Description: 

A $125 million CTF financed project to develop 150 MW of geothermal power at two sites to meet growing energy demand and provide energy security to the Indonesian economy.

Background:

During the past decade, Indonesia‘s GDP has grown approximately five to six percent annually, and even remained positive during the global economic downturn in 2008-09. However, Indonesia‘s power sector has struggled to keep up with the high electricity demand that has accompanied economic growth. To meet this growing demand while ensuring energy security, the Indonesia government has taken steps to partially develop its 27,000 MW of geothermal energy potential within the country.

The project includes a single component with an investment cost estimated at $574.7 million. Of this total, the World Bank will provide financing of $175 million through an IBRD loan which complements a $125 million concessional loan from the CTF. PGE will contribute $274.7 million from funds secured from its parent company.

Objectives and Outputs:

The principle objective of this investment is to leverage the vast geothermal energy resources of Indonesia. As a non-tradeable energy source unlike fossil fuels, geothermal capacity must be used in-country and therefore provides significant energy security.

The projects consists of investments in geothermal resources and steam field development, as well as construction of the Steamfield Above-Ground System (SAGS) and power plants of approximately 110 MW and approximately 40 MW at the Ulubelu and Lahendong (Tompaso) geothermal fields, respectively.

The economic benefits of these geothermal projects are the avoided resource costs of developing an alternative comparable coal-fired power plant. These benefits include the avoided external costs that would have resulted from the emissions of local pollutants.

The proposed projects will have a significant positive impact given the avoided release of greenhouse gas and local pollutants compared with the common alternative to generate electricity from coal. Then local population benefits from the saved emissions of hazardous air pollutants such as sulfur dioxide and soot, while the world community enjoys the climate benefits of saved carbon dioxide emissions from this rapidly expanding economy.  In tons of CO2 equivalent per MW, the power stations at both sites are estimated to produce greenhouse gases at one-tenth the rate of a coal-fired power plant.

Furthermore, this investment seeks to streamline the financial and technical processes required to develop geothermal power with the hopes to aid Indonesia in unlocking its subterranean energy potential.

This project summary is drawn from draft project proposals [such as the PAD, PID, SAR, and country investment plan] and may not contain the most up-to-date information.

IBRD Project Portal


Project Details
Project Document | Proposed Decision
Approved on December 21, 2010 (Approved Decision)
Approved amount(s):
USD 125.0 million