Indonesia finds itself navigating the complex intersection of energy pragmatism and diplomatic rhetoric after awarding a major geothermal contract to PT Ormat Geothermal Indonesia, a subsidiary of the Israeli-headquartered Ormat Technologies, Inc.
The Ministry of Energy and Mineral Resources confirmed on January 12 that Ormat had been selected as the winning bidder for the Telaga Reanu geothermal working area in West Halmahera, a resource-rich region in Indonesia's eastern provinces. The decision has triggered calls from civil society groups demanding the government reevaluate the concession given Indonesia's vocal support for Palestinian statehood and its stance on Israeli policy.
Ormat Technologies, established in 1965 in Yavne, Israel, operates one of the world's largest geothermal portfolios. The company's Indonesian subsidiary has been active in the archipelago since 2015, operating significant projects at Ijen in East Java and Salak. As of 2021, Ormat owned and operated 933 megawatts of geothermal and recovered energy-based power plants globally, with major production facilities remaining in Israel.
While Ormat Technologies is administratively registered in the United States and listed on the New York Stock Exchange since 2004, its Israeli origins and continued operational ties to Israel have made it a focal point of controversy. Indonesia does not maintain formal diplomatic relations with Israel and has consistently supported Palestinian rights in international forums.
"This reveals the gap between Indonesia's diplomatic positioning and its energy policy realities," said Fabby Tumiwa, executive director of the Institute for Essential Services Reform, a Jakarta-based energy think tank. "The government needs to explain how this contract aligns with our foreign policy principles."
Indonesia has set ambitious renewable energy targets as part of its commitment to reduce carbon emissions and achieve net-zero by 2060. Geothermal energy represents a critical component of this transition, with the archipelago sitting atop the world's largest geothermal reserves. However, development has been slow, hampered by complex regulations, land acquisition challenges, and insufficient domestic technical capacity.
Ormat's established presence in Indonesia's geothermal sector underscores a deeper strategic dependency. The company's technology and operational expertise fill gaps that domestic firms have yet to bridge. The Telaga Reanu project represents potential jobs and energy security for resource-poor North Maluku province, where electricity access remains limited outside urban centers.
Civil society organizations have called on the government to conduct a thorough review of all Ormat concessions. "Energy sovereignty means more than just generating power," argued Hendri Saparini from the Indonesian Forum for the Environment. "It requires alignment between our development needs and our values as a nation."
The Energy Ministry has yet to respond publicly to calls for reevaluation. In Indonesia, as across archipelagic democracies, unity in diversity requires constant negotiation across islands, ethnicities, and beliefs—and increasingly, between economic necessity and diplomatic principle.
This controversy highlights how Indonesia's energy transition intersects with its broader identity as the world's largest Muslim-majority democracy and a leader in the Non-Aligned Movement. How Jakarta navigates this tension will signal whether pragmatic energy needs or solidarity principles take precedence in shaping the nation's renewable future.
