Geothermal-rich SE Asia struggles to tap earth's power

Faced with looming energy crises in their developing economies, power-hungry Indonesia and the Philippines are looking deep into the earth for a solution.

Both are in the so-called Pacific Ring of Fire, an area peppered with volcanoes and home to the world's biggest reservoir of geothermal power.

"When I think of Indonesia and energy, I think geothermal. Indonesia has more than 500 volcanoes, of which 130 are active," Lester Brown, president of the Washington-based Earth Policy Institute, told CLSA Asia-Pacific Markets in a speech in June.

"Indonesia could run its economy entirely on geothermal energy and has not come close to tapping the full potential," he told the investment group.

That may be changing though as soaring oil prices, surging demand and creaking infrastructure in the power sector make it all the more urgent for both Indonesia and the Philippines to find ways to exploit their geothermal reserves.

But unlocking the potential is proving difficult.

Geothermal projects involve drilling wells deep into the earth to tap steam or hot water to power turbines. Not all of the challenges are terrestrial in nature. It's a capital-intensive process made worse by tortuous red tape and other stumbling blocks in places such as Indonesia and the Philippines.

Indonesia's Bedugul project, set among volcanoes on the Hindu enclave of Bali, aims to develop up to 175 MW of power, or roughly half of the resort island's needs. But the project is now on hold because local residents fear it could damage a sacred area and affect water supplies from the nearby lakes. Most of Bali's power is currently supplied from neighbouring Java island via an undersea cable. Supporters say the project is essential to meet growing electricity demand in the resort island, which is at the heart of Indonesia's tourism industry.

"We hope that the project will run, not just because of the investors but for Bali's future," said Ni Made Widiasari of Bali Energy, the firm behind the project. She denied the project would be damaging.

In the Philippines, currently the world's second-biggest geothermal producer behind the US, one of the main obstacles to developing the reserves is the high acidity associated with active volcanoes, which can corrode the pipes.

"There are many fields that are still acidic, meaning the dead volcanoes underlying them are not really dead," said Paul Aquino, president of PNOC-Energy Development Corp which operates nine steam fields with a capacity of 1,199 Megawatts (MW), or about 60 per cent of the country's geothermal capacity.

That would make it hard for the Philippines to achieve its goal of raising geothermal capacity from an existing 1,931 megawatts to 3,131 MW by 2013, and overtaking the US as top global geothermal producer, he added.

Geothermal power accounts for around 18 per cent of the Philippines' energy needs.

"We have already exploited those areas with the biggest geothermal resource," Mr Aquino said, adding that many of the Philippines' most attractive untapped sites are located in natural parks or protected by the Indigenous Peoples Rights Act.

Catherine Maceda, spokesman for the Renewable Energy Coalition, a group promoting the use of alternative energy, also warned that the Philippines needed to push through a renewable energy Bill to provide greater incentives and clarity.