Abstract
As a ring of fire nation, Indonesia possesses a plethora of geothermal resources spread across the country. Out of 29 GW of potential capacities, less than 10 % is utilized as power plants. As part of effort to increase renewable energy generation, the government plans to push more utilization of geothermal power plants, by stipulating policies to achieve the target of 17 GW of used potential by 2050. To reach this goal, the potential factors that influence geothermal development should be examined, especially when such factors are influenced by various decision-makers. This study aims to identify the most significant factors influencing geothermal development in Indonesia. First, the study adopts a cross-sectional time series national data on installed geothermal power plant capacity spanning 35 years with key policy factors such as tax allowance, direct funding, and Feed-in tariff (FiT). Second, the study control for regional specific characteristics, such as forest protection policies along with the protected forest area,social conflicts, and natural disasters, by examining the panel of geothermal capacities across 6 provinces with the most geothermal resources. The study applies the Autoregressive Distributed Lag (ARDL) to examine the determinants of geothermal development through cumulative installed capacity of geothermal. The result suggests that direct funding and tax allowance positively and significantly impact geothermal capacity. At the provincial level, the study finds that forest protection policy and the area of protected forest promotes geothermal capacity development which suggests that imposing forest protection does not hinder geothermal development while being supported with the significance of feed-in tariff.
