World Renewable Energy Congress-Indonesia International Conference on Renewable Energy and Energy Efficiency, 17-19 October 2011, Bali, Indonesia Draft Final 1 CDM Financing for Geothermal Project in Indonesia: Current Status and Post 2012 Prospect Ratna Etie Puspita Dewi* and Agus Sugiyono Center for Energy Resources Development Technology Agency for the Assessment and Application of Technology Jakarta, Indonesia * Corresponding author: r_puspitadewi@yahoo.co.id Abstract Geothermal potential in Indonesia reaches 29,038 MW, but only about 4% has been utilized. The obstacles faced is the high investment costs and limited funding mechanism. CDM is one of the incentive mechanisms that can be used to help overcome these obstacles. CDM for development of geothermal projects in Indonesia was the first utilized in the development of Darajat geothermal power plant unit III with the installed capacity of 110 MW which is operated by Chevron Geothermal Indonesia. This project has been registered at the CDM Executive Board in 11 December 2006 and received the CERs for the first time in 11 June 2009. After this success, a lot of construction of geothermal power plants using CDM funding scheme. The cost of generating geothermal power plants in Indonesia about 9.5 cents $/ kWh and with the CDM scheme can reduce the generating cost about 0.85 cents $/ kWh. CDM is the only mechanism in the Kyoto Protocol that involves developing countries. The first phase of the Kyoto protocol will expire in 2012 and until now there is no legally binding to continue the second phase of the Kyoto protocol. Various proposals need to be studied regarding post-2012 climate change regime, including the CDM scheme. Agreement schemes need to be discussed and analyzed the advantages and disadvantages for Indonesia, especially in the development of geothermal power plants. Agreement is expected to come to involve the countries that did not ratify the Kyoto Protocol, especially the United States and Australia. Keywords: geothermal, CDM, post 2012 1. Introduction Indonesia has passed by volcano belt which stretches from the island of Sumatra, Java, Nusa Tenggara, Maluku and Sulawesi. The volcanic belt contained about 117 active volcanoes center that form a volcano line along approximately 7000 km, that lead Indonesia has 40% of the world's geothermal potential. According the data from Geology Agency of Ministry for Energy and Mineral Resources, Indonesia's geothermal potential reach 29.038 MW, which include proven reserves of 2.288 MW, probable reserves of 823 MW and possible reserves of 12.756 MW as well as hypothetical resources of 4.391 MW and speculative resources of 8.780 MW respectively. Geothermal potential that has been used up to 2010 is 4.1% or 1,189 MW. Utilization of geothermal is still very small when compared to conditions in the Philippines which have utilized 44.5% of geothermal potential. Recently the development of geothermal power plant still has high investment cost and high interest rate. Therefore many constraints encountered in geothermal development in Indonesia that derived from the government regulation and financial obstacles for investors. Financial constraints faced by many obstacles, including the limited of funding mechanism. Clean Development Mechanism (CDM) is one of the incentive mechanisms that can be used to help overcome this obstacle. The successful of Chevron Geothermal Indonesia to implement the CDM funding for Darajat geothermal power plant unit III has been promoting the development of the next geothermal projects. In addition, there are currently several government policies that helped in the development of