Developing sustainable energy sources is critical to meet Indonesia’s increasing power demand. The country has 40% of the world's geothermal resources. Development of these resources will help diversify the country's energy mix to meet the demand and its commitment to reduce 30% of its carbon dioxide emissions by 2030.
While the Indonesian government is improving its geothermal program to attract more investors, development partners like the Asian Development Bank (ADB) are helping mobilize financing from public and private sectors to develop these resources.
ADB, through the Climate Investment Funds (CIF), and its private sector partners are supporting three landmark geothermal power projects in North, South and West Sumatra. These energy projects demonstrate how private sector investment can drive geothermal energy development.
Jakarta, Indonesia - Indonesia has the largest economy in Southeast Asia. But the country remains among the world’s top greenhouse gas emitters.
By 2030, Indonesia is committed to reducing its carbon dioxide emissions by almost 30%. To meet this target, Indonesia is diversifying its energy mix by developing renewable energy sources.
With about 40% of the world's geothermal reserves, a low-carbon future is within Indonesia’s reach.
Extracted from heat deep within the earth, geothermal energy is cost effective, reliable, and environment friendly. So far, only about 4% of this resource has been developed.
While the government is improving its geothermal development program to attract more investors, development partners like the Asian Development Bank are helping mobilize financing from the public and private sectors.
"The development of the private sector in Indonesia has become an increasingly important objective of our work here. The infrastructure deficit is quite high. So in order to help government fill that gap, we have to help mobilize private sector finance,” shares Winfried Wicklein, ADB's Indonesia Resident Mission Country Director.
ADB, through Climate Investment Funds, is supporting three major geothermal projects in Indonesia. Sarulla Geothermal Power Project in North Sumatra is in the most advanced stage. With a 330MW capacity, it is the biggest geothermal project in the world in one single contract.
"Sarulla Geothermal Power Plant is a significant project. With the support of the local and central government, we hope our presence in North Tapanuli would add value to the surrounding people," states Shinichi Aburaya, CEO, Sarulla Operations Ltd.
In West Sumatra, 80MW-Muara Laboh power project is in its power plant construction phase. While second phase financing has been approved to start power plant construction in South Sumatra's 90MW-Rantau Dedap project.
Supramu Santoso, President-CEO of PT Supreme Energy acknowledges that, "Indonesia needs a lot of energy. We have the largest geothermal reserve in the world, so why not try to make that useful to our country. This is a good opportunity for investment and at the same time also good for Indonesia that we can develop renewable energy."
A million households are expected to benefit with the increased geothermal-sourced electricity from these projects.These projects will also provide development opportunities for local communities.
Ismoyo Argo, Sr. Business Development Manager of PT Supreme Energy, shares that to support and help the community, their organization gives capacity building and training to communities surrounding the project site.
These energy projects in Indonesia demonstrate how private sector investment can drive geothermal sector development.
"The combination of ADB and CIF has led to the financing of three landmark geothermal projects in Indonesia. It's a very powerful combination, very innovative. We look forward to working with many other project developers, lenders and others in the market to do more projects like this," comments Michael Barrow, Director General, ADB's Private Sector Operations Department.
Developing sustainable energy sources is critical to meet Indonesia’s increasing power demand and growing economy.