World Bank has offered $55.25m grant to Indonesia to support the development of geothermal power generation in the country.

The grant will support the Geothermal Energy Upstream Development Project in the country which will help in attracting investment to the sector.

First component of the grant includes contribution of $49m from the Clean Technology Fund (CTF) for developing the infrastructure and exploration drilling. Indonesian Ministry of Finance along with state-owned infrastructure financing company PT. Sarana Multi Infrastruktur will also contribute $49m on their part to the project.

The second component of the World Bank grant is the Global Environment Facility’s (GEF) $6.25m fund to help in meeting the required technical assistance for building capacity in geothermal exploration which also covers safeguards due diligence.

World Bank Indonesia country director Rodrigo Chaves said: “Insufficient energy holds back Indonesia’s growth potential and limits the future opportunities of millions of Indonesians. These grants will help Indonesia develop its abundant geothermal power potential.

“The World Bank fully supports the government’s efforts to achieve100 percent access to modern, reliable electricity as quickly as possible.”

The Geothermal Energy Upstream Development Project is expected to support the country’s efforts towards its transition to greener energy. Besides, it is also likely to help Indonesia in its target to increase the share of renewable energy in the energy mix to 23% by 2025.

According to World Bank senior energy specialist Peter Johansen, the geothermal power generation project will particularly focus on Eastern Indonesia where there is a high shortage of modern and reliable electricity supply.

The project is also expected to distribute the geothermal power it generates equally across the archipelago to meet the electricity needs of an estimated 30 million Indonesians or 12% of the population.