JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB) announced to provided of US$40 million to invest in Indonesia’s first utility-scale solar photovoltaic (PV) plants of Vena Energy that will create the first utility-scale parks in the country.
The loan package is part of a two-phased portfolio financing totaling approximately $160 million for new renewable energy investments in the country, said the agency on Thursday (24/05).
The first phase $120.8 million, was signed in December 2017 and backed a 72-MW wind project of PT Energi Bayu Jeneponto, a subsidiary of Vena Energyin in Jeneponto, South Sulawesi.
The second phase, which achieved first drawdown today, comprises a 21 MW solar PV power plant in Likupang, North Sulawesi and three 7 MW solar PV power plants in Pringgabaya, Selong, and Sengkol in Lombok, West Nusa Tenggara.
The financing package including financing from two trust funds administered of ADB, namely the Leading Asia’s Private Infrastructure Fund (LEAP) and the Canadian Climate Fund for the Private Sector in Asia II (CFPS II).
“ADB and Vena Energy have been able to add over 114 MW of clean energy to Indonesia’s electricity grid, while helping reduce the country’s dependence on fossil fuels and promoting renewable energy development,” said Infrastructure Finance Division Director for Southeast Asia, East Asia, and the Pacific at ADB’s Private Sector Operations Department Jackie B. Surtani.
Vena Energy Chief Executive Officer Mr. Nitin Apte added, Indonesia has made a strong commitment to renewable energy, pledging to leverage the country’s considerable solar and wind energy resources to take renewables to 23 percent of Indonesia’s overall energy mix by 2025.
All wind and solar parks supported by the ADB package will be supplying power to state-owned utility company PT Perusahaan Listrik Negara (PLN), the lender said.
The CFPS II loans for the project’s two phases have been instrumental in assisting the sponsors bridge the financing gap in the relatively low-tariff environment in Indonesia and bring these projects to market. Concessional financing was needed to improve returns to overcome first-mover risks as well as address various technical and regulatory challenges.
These transactions are expected to demonstrate commercial viability of limited recourse financing for renewable energy projects and help Indonesia unlock its renewable energy markets to the private sector.
CFPS II was established in March 2017 with an approximately $150 million contribution from the Government of Canada to support greater private sector participation in climate change mitigation and adaptation projects and promote gender equality and the empowerment of women and girls in projects supported by the fund.
Launched in August 2016, LEAP is one of ADB’s co-financing vehicles dedicated to private sector infrastructure in Asia and the Pacific. The Japan International Cooperation Agency (JICA) supports the fund through a $1.5 billion equity commitment.
Combined with ADB’s own capital and that of commercial partners, the fund is expected to provide financing of at least $6 billion and enables ADB to boost support for quality and sustainable infrastructure.
Last year, total investment in renewable energy in Indonesia has reached Rp12 trillion (US$845.07 million), compared to Rp8.63 trillion in full year 2014, Rp13.96 trillion in 2015 and Rp21.25 trillion in 2016. In addition, the installed capacity of renewable energy power plants have also expanded.
As much as 1,808.5 MW of geothermal power plants were added in the ten months to October, solar and micro hydro power plants 259.8 MW and bioenergy 1,812 MW.
The government itself has developed 471 units of renewable energy-based power plants with installed capacity of 38.9 MW (excluding geothermal energy), that helps lighten up villages and 67,000 households in remote areas.