Indonesia’s Largest Geothermal Firm Aims to Power Data Centers

(Bloomberg) -- Star Energy Geothermal, owned by one of Indonesia’s most valuable companies, PT Barito Renewables Energy, is in talks to supply clean power to data centers if developers can build them near its geothermal power plants.

The electricity producer wants to shift from selling only to the state utility to bringing in “customers who are willing to buy renewable energy in Indonesia,” Chief Executive Hendra Soetjipto Tan said at Bloomberg’s Sustainable Business Summit in Singapore on Wednesday. The firm is also thinking about how to sell power to neighboring countries in the future, he said, without providing further details.

The rapid growth of the artificial intelligence sector is set to exponentially increase demand for energy around the world, with tech companies rushing to secure long-term contracts for electricity to fuel data centers. Geothermal makes for a stable and consistent source of energy where solar or wind may be intermittent. 

Firms are also grappling with whether to build data centers near clean power sources — usually in remote locations — or closer to demand bases like cities. Typically, geothermal plants are built near volcanoes or other areas where natural heat is found close to the Earth’s surface. Indonesia, which straddles the seismically active Pacific Ring of Fire, has the world’s largest geothermal potential, according to the Asian Development Bank, and accounted for 2.1 gigawatts or around 13% of global capacity.

While the renewable source accounts for just a sliver of installed capacity globally, the industry has seen a resurgence of interest, with investment in geothermal plants leaping to $8 billion in 2023, much higher than in previous years, according to BloombergNEF.