ADB Supports Expansion of Geothermal Power in Indonesia

January 16, 2025 — The Asian Development Bank (ADB) has signed a $92.6 million financing agreement with PT Supreme Energy Muara Laboh (SEML) to further develop Indonesia’s geothermal power resources, a press release by ADB says.

This investment will support the expansion of an existing geothermal facility at Muara Laboh in West Sumatra and facilitate the construction, operation, and maintenance of a new geothermal power plant with an approximate capacity of 83 megawatts (MW). The ADB’s total arranged finance package of $92.6 million consists of $38.8 million from the bank’s ordinary capital resources, a $38.8 million syndicated ADB B loan from Sumitomo Mitsui Banking Corporation with ADB acting as the lender on record, and a $15 million concessional loan from the Australian Climate Finance Partnership (ACFP).

Notably, ADB is the lead structuring bank on this transaction, marking the first time it has mobilized private commercial capital with uncovered project risk in Indonesia’s greenfield geothermal Independent Power Producer sector.

ADB is joined by parallel lenders, including the Japan Bank for International Cooperation and a group of commercial banks operating 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.

“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.”

Since 2013, ADB has utilized its extensive experience to finance 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. “We are grateful for ADB's continued support in harnessing Indonesia's vast geothermal potential,” said SEML President Director Nisriyanto. “This project not only strengthens our renewable energy portfolio but also contributes to the local economy by creating jobs and fostering community development.”

Indonesia holds the world’s largest geothermal energy reserves, estimated at 23.1 gigawatts, but currently utilizes only a small portion of this potential. The country’s abundant geothermal resources have prompted the government to prioritize the development of geothermal power plants. The ACFP is a concessional blended financing facility managed by ADB and funded by the Government of Australia.

It aims to catalyze financing for private sector climate adaptation and mitigation investments in the Pacific and Southeast Asia, addressing market gaps and demand by derisking high development impact projects and bringing them to market. SEML is a special-purpose vehicle created 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 INPEX Corporation, the largest oil and gas exploration and production company in Japan. ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while continuing its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members, 49 of which are from the region.

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