The Asian Development Bank is the lender behind the funds to help expand renewable energy
Indonesia has taken out a $300 million loan from the Asian Development Bank to fund two geothermal plants in Java. This will help the country to be able to boost its electricity generation capacity by 110 megawatts.
The money will be used for building and commissioning two facilities at Dieng in Central Java and Patuha.
The two geothermal plants will be built and commissioned by PT Geo Dipa Energi (GDE), which is an Indonesian state-owned renewable energy company. The Asian Development Bank will also manage a $35 million Clean Technology Fund loan for the project.
“ADB’s geothermal project will help Indonesia combat climate change and make its electricity system more sustainable, reliable, and efficient. It will also help businesses and consumers access affordable, reliable, and modern energy,” said Winfried F. Wicklein, the bank’s country director for Indonesia.
“Our support is aligned with Indonesia’s long-term goals for economic growth and energy, including maximising the use of indigenous energy resources, diversifying the fuel mix, and ensuring environmental sustainability,” Wicklein added.
The largest geothermal plants in the world are already located in Indonesia.
Indonesia is home to the largest facility of that nature, with an estimated 29 gigawatts (GW) capacity. The second largest installed facility of that nature is also in the country, with its 2.1 GW capacity.
The bank has supported a number of other projects of this nature. These include those at Muara Laboh, Sarulla, and Rantau Dedap. Still, it said that geothermal power development continues to be slow due to the exploration phase. That component of using this renewable energy is lengthy, risky and expensive.
The bank said this most recent loan will raise GDE’s capacity for planning and executing projects while taking on drilling with government support, which is meant to draw investment support from the private sector which his critical to gaining fresh geothermal plants development in new areas. This newest National Strategic Project is expected to cut 700,000 tons of CO2 per year from the country’s emissions, according to data from Riki Ibrahim, GDE president director.