By: Our Correspondent

When President Olafur Ragnar Grimsson of Iceland came to open the 2010
World Geothermal Congress on April 226 in Bali with Indonesian
President Susilo Bambang Yudhoyono it was as if the fiery spirit of
geothermal energy was angry with the human race.

The Icelandic
volcano Eyjafjallajokull had thrown up huge clouds of ash, bringing
Western European air traffic to a halt for days. But Grimsson came from
his small island state near the Arctic circle with its population of
318,000 to inspire President Yudhoyono with his population of 230
million that Indonesia, with 40 percent of world geothermal energy
resources, could succeed in developing clean sustainable geothermal
energy.

The World Geothermal Congress 2010 hopefully marks a
turning point for an industry which just reached global electrical
production capacity of 10 GWe – or 10,000 megawatts (MW) – although
Indonesia alone probably needs an extra 5 GWe every year to keep up
with demand.

The geothermal industry is growing up, with an
estimated resource capacity of 28,000 MW in Indonesia. Indonesia plans
to develop 4,000 MW of geothermal energy as part of its second 10,000
MW accelerated electricity development program between 2010 and 2015
and to develop 9,500 MW of geothermal energy by 2025. Yet the country
has only developed 1,200 MW so far and is taking a gamble that it can
rapidly mobilize the financial and human capacity needed. The country
needs an estimated US$12 billion to build 4,000 MW urgently. One
foreign expert estimated it needs 50 to 60 full-time trained specialist
professionals to build each GWe of capacity. But Indonesia only has 20
percent of this capacity right now.

The 2,500 Geothermal
Congress participants in Bali looked like a cross-section of a green
technology movement in transition. The crowd ranged from bearded
latter-day hippie geo-technology freaks, to green idealists to bright
young professionals and earnest bureaucrats from countries seeking to
learn how to regulate a new energy business. Not to mention a growing
number of harder-nosed blue-suited business leaders learning how to
make money out of an industry with high front-end costs and big
exploration risks.

Yet the geothermal congress still looked and
sounded like a missionary movement seeking to finance the
unfinanceable, bank on the unbankable, insure the uninsurable, and
perhaps negotiate the non-negotiable with governments and institutions,
whilst anxious that wind, solar and other renewables may overtake it
before its search for the Holy Grail of exponential growth could be
successful.

And looming over the entire green movement is the
relentless onward march of a revived carbon-free nuclear power
industry, providing the only technology that can plug the gap on the
high-volume energy demands of the masses in Asia who are not yet into
energy efficiency, while gobbling up maybe 80 percent of global energy
research and development budgets, with its capacity to generate
gynormous Gigs of power, but at what true cost in resources and long
term waste management?

Energy statistics may mean that nuclear
energy will win by a long lead, but geothermal can take its place as a
medium-sized player on the global stage and maybe give the world 100
GWe in the next 90 years, having taken the last 100 to generate 10.

Meanwhile
Indonesia is both dream and nightmare, and the main battleground on
which the battle for global geothermal credibility must be fought and
won. Its track record for progressing from laws to regulations to
enforcement is poor. Its insufficiently adapted regulatory frameworks
and hybrid deconcentrated decentralization are a challenge for
decision-making.

The enthusiasm and commitment of President
Yudhoyono, his top ministers and officials will hopefully
counterbalance opposition, inertia and corruption. Problems of lack of
infrastructure and capacity must be resolved. A cultural compromise is
needed in support of the Independent Power Producer model, satisfying
both the nationalist and globalizing camps at home as well as foreign
investors.

In addition geothermal energy must serve the poor
as well as the rich, the rural as well as the urban and small
communities and interests as well as big ones, with micro and
medium-sized power as well as larger-scale. Such thinking is almost
unheard of in Indonesia but means it would be possible to help villages
with their own geothermal power.

But some of the bright young
professionals in Bali, and social visionaries, knew what to do and the
expertise from Iceland, Germany, other EU countries and the USA needs
to reach rural Indonesia, East Africa and other places where social
balance is essential and large-scale development will not be possible
given resources or appropriate to needs.

Resolve these issues
and the geothermal lobby will help transform Indonesia into a truly
modern and great economy, the seventh or eighth largest in the world.
So President Grimsson was not selling hot air. If his little country
could do so much with geothermal energy with so little, then Indonesia
must learn from Iceland that size is not everything. And that it’s not
what you do, but the way that you do it.

Terry Lacey is a development economist who writes from Jakarta.