$50 million A.D.B. loan to develop Indonesia’s geothermal potential

The loan, supported by the Clean Technology Fund, is to share risks with the private sector during the project development and exploration phase of the RantauDedap geothermal project that will be located in South Sumatra.

The Asian Development Bank will provide Indonesia a loan of up to $50 million to support its geothermal exploration.

The loan, supported by the Clean Technology Fund, is to share risks with the private sector during the project development and exploration phase of the RantauDedap geothermal project that will be located in South Sumatra.

“This innovative loan demonstrates the depth of A.D.B. support for deploying clean energy technologies that can significantly displace coal and oil-fired power. In addition, it will help unlock Indonesia’s geothermal potential by bridging a key financing gap in the market,” said Lazeena Rahman, investment specialist in A.D.B.’s Private Sector Operations Department.

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Under the initial phase of the RantauDedap project, geothermal resource exploration will be conducted involving the drilling and testing of wells.

Upon the targeted development of the geothermal project, it is expected to be able to support at least 240 megawatts of geothermal power generation capacity over 30 years, with an estimated net reduction in carbon dioxide emissions of around 1.1 million tons annually.

The project will be implemented under a 35-year geothermal operating license, a 30-year energy sales contract with Perusahaan Listrik Negara, the national electricity utility company, and a business viability guarantee from the Ministry of Finance.

The borrower – Supreme Energy RantauDedap – is a special purpose vehicle established in Indonesia to explore and develop geothermal resources, and to construct, operate, and maintain the completed power plant and facilities. The project company’s shareholders are GDF Suez, Marubeni Corporation, and Supreme Energy.

The current loan follows A.D.B.’s $350 million financing for the 320 MW-Saraulla Geothermal Power Development Project, which reached financial close earlier this year. It was also supported by the Clean Technology Fund.

It is estimated that Indonesia has a geothermal resource potential of approximately 29,000 MW, however, less than 5 percent of this potential has been developed. – EcoSeed Staff

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