The loan will support the construction and commissioning of two geothermal plants in Dieng in Central Java and Patuha in West Java by GDE
The Asian Development Bank (ADB) has agreed to provide $300m loan to Indonesian state-owned company PT Geo Dipa Energi (GDE), for the development of 110MW geothermal power generation project in Java.
The lender has also agreed to manage $35m loan from the Clean Technology Fund for the project. The loan will support the construction and commissioning of two geothermal plants in Dieng in Central Java and Patuha in West Java by GDE.
When commissioned, the geothermal plant will boost the GDE’s capacity to plan and execute projects and undertake government-supported drilling, which aims to attract investment from private sector to develop new geothermal projects.
GDE president director Riki Ibrahim said: “The project, recognized as a National Strategic Project by the government, will provide environmentally friendly base-load electricity to the Java–Bali electricity grid, reducing CO2 emissions by more than 700,000 tons per year.
“The project will build critical geothermal experience in Indonesia and contribute to the government’s efforts to attract private-sector investment in the sector by reducing early-stage project development risk.”
Indonesia has the highest geothermal potential of 29GW in the world
Indonesia is touted to have the world’s largest geothermal potential, with an estimated 29GW and also has the world’s second-largest installed geothermal capacity of 2.1GW.
Through its private sector finance operations, ADB has supported the country’s geothermal sector for projects at Muara Laboh, Rantau Dedap, and Sarulla.
Despite the support, the development of the power sector remains slow, mainly due to the costly, lengthy and high risk exploration phases.
ADB Indonesia country director Winfried Wicklein said: “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.
“Our support is aligned with Indonesia’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.”
Last April, ADB offered a loan of $305m to finance the Jawa-1, a 1.76GW combined-cycle gas turbine (CCGT) power plant, located in Cilamaya, Karawang, West Java.
Power generated from the plant will be supplied to PT. Perusahaan Listrik Negara (PLN), the national power utility and it is touted to help avoid 1.77 million tons of carbon dioxide emissions from entering the atmosphere.