s geothermal sector is guided by multiple stakeholders—national ministries, environmental agencies, forestry authorities, and local governments. These frameworks are designed to balance development with sustainability. For project developers, the challenge is not resistance but coordination: aligning with various requirements, ensuring timely documentation, and leveraging incentives such as bonded logistics to optimize project costs. The EPC and supply chain teams that succeed are those who treat compliance as a strategic advantage, not a hurdle.
2. Geographical Barriers
Most geothermal reserves sit in volcanic regions—remote, mountainous, and difficult to access. Transporting a 100-ton turbine to Flores or Sulawesi isn’t just engineering, it’s a logistics miracle. Poor roads, unpredictable weather, and fragile infrastructure make every move a high-stakes operation.
3. Community Engagement
No project moves forward without local buy-in. Communities worry about water, farming land, and environmental impact. Resistance can erupt into delays or outright cancellations. Successful EPCs weave CSR and engagement into their supply chain planning, ensuring communities see benefits, not just risks.
Why Supply Chain Expertise Decides Bankability
For investors, the word that matters most is bankability. Can the project deliver power on time and on budget? Can it navigate requirements, mitigate risks, and maintain social license?
That’s where supply chain teams prove decisive. The best supply chain partners:
Navigate compliance: securing customs clearance, bonded warehouse strategies, and alignment with ESG standards.
Master remote logistics: orchestrating multimodal transport—sea, road, air, heavy lift—to reach volcanic sites.
Integrate with EPC schedules: ensuring equipment, permits, and workforce arrive in sync.
Bridge stakeholders: coordinating not only with EPCs and governments but also with local communities.
In practice, a strong supply chain team functions as a risk manager. Each avoided delay can save millions, while each successful permit keeps investor confidence intact.
Lessons from Recent Projects
Muara Laboh (West Sumatra): With ADB financing, strict compliance and structured logistics were prerequisites for disbursement. The supply chain became part of the financing equation.
First Gen & Sinar Mas JV: Operating across islands underscores the scale of coordination needed—only integrated logistics can handle both distance and diversity.
Ulubelu (Lampung): Ongoing studies on water and food impact show how community and environmental concerns now directly shape logistics planning. Projects aren’t judged only by megawatts, but by how they balance people, planet, and process.
The New Mandate: Supply Chain as Strategy
For EPCs and developers, the rules of the game are shifting:
Compliance-savvy logistics is now as critical as technical engineering.
Technology-enabled visibility (real-time dashboards, predictive alerts) is expected, not optional.
Sustainability-first supply chains that integrate CSR and green procurement strengthen community and investor trust.
In geothermal, logistics is no longer a supporting role—it is the backbone of competitiveness.
Conclusion: Who Will Win Indonesia’s Geothermal Race?
Indonesia’s geothermal future is not guaranteed. The reserves are there, the financing is building, and the political will is clear—but without solving alignment, geography, and community challenges, projects risk being delayed or derailed.
The winners will be those who understand this reality: supply chain is not cargo—it is strategy.
At Transcon Indonesia (TCI), we have seen firsthand how remote logistics, regulatory compliance, and community engagement shape outcomes. From bonded logistics to project cargo in remote volcanic regions, TCI has supported projects that others considered too complex.
Because in geothermal—as in all of Indonesia’s energy journey—the supply chain will decide who wins.