The Asian Development Bank (ADB) has approved a $470mn results-based loan to Indonesian state-owned power generation company Perusahaan Listrik Negara (PLN), to support the country’s transition to renewable energy.

The funding will be for the first phase of the Accelerating Indonesia’s Clean Energy Transition programme, which is part of the ADB’s country partnership strategy with Indonesia. The programme will be implemented over 2026-31 and is aimed at facilitating the development of solar photovoltaic and wind power projects and strengthening power grid infrastructure across the country.

The scheme is expected to mobilise over $1bn in private investment, to cover large-scale solar and wind projects totalling 1.8GW. It is also expected to help avoid up to 2.5mn t/yr of CO2 emissions.

The programme comprises $470mn in financing from ADB’s ordinary capital resources and $30mn from ADB-administered funds such as the Asean Infrastructure Fund.

The development of a robust power grid that integrates renewable energy scale will also help to support Asean power grid plans, the ADB said. The organisation said earlier this year that it would allocate up to $10bn in investments for the grid over the next 10 years.

Indonesia aims for the share of renewables in its energy mix to reach 19-23pc in 2030, 36-40pc in 2040 and 70-72pc in 2060. It expects this will require a total investment of $472.6bn, in order to be achieved.

The ADB last month also approved a $180mn loan to support state-owned geothermal firm Geo Dipa Energy. The financing is meant to support the completion of the construction and commissioning of two geothermal plants of 55MW capacity each, on Java island.

Indonesia has the world’s largest geothermal potential at 29GW, and the second-largest installed capacity at 2.1GW, but the country’s geothermal development is still slow because of cost barriers and the high risks involved in the exploration process, said the ADB.

Source: Argus by Prethika Nair