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Indonesia : ADB Approves $300 Million Loan to Increase Indonesia's Geothermal Electricity Generation
Publish Date : 01-Jun-2020
The Asian Development Bank (ADB) has approved a $300 million loan to help PT Geo Dipa Energi (GDE), an Indonesian state-owned company, expand its geothermal power generation capacity by 110 megawatts in Java, the countryâ€™s largest electricity grid and a challenging market for the development of renewable energy. ADB will also manage a $35 million loan from the Clean Technology Fund for the project.
â€œADBâ€™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,â€ said ADB Country Director for Indonesia Winfried F. Wicklein. â€œOur support is aligned with Indonesiaâ€™s long-term goals for economic growth and energy, including maximizing the use of indigenous energy resources, diversifying the fuel mix, and ensuring environmental sustainability.â€
Indonesia has the worldâ€™s largest geothermal potential, with an estimated 29 gigawatts (GW), and the worldâ€™s second-largest installed geothermal capacity of 2.1 GW. ADB, through its private sector finance operations, has had a long-standing interest in Indonesiaâ€™s geothermal sector, supporting projects at Muara Laboh, Rantau Dedap, and Sarulla. But the development of geothermal power remains slow, largely because the exploration phase is costly, lengthy, and high risk.
The Geothermal Power Generation Project will support the construction and commissioning of two geothermal plants at Dieng in Central Java and Patuha in West Java by GDE, a state-owned enterprise focused on geothermal exploration, development, and power generation. It will boost GDEâ€™s capacity to plan and execute projects and undertake government-supported drilling, which aims to attract much-needed private sector investment to develop new geothermal areas. In addition, GDE will provide direct assistance to nearby communities, including women and other vulnerable groups, and help improve livelihoods.
â€œThe project, recognized as a National Strategic Project by the government, will provide environmentally friendly base-load electricity to the Javaâ€“Bali electricity grid, reducing CO2 emissions by more than 700,000 tons per year,â€ said GDE President Director Riki Ibrahim. â€œThe project will build critical geothermal experience in Indonesia and contribute to the governmentâ€™s efforts to attract private-sector investment in the sector by reducing early-stage project development risk.â€
The project, approved amid the novel coronavirus disease (COVID-19) pandemic, will help ensure that Indonesiaâ€™s economic recovery will be green, sustainable, and resilient.
â€œADBâ€™s intervention will help make clean energy transition a key part of the countryâ€™s recovery from the pandemic. The project will create jobs for those supplying goods and services for drilling and construction, and will create livelihood opportunities in the local area,â€ said ADB Senior Energy Specialist for Southeast Asia Shannon Cowlin.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 membersâ€”49 from the region.