fbpx 52282-001: Geothermal Power Generation Project | Asian Development Bank

Indonesia: Geothermal Power Generation Project

Sovereign (Public) Project | 52282-001 Status: Approved

The project will support expansion of Indonesia''s geothermal generating capacity to contribute to the sustainability, resiliency, and sufficiency of the electricity system. It is aligned with the following Sustainable Development Goals (SDGs): SDG 7 on access to affordable, reliable, sustainable and modern energy for all and SDG 13 on urgent action to combat climate change and its impacts. The project will support GDE, a state-owned geothermal company focused on development and operation of geothermal resources, to commission an additional 110 megawatts (MW) of geothermal electricity generating capacity - 55 MW at the Dieng geothermal field in Central Java and 55 MW at the Patuha geothermal field in West Java.

Project Details

Project Officer
Florian Kitt Southeast Asia Department Request for information
Country
  • Indonesia
Sector
  • Energy
 
Project Name Geothermal Power Generation Project
Project Number 52282-001
Country Indonesia
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3928-INO: Geothermal Power Generation Project
Ordinary capital resources US$ 300.00 million
Loan 8380-INO: Geothermal Power Generation Project
Clean Technology Fund US$ 35.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Sector / Subsector

Energy / Renewable energy generation - geothermal

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The project will support expansion of Indonesia''s geothermal generating capacity to contribute to the sustainability, resiliency, and sufficiency of the electricity system. It is aligned with the following Sustainable Development Goals (SDGs): SDG 7 on access to affordable, reliable, sustainable and modern energy for all and SDG 13 on urgent action to combat climate change and its impacts. The project will support GDE, a state-owned geothermal company focused on development and operation of geothermal resources, to commission an additional 110 megawatts (MW) of geothermal electricity generating capacity - 55 MW at the Dieng geothermal field in Central Java and 55 MW at the Patuha geothermal field in West Java.
Project Rationale and Linkage to Country/Regional Strategy

Geothermal energy is one of the few renewable energy technologies that can provide baseload power, which makes it a valuable complement to variable renewable energy such as wind and solar energy. Indonesia has the world's largest geothermal potential, estimated at 29 GW. Since the Geothermal Law was enacted in 2003, the Government of Indonesia has prioritized the development of this resource, but geothermal development has been slow to take off. The government has allocated the development rights for geothermal working areas, with an estimated aggregate potential of 4.4 GW. Of these areas, private sector developers hold the development rights for 2.4 GW and state-owned enterprises (SOEs) hold the rights for areas with an aggregate potential of 2.0 GW. As of May 2018, Indonesia had reached only 1.95 GW of installed geothermal capacity, which is less than half of the allocated rights and significantly short of the targeted 7.2 GW by 2025.

To reach the required scale, the private sector must play a strong role in geothermal development. Indonesia has had some success with private sector-led geothermal projects, including those supported by the Asian Development Bank (ADB) Private Sector Operations Department. However, many privately held concession areas have not advanced because of environmental, social, or fiscal issues; and private sector interest in recent tenders has been modest. A variety of challenges face the sector, including the costly, lengthy, and high-risk exploration phase; unstable policy environment; and an often-unfavorable tariff regime.

Development partners are supporting the government to establish a more conducive policy environment for geothermal development. ADB has been an active participant in these efforts, in particular through the recent policy-based lending program. To reduce the up-front risks associated with geothermal exploration, the government is implementing a new risk-sharing mechanism for the project initiation phase, funded by the World Bank and the Green Climate Fund. As part of this program, the government will fund exploratory drilling for geothermal working areas that can subsequently be tendered. The updated geothermal regulation allows for greenfield geothermal working areas to be assigned to SOEs if the tender process fails (Regulation No. 37 [2018] on Offering of Geothermal Working Areas, Issuance of Geothermal License and Geothermal Business Assignment). Legacy projects where both private and public sector developers have grandfathered power purchase agreements (PPAs) are expected to proceed under the agreed mechanism and ownership

PT Geo Dipa Energi (GDE) was formed in 2002 as a joint venture company of Pertamina and PLN to manage and develop the geothermal working areas at Dieng and Patuha, which are among the 2 GW of working areas allocated for SOE development. GDE negotiated a PPA with PLN in 2004 for both Dieng and Patuha, covering the generation of up to 400 MW at each site. In 2011, the government reorganized GDE from a joint venture to a limited liability company and took over the 67% of shares owned by Pertamina. Equity injections from the government have increased its shareholding to 93.3%, while PLN holds 6.7%. GDE operates a 55 MW power plant at Dieng (Dieng Unit 1) and a 55 MW power plant at Patuha (Patuha Unit 1). It started operations by recommissioning Dieng Unit 1, which was initially commissioned by the private sector and then turned over to the government after the 1997 Asian financial crisis. GDE subsequently commissioned Patuha Unit 1 in 2014, which required the construction and commissioning of a power plant and associated systems fed by previously drilled wells. Under the proposed project, GDE plans to commission additional units at Dieng and Patuha (Dieng Unit 2 and Patuha Unit 2). These are government priority projects (according to the Regulation of the Ministry of Energy and Mineral Resources No. 40 [2014]) and PLN will purchase the electricity generated under the existing PPAs for these two working areas. In parallel with the development of Dieng Unit 2 and Patuha Unit 2, GDE will conduct exploratory drilling on behalf of the government, under a new risk-sharing program, for sites to be tendered. In addition, GDE will develop geothermal working areas for which it holds the development rights in areas that are less attractive to private investment because of environmental and social risks.

The project will add renewable energy baseload generation in Java by expanding geothermal power generation to reduce Indonesia's reliance on coal. It will contribute to reaching Indonesia's renewable energy targets and reducing GHG emissions in Indonesia and globally. Java has the country's largest electricity demand but is the most challenging for renewable energy because of low average generating costs from low-cost coal-based electricity generation, against which renewable energy must compete. The project will support capacity development of GDE, including increased knowledge of geothermal reservoir performance, contract and project management, and social and environmental impact minimization and management all with gender and climate resilience considerations. It will also support GDE to enhance its community development programs to be more strategic in responding to community needs, including women's needs. The strong emphasis on environmental and social risk assessment and management reflects lessons learned from previous energy sector projects in Indonesia, where such issues have impeded efficient and sustainable project development. The enhancement of GDE's institutional capacity will better equip it to undertake government-supported drilling to bring in the necessary private sector investment and set a proven standard for safeguard management, including for geothermal areas to be newly developed.

The project is aligned with Indonesia's long-term goals for energy, including maximizing the use of indigenous energy resources, diversifying the fuel mix, and ensuring environmental sustainability. ADB's energy sector support, as outlined in its draft country partnership strategy for Indonesia, 2020 2024, is aligned with these long-term goals, with a focus on policy reforms, developing sustainable electricity generation, and grid investments. The project is also aligned with several operational priorities of Strategy 2030.

Impact

Contribution to geothermal energy in Indonesian power supply increased. (Electricity Power Supply Business Plan [RUPTL 2018- 2027])

Renewable energy in electricity sector increased. (First Nationally Determined Contribution to the UNFCCC; Republic of Indonesia)

Project Outcome
Description of Outcome Adequacy and sustainability of energy supply increased
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Geothermal power plants constructed and commissioned

Institutional capacity of GDE strengthened

Community development program enhanced

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

Initial environmental examination (IEE) reports were prepared for the proposed facilities in Dieng and Patuha. The IEEs for Dieng 2 and Patuha 2 were based on the final feasibility study (August 2019, made use of domestic impact assessments [AMDAL]) for both facilities, and describe the potential environmental impacts and mitigation measures including the environmental monitoring required to ensure compliance to the national requirements and ADB SPS 2009. The IEEs will be updated and/or revised as needed once the front-end engineering design (FEED) has been completed. The revised/updated IEEs will be similarly disclosed to the ADB website, as required by SPS 2009 and Access to Information 2018.

The IEEs, supplemented by independent studies (critical habitat and biodiversity impact assessments; air quality and noise impact assessments; audits of existing environmental management systems and emergency preparedness and response systems; and environmental and safety audits of existing facilities), conclude that the project will extend existing facilities located within highly modified and disturbed areas, and is not anticipated to result in impacts that are significant and unprecedented. During construction, there will be localized temporary direct impacts, including ground surface disturbances, increased dust and noise levels, occupational and community health and safety risks, a significant temporary increase in water usage for well drilling, temporary traffic disturbance, and increased waste disposal requirements. These and other impacts will be mitigated through measures presented in the environmental management plan. Measures to avoid and mitigate adverse impacts on natural habitat and important ecology have been identified in biodiversity action plans prepared for both sites.

Involuntary Resettlement The project team carried out a social impact assessment at both sites. A total of 106 persons (29 households) will be directly affected and four lease coordinators (21 persons) will be indirectly affected by the development of Dieng 2. A resettlement plan was prepared to document the impact assessments and mitigation measures to be undertaken. Of the affected persons at Dieng, 86 are considered to be severely affected by the project and 47 are considered vulnerable. No significant changes to land requirements are expected during the construction of Dieng 2, but any changes will be reflected in an updated resettlement plan. The Patuha 2 will be built mostly within GDE's existing premises, but requires an additional 7.2 hectares (ha) of land. Some of this (2.6 ha) is located in a forest area that is not used by the community. GDE is processing a forestry land use permit for this land and will need to provide forestry land replacement after the Ministry of Environment and Forestry issues the permit. A resettlement plan will be prepared by GDE in compliance with ADB's Safeguard Policy Statement for this forestry land replacement, once identified. The remaining 4.6 ha required for Patuha 2 is within a tea plantation area, and GDE is processing a lease extension to secure its use throughout the project operation. The Patuha 2 due diligence report documents the assessments and mitigation measures to be taken. Capacity building and training to strengthen GDE staff knowledge on social safeguards will be conducted by the PMC during project implementation to ensure smooth and appropriate implementation of social safeguards.
Indigenous Peoples The due diligence confirmed that the project is not expected to have any impact on indigenous people as it is not implemented in the areas with prevalent indigenous communities. It will not directly or indirectly affect the dignity, human rights, livelihood systems, or culture of indigenous peoples or affect the territories of natural or cultural resources that indigenous peoples own, use, occupy, or claim as their ancestral domain.
Stakeholder Communication, Participation, and Consultation
During Project Design

Meaningful consultation with the affected persons (APs), communities, and stakeholders has been conducted during project processing and will continue during project implementation. The consultations carried out during project processing include: (i) initial consultation with communities living around project areas including APs and local leaders, village offices staff, and stakeholders to capture their perception and suggestions on the proposed project; (ii) focused group discussion on specific issues including income and livelihood restoration program for the poor and other vulnerable APs as well as the APs to be severely affected by the proposed project; (iii) meetings with sub-district and district agencies to obtain their support on the project; and (iv) meeting with Geothermal experts and civil society organizations to obtain feedbacks and inputs for the projects related safeguards and social issues. Continued consultations will be conducted during project implementation.

A stakeholder communication strategy (SCS) has been prepared to ensure (i) the delivery of relevant information to stakeholders in a culturally appropriate, gender sensitive, and timely manner; (ii) a regular flow of reliable information between the project internally and stakeholders externally. The SCS should ensure meaningful engagement with the affected community, strategic stakeholders, and indirect stakeholder, to ensure that, where relevant, that a conflict-sensitive approach is employed in communications, community engagement, and broader project planning. Special attention will be provided to the poor and other vulnerable groups in the SCS.

During Project Implementation
Business Opportunities
Consulting Services Indicative consulting services contracts include (i) pilot plant design and testing-Dieng and (ii) project management consultant.
Procurement Indicative procurement packages include (i) 2 goods contracts; (ii) 2 non-consulting services contracts; (ii) 9 works contracts; and (v) 2 EPC (plant) contracts.
Responsible ADB Officer Florian Kitt
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
PT Geo Dipa Energi (Persero)
[email protected]
Aldevco Octagon 2nd Floor, JL. Warung Jati Barat No. 75, Jakarta Selatan 12740 - Indonesia
Timetable
Concept Clearance 15 Feb 2019
Fact Finding 09 Sep 2019 to 19 Sep 2019
MRM 12 Dec 2019
Approval 28 May 2020
Last Review Mission -
Last PDS Update 28 May 2020

Loan 3928-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 May 2020 - - 31 Dec 2024 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 434.20 Cumulative Contract Awards
ADB 300.00 28 May 2020 0.00 0.00 0%
Counterpart 134.20 Cumulative Disbursements
Cofinancing 0.00 28 May 2020 0.00 0.00 0%

Loan 8380-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 May 2020 - - 31 Dec 2024 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 35.00 Cumulative Contract Awards
ADB 0.00 28 May 2020 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 35.00 28 May 2020 0.00 0.00 0%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Project Management Consultant Firm - Consulting Closed 11 May 2020 16 Jun 2020
52282-INO: Geothermal Power Generation Project [G-01] Invitation for Bids Closed 13 Feb 2020 26 Mar 2020
52282-INO: Geothermal Power Generation Project [G-02] Invitation for Bids Closed 16 Jan 2020 27 Feb 2020
52282-INO: Geothermal Power Generation Project Advance Notice Active 24 Oct 2019

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan