ADB Signs Agreement to Develop Indonesia's Geothermal Energy Resources

IDXChannel - The Asian Development Bank (ADB) has signed a financing agreement with PT Supreme Energy Muara Laboh (SEML) to develop Indonesia’s geothermal power resources. 

This will be done through the expansion of a geothermal facility at Muara Laboh in West Sumatera, while supporting the construction, operation, and maintenance of a new geothermal power plant with an approximate capacity of 83 megawatts (MW).

ADB’s total arranged finance package of around USD92 million comprises of a USD38 million from the bank’s ordinary capital resources, a USD38 million syndicated ADB B loan from Sumitomo Mitsui Banking Corporation with ADB acting as the lender on record, and a USD15 million concessional loan from the Australian Climate Finance Partnership (ACFP). 

ADB is the lead structuring bank on the transaction, mobilizing private commercial capital with uncovered project risk for the first time in Indonesia’s greenfield geothermal Independent Power Producer sector.

ADB is joined by parallel lenders including the Japan Bank for International Cooperation and a set of commercial banks under guarantee from Nippon Export and Investment Insurance.

“Investment in geothermal power can be challenging, making the support of ACFP and the Government of Australia vital to mitigate risks and deliver a project that helps Indonesia to meet its clean energy targets and deliver affordable electricity,” said ADB Country Director for Indonesia Jiro Tominaga in a media release on Tuesday (14/1/2025).

“This project will help to reduce greenhouse gas emissions and promote sustainable energy solutions that will enhance the country's long-term energy security. It is critical for the private and public sector to work together in advancing geothermal development," Tominaga said.

Since 2013, ADB has leveraged its extensive experience in financing four geothermal transactions in Indonesia. Demonstrating a strong commitment to the country's geothermal sector, ADB has supported private sector finance operations for projects including Muara Laboh Stage 1, Rantau Dedap, and the Sarulla geothermal power project.

Indonesia has the world’s largest geothermal energy reserves, estimated at 23.1 gigawatts, but utilizes only a fraction of this potential. Its abundant geothermal resources has led the government to prioritize the development of geothermal plants.

SEML is a special-purpose vehicle established to explore and develop geothermal resources in Indonesia. It is a joint venture between the Indonesian geothermal power provider, PT Supreme Energy; the Japanese trading and investment company, Sumitomo Corporation; and the largest oil and gas exploration and production company in Japan, INPEX Corporation. (Wahyu Dwi Anggoro)