World Bank supports Indonesia's geothermal development

July 29, 2011

Indonesia's plans for geothermal power received a fillip as the World Bank offered loans of USD300 to Pertamina Geothermal Energy. The money will be used to to expand power generation by up to 150MW in geothermal fields at Ulubelu, South Sumatra and Lahendong, North Sulawesi.

While the project is substantial, the country has a long way to go to meet its electricity needs. As of 2010, Indonesia's generation capacity was 30,000 MW. For neighbouring Australia, with a tenth of the population, it is 51,000 MW. At present, about 12 percent of Indonesia's total energy mix comes from geothermal and hydro. By 2019, that is projected to grow to 18 percent and many projects still need funding.

The financing package comprises USD175 million loan from the International Bank for Reconstruction and Development - the World Bank's lending arm for middle-income countries - and a USD125 million concessional loan from the Clean Technology Fund on the basis of the project's positive impact on climate change. It was the first approval out of the Clean Technology Fund operation in the East Asia Region.