Pertamina Geothermal Sees $63 Billion GDP Boost as Indonesia Eyes Clean Energy Surge

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JAKARTA, investortrust.id — PT Pertamina Geothermal Energy Tbk, or PGEO, the renewable energy arm of Indonesia’s state oil company, is ramping up efforts to dominate the geothermal market and contribute significantly to the national economy. 

If fully developed, the company’s geothermal projects could contribute up to $63 billion (Rp 1,041 trillion) to Indonesia’s gross domestic product by 2035, according to its Investor Relations Manager Ronald Andre P. Hutagalung.

Speaking at the Pertamina Geothermal Energy–Investortrust Youth Seminar at Universitas Trisakti on Thursday, May 15, Hutagalung said Indonesia’s geothermal potential—estimated at 24 gigawatts (GW)—is the second largest in the world, after the United States. However, installed capacity remains underutilized at only 2.6 GW, or just 11% of total reserves.

The Indonesian government is targeting 10.5 GW of geothermal capacity by 2035. PGEO plans to contribute 1.8 GW of that total, up from its current installed portfolio of 673 megawatts (MW). “The contribution to GDP could reach between $62 billion to $63 billion if the national target is achieved,” Hutagalung said.

Monetizing Green Growth

PGEO also projects an additional $9 billion in revenue from geothermal off-grid development and manufacturing, while helping reduce over 55 million tons of CO₂ emissions. Geothermal, Hutagalung emphasized, has a capacity factor above 85% and can serve as a stable baseload, unlike intermittent sources such as solar and wind.

To accelerate growth, PGEO has identified 13 “quick-win” geothermal projects across Java, Sumatra, and Sulawesi, totaling 395 MW, which can be monetized within 18–24 months. With the addition of binary technology, smaller-scale projects of just 10 MW are now financially viable—significantly reducing the minimum economic scale from 50 MW under conventional systems.

As of 2025, PGEO operates 14 concessions with 673 MW directly under its management and an additional 1,200 MW through joint operating contracts (JOC), bringing its total managed portfolio to 1.8 GW.

By 2033, PGEO aims to reach 1.7 GW installed capacity, with 1.1 GW in proven reserves, 563 MW classified as probable, and another 1.6 GW considered possible reserves.

Economic Hurdles: The 'Single Buyer' Problem

Despite the vast potential, geothermal development in Indonesia continues to face structural obstacles. One major hurdle, according to energy expert Pri Agung Rakhmanto of Universitas Trisakti, is the single-buyer electricity market dominated by state utility PT PLN (Persero).

“This setup gives PLN excessive bargaining power,” Rakhmanto said at the same seminar. With PLN comparing geothermal to cheaper fossil fuel sources, such as coal-powered electricity at roughly Rp 900 per kilowatt-hour (kWh), geothermal’s average price of Rp 1,400 per kWh is deemed uncompetitive.

As a result, power purchase agreements are often stalled, discouraging private investment. “A single buyer will naturally opt for the lowest-cost supply, even if it means sidelining cleaner alternatives,” Rakhmanto warned.

Financial Performance and ESG Impact

PGEO’s performance in 2024 reflected steady growth. The company increased its production volume by 2%, from 4,735 gigawatt-hours (GWh) to 4,817 GWh. For 2025, the target is 4,930 GWh, supported by the addition of the 55 MW Lumut Balai Unit 3.

Capital expenditure through 2029 is projected at $3.3 billion to reach the 1 GW capacity target. From a sustainability standpoint, PGEO reported an emission intensity of just 4 kilograms CO₂ per MWh—drastically lower than coal’s 1,000 kg.

The company also recorded over 4 million tons in CO₂ emission avoidance in 2024, equivalent to taking 900 vehicles off the road. PGEO’s ESG rating stands at 7.1—categorized as “negative risk” and considered among the best globally.

Market Response

On Thursday, May 15, 2025, PGEO’s stock surged 10.77% to Rp 1,080, its highest closing since November 2024. The price has climbed 15.5% since the end of 2024, fueled by strong investor optimism over the company’s green expansion roadmap.

In terms of financials, PGEO posted stable revenue of $407 million, with net profit exceeding $160 million. EBITDA reached $324 million, with a gearing ratio of 0.36x and cost of funding at 3.7%.