The Asian Development Bank (ADB) has agreed to provide $109m financing for the Muara Laboh geothermal power generation project in western Indonesia.

The project is being developed by PT Supreme Energy Muara Laboh, a joint venture of the Indonesian geothermal power developer, PT Supreme Energy; the Japanese trading and investment firm, Sumitomo; and global energy company ENGIE.

The first phase of the project will generate 80MW of emission-free electricity, enough to power about 120,000 households.

Construction on the project is anticipated to start this year in the Solok Selatan region in West Sumatra province.

Indonesia has about 40% of the world’s geothermal reserves, estimated at 28,000MW.

ADB's financing is part of its efforts to accelerate private sector-led infrastructure development in Asia and the Pacific and boost support for clean energy.

The assistance is funded by a $70m loan from ADB’s own capital and a $19m participation from the Clean Technology Fund (CTF).

Apart from ADB, financing is being provided by the Japan Bank for International Cooperation and a set of commercial banks under a guarantee from Nippon Export and Investment Insurance.

ADB Private Sector Operations Department senior investment specialist Yuichiro Yoi said: “This project demonstrates Indonesia’s commitment to meet increasing demand for electricity and support the development of renewable energy.

“This transaction proves that the private sector will play a critical role in helping the country achieve both of these targets.”

ENGIE has been present in Indonesia for more than 60 years. Muara Laboh is the company's first renewable project in the country.

Image: ADB supports Indonesian clean energy with $109m financing for geothermal. Photo: Courtesy of the Asian Development Bank.