An employee monitors pipeline of Karaha Unit I geothermal power plant owned by PT Pertamina Geothermal Energy in West Java (Photo: Antara)Jakarta (VNA) – The World Bank (WB) has approved a 150 million USD loan for Indonesia to scale up investmentsin geothermal energy by reducing the risks of early-stage exploration.
The loan is accompaniedby 127.5 million USD in grants from the Green Climate Fund and the CleanTechnology Fund, two institutions supporting climate-friendly development.
Geothermalenergy is expected to play a significant role in reducing Indonesia’sgreenhouse gas emissions. As a clean and renewable energy source that providespower continuously, geothermal can reduce the country’s dependence oncoal-fired power and other fossil fuels.
Ifgeothermal resources can be accessed easily, costs are competitive with coaland natural gas.
IndonesianMinister of Finance Sri Mulyani said the country’s geothermal sector has vastpotential and its current installed geothermal power capacity is already thesecond largest in the world.
Geothermalis environmentally sustainable and developing this sector is an integral partof Indonesia’s overall energy security, as well as making the country lessdependent on imported fuels, she added.
Therefore,the government of Indonesia is strongly committed to encourage participation bydevelopers in exploring the geothermal potential and to provide support throughthis risk mitigation facility, Mulyani said.
Underthe Indonesia Geothermal Resource Risk Mitigation (GREM) project, the financingfrom the WB will help public and private sector developers to mitigate risks inexploration of geothermal resources, including covering a part of the cost incase of unsuccessful exploration.
Theproject will also finance technical assistance and capacity building of keystakeholders in the geothermal sector.
FXSutijastoto, Director General of New, Renewable Energy, and Energy Conservationunder Indonesia’s Ministry of Energy and Mineral Resources, said achieving thetarget of 23 percent renewable energy mix by 2025 requires contributions fromgeothermal development of about 7 percent, or equal to 7,000 MW. It is anambitious and huge development with a total investment of 35 billion USD.
Geothermalprojects are risky investments especially at the exploration stage, and nofinancial institutions provide funding for this early stage.
World Bank CountryDirector for Indonesia and Timor-Leste Rodrigo A. Chaves said financing forexploration drilling has been among the main barriers for geothermal expansionin Indonesia. Overcoming this hurdle will allow Indonesia to fully tap into thecountry’s large geothermal potential./.
