As the global community races toward a Net-Zero future, decarbonizing “hard-to-abate” sectors—such as heavy industry and shipping—has become a paramount challenge. Green hydrogen, produced via electrolysis, stands as a cornerstone of this transition. For Indonesia, which holds approximately 40% of the world’s geothermal reserves, the potential is immense: geothermal energy offers a stable, carbon-free baseload that solar and wind cannot match. However, high capital costs and market volatility create a landscape of “deep uncertainty” for investors. This insight, based on a recent peer-reviewed publication in the International Journal of Hydrogen Energy, explores how we can move beyond traditional financial forecasts to secure a viable green hydrogen economy.


Traditional financial models often fail in emerging markets because they rely on static assumptions. To solve this, SEMS Lab researchers utilized Exploratory Financial Modeling and Analysis (EFMA). This methodology integrates traditional Discounted Cash Flow (DCF) with Exploratory Modeling and Analysis (EMA), allowing for the simulation of thousands of plausible future scenarios simultaneously. By stress-testing investment feasibility against a wide range of variables—from fluctuating technology costs to shifting policy incentives—the research identifies “robust” regions where investment remains viable despite market turbulence.

Key Highlights

  • The Criticality of Electricity Pricing: The study finds that the Cost of Electricity (COE) is the single most dominant factor, accounting for up to 70% of the Levelized Cost of Hydrogen (LCOH). Systemic success depends on optimizing the integration of “excess” geothermal power.

  • Financial Robustness Thresholds: For a project to remain resilient, the findings suggest that the discount rate must ideally stay below 10%, with a moderate debt-to-capital ratio to balance risk and return.

  • The Payback Gap: Under current economic conditions, achieving a payback period of less than seven years—a common benchmark for industrial projects—remains a significant challenge that requires targeted policy interventions or technological breakthroughs.

  • Systemic Synergy: Utilizing geothermal energy for hydrogen production creates a unique “energy-industrial” synergy, allowing geothermal plants to improve their capacity factors while providing the hydrogen market with a reliable, continuous energy source.

The SEMS Perspective

This research embodies the SEMS Lab mission: From Complexity to Clarity. From Insight to Impact. By applying systems thinking to financial modeling, we move away from “best-guess” predictions and toward robust decision-making. Navigating the energy transition requires more than just technical innovation; it requires the systemic tools to understand how economic, regulatory, and technical variables interact. This work provides a roadmap for turning Indonesia’s geothermal potential into a resilient pillar of sustainable development and industrial strength.

Read the full paper here: Investment feasibility of green hydrogen production from geothermal electricity: Navigating uncertainty with exploratory financial modeling and analysis

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