The Asian Development Bank (ADB) has approved a US$180mn loan as the second additional financing to support PT Geo Dipa Energy (GDE) — an Indonesian state-owned company — to further boost the country’s geothermal electricity generation.
It will support the construction and commission of two geothermal plants each with a capacity of 55 MW in Java Island.
The project will provide environmentally friendly base-load electricity to the Java–Bali electricity grid, reducing CO2 emissions by more than 550,000 tons per year, ADB said in a statement.
The additional financing will focus on supporting project completion “against increasing costs”, it added, as well as sustaining progress toward the south-east Asian country’s clean energy and climate goals.
“PT Geo Dipa Energy plays a catalytic role in driving the next phase of geothermal development,” said ADB Country Director for Indonesia, Jiro Tominaga.
“We look forward to continuing our close collaboration to expand Indonesia’s geothermal capacity and accelerate the shift toward a cleaner, more resilient energy future.”
Despite having the world’s largest geothermal potential (29 gigawatts) and the second-largest installed capacity (2.1 gigawatts), Indonesia’s geothermal development remains slow due to the high cost, long duration, and high risk of exploration, ADB added.
Approved in 2020, the Java Island project supports GDE in geothermal exploration, development, and power generation while strengthening its capacity to plan and implement projects and conduct government-supported drilling to attract private investment.
In 2023, ADB processed the first additional financing for the project, a US$10mn grant from the Japan Fund for the Joint Crediting Mechanism, to incorporate advanced technology at the Patuha unit 2 power plant.
The bank also flagged the project’s overall community and sustainability impact as well.
As part of its community strategy, GDE allocates funds to improve women’s livelihoods through support for women-led small businesses and scholarships.
It also promotes gender balance across its staff and contractors by integrating gender-sensitive approaches in its operations, the ADB statement added.