Unlocking Geothermal Potential in Indonesia: A Techno-Economic Analysis With Carbon Credits Toward 2060 NDC Goal

Abstract

Indonesia's considerable geothermal resources present tremendous potential for energy production, yet restricted investor interest hampers development. This study evaluates the economic viability of a proposed 330 MW geothermal power plant in Gunung Kembar to encourage investment and facilitate Indonesia's 2060 Nationally Determined Contributions (NDC). Four scenarios were modeled using RETScreen, each differing in carbon credit pricing and project duration. Scenario I implement a carbon credit price of $2 per metric ton of CO₂ over a 25-year period, resulting in a Net Present Value (NPV) of $22 million and a Levelized Cost of Electricity (LCOE) of 0.091 USD/kWh. Scenario II elevates the credit price to $18, resulting in an NPV of $23.5 million. In Scenario III, prolonging the project lifespan to 30 years yielded a NPV of $30.6 million and a LCOE of 0.088 USD/kWh. Scenario IV, featuring a credit price of $50 and a term of 30 years, attained the highest NPV at $67.9 million and an LCOE of 0.088 USD/kWh. Scenario IV demonstrates the most economic potential, indicating that elevated carbon price may augment project profitability and stimulate renewable investment in Indonesia.