This paper is guided by a vision to create Icelandic-Indonesian cooperation within the geothermal sector. It sets out in an explorative manner to analyse the institutional barriers to geothermal development in Indonesia. Building on that analysis and the overlapping literature of technology transfer, sustainable development, innovation diffusion, and energy based economic development; the paper discusses how the Icelandic geothermal sector can support and simultaneously benefit from the geothermal development in Indonesia. The paper than identifies and develops a specific case of Icelandic technology transfer to Indonesia and suggest further cooperation in the implementation and commercialization of the relevant small scale geothermal technology. This section discusses the nature of such a transfer and the possible economic, social, and environmental benefits of the technology for Indonesia.