The Asian Development Bank (ADB) has agreed to provide a $300m loan to Indonesian state-owned company PT Geo Dipa Energi (GDE) to expand the geothermal power generation capacity in the country.

The funding will be used to develop the 110MW Geothermal Power Generation Project, which involves the construction of two geothermal plants including 55MW at the Dieng geothermal field in Central Java and 55MW at the Patuha geothermal field in West Java.

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GDE president director Riki Ibrahim said: “The project, recognized as a National Strategic Project by the government, will provide environmentally friendly base-load electricity to the Java–Bali electricity grid, reducing CO2 emissions by more than 700,000 tons per year.

“The project will build critical geothermal experience in Indonesia and contribute to the government’s efforts to attract private-sector investment in the sector by reducing early-stage project development risk.”

According to ADB, Indonesia has the world’s second-largest installed geothermal capacity of 2.1GW and is estimated to hold 29GWof geothermal potential, making it the world’s largest of its kind.

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Expected to help ensure the sustainable and resilient economic recovery for the country, the project has been approved amid the novel Covid-19.

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ADB Indonesia country director Winfried Wicklein said: “ADB’s geothermal project will help Indonesia combat climate change and make its electricity system more sustainable, reliable, and efficient. It will also help businesses and consumers access affordable, reliable, and modern energy.

“Our support is aligned with Indonesia’s long-term goals for economic growth and energy, including maximising the use of indigenous energy resources, diversifying the fuel mix, and ensuring environmental sustainability.”

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GDE will build two geothermal plants in Indonesia. (Credit: Simon Steinberger from Pixabay)