Growing concerns over UAE plan to expand geothermal investment in Indonesia

Last week, the United Arab Emirates (UAE) signaled its intention to deepen its involvement in Indonesia’s renewable energy sector, with geothermal identified as one of the focuses. Speaking at Abu Dhabi Sustainability Week, executives from Masdar, the UAE’s state-owned renewable energy company, highlighted geothermal’s strategic importance and emphasized Indonesia’s position as the world’s second-largest geothermal producer. Masdar framed the move as a natural extension of its broader commitment to Indonesia’s clean energy transition.

That conclusion deserves reconsideration.

For the UAE, expanding investment in Indonesian geothermal energy is a strategic misstep. The technology is increasingly associated with social conflict, long development timelines and uncertain returns. Meanwhile, Masdar already has a more effective, scalable and politically durable pathway in Indonesia: floating solar power paired with battery energy storage.

Geothermal is often promoted as an ideal clean energy source because it provides steady, baseload electricity. In practice, geothermal development in Indonesia has proven far more complicated. Projects require extensive drilling, land access and permanent surface infrastructure, frequently located in rural or environmentally sensitive areas. These requirements have brought geothermal projects into direct conflict with local communities.

Across Java, Sumatra and eastern Indonesia, geothermal developments have faced protests, legal challenges and prolonged delays. Communities have raised concerns over land rights, water security and environmental degradation. In some cases, projects have stalled for years despite strong central government backing. These conflicts are not isolated incidents; they reflect a structural mismatch between geothermal development and Indonesia’s social and geographic realities.

READ: As Indonesia leads on human rights, Gaza defines the moment

Studies of geothermal deployment in Indonesia have consistently shown that promised local benefits are often overstated. Construction jobs are temporary, long-term employment is limited, and revenue-sharing mechanisms rarely compensate for disruptions to agriculture or access to land. When renewable energy projects generate resistance rather than consent, they undermine both climate goals and political stability.

For a foreign investor, this translates into risk. Delays increase costs. Community opposition invites regulatory intervention. Reputational damage can spill beyond individual projects. For the UAE, which has positioned itself as a responsible and forward-looking global energy partner, being drawn into contested geothermal developments is not a neutral outcome.

There is also the issue of speed. Geothermal projects are slow to deliver. From exploration to commercial operation, timelines can exceed a decade, with no guarantee that drilling will produce viable resources. Cost overruns and underperformance are common. In a country with rising electricity demand and ambitious climate targets, these delays matter.

What makes this strategy particularly questionable is that Masdar already has a proven alternative in Indonesia.

The Cirata Floating Solar Power Plant in West Java — Masdar’s first renewable energy project in Southeast Asia — has demonstrated how innovation can overcome land constraints without triggering social conflict. Built on an existing reservoir, Cirata avoided land acquisition disputes and reached operation far faster than a typical geothermal project. Its strong performance prompted Indonesia to revise regulations, increasing the allowable surface area for floating solar installations from 5 percent to 20 percent.

OPINION: What Indonesia’s silence on Iran is meant to preserve

Indonesia has since identified hundreds of reservoirs with potential for floating solar development. When combined with battery energy storage, floating solar can increasingly provide reliable power during peak demand periods. Storage costs continue to fall, and deployment timelines are measured in years rather than decades. Unlike geothermal, floating solar does not require drilling, does not displace communities and does not depend on uncertain subsurface conditions.

From a strategic standpoint, the contrast is stark. Geothermal ties capital to long-term, high-risk projects with rising social opposition. Floating solar and storage offer faster emissions reductions, clearer economics and far fewer political complications.

None of this suggests geothermal has no role in Indonesia’s energy mix. But it does suggest that new foreign investment — especially from partners with alternative options — should be directed elsewhere. Clean energy transitions succeed not only on technical merit but on social acceptance and speed of deployment.

For the UAE, the lesson from Indonesia is already visible. Its most successful project is not underground but on the surface of a reservoir. If Masdar wants to reinforce its credibility, reduce risk and accelerate impact, it should expand what works rather than double down on what increasingly does not.

In Indonesia, geothermal is no longer the safest bet for a clean energy future. Floating solar and energy storage are.

OPINION: Indonesia issued 51 visas to Israelis. That choice has moral consequences

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.