Geothermal energy offers a promising, clean, and sustainable solution to meet global energy demands, particularly in tectonically active regions such as Indonesia and the Philippines. These countries have vast geothermal reserves that align with their efforts to transition away from polluting fossil fuels.
However, despite their potential, much of this energy remains untapped due to financial, regulatory, and community-related barriers. Recent efforts to address these challenges are underway, with changes in domestic policies and financing mechanisms playing a crucial role.
Geothermal energy, derived from the Earth’s heat, is highly valued for its reliability and minimal environmental footprint. Unlike solar and wind, geothermal plants can provide continuous power, independent of weather conditions.
This stability makes geothermal an attractive component of the global renewable energy mix. Projections suggest significant growth in geothermal use, especially in Southeast Asia, where Indonesia and the Philippines already rank among the top three geothermal energy producers globally, alongside the United States.
Despite their leadership in geothermal usage, Indonesia and the Philippines have only developed a fraction of their potential. Indonesia taps into less than 10% of its reserves, contributing 6% to its power supply, while the Philippines has developed about 8%, representing 14.6% of its energy mix.
Geothermal Energy Expansion in Southeast Asia Faces Financial Hurdles, Community Resistance, and Untapped Potential
Both countries have ambitious plans to expand geothermal capacity, with Indonesia aiming for an 8% increase by 2030 and the Philippines targeting a near doubling of its geothermal output through new projects.
Financing remains a significant hurdle, particularly during the high-risk exploration stage of geothermal development, which involves extensive testing and drilling to confirm site viability.
Limited access to climate finance exacerbates this challenge, with geothermal projects receiving only a small portion of available funds in Southeast Asia. Efforts to bridge this gap include “blended finance” strategies combining public and private investments, green bonds, and policy reforms such as green energy auctions and improved regulatory frameworks.
Community opposition also poses a barrier to geothermal expansion. Concerns about safety, environmental impact, and land degradation have led to protests in both Indonesia and the Philippines. Some companies have responded by paying royalties to affected communities, but experts stress the need for greater engagement and transparency.
Building trust and securing consent from local communities are crucial for successful and sustainable geothermal development, ensuring that projects not only generate energy but also bring tangible benefits to all stakeholders.
