ADB and PT Supreme Energy Muara Laboh Partner to Expand Indonesia’s Geothermal Energy Capacity

ADB, acting as the lead structuring bank, has mobilized private commercial capital while addressing project risk in Indonesia’s greenfield geothermal Independent Power Producer sector.

The Asian Development Bank (ADB) has signed a $92.6 million financing agreement with PT Supreme Energy Muara Laboh (SEML) to boost Indonesia’s renewable energy sector by expanding geothermal power production in West Sumatra. The initiative will support the construction, operation, and maintenance of a new 83-megawatt (MW) geothermal power plant, leveraging Indonesia’s abundant geothermal potential to address energy demands sustainably.

Innovative Financing Structure

ADB’s financing package of $92.6 million consists of:

• $38.8 million from ADB’s ordinary capital resources.
• $38.8 million syndicated ADB B loan from Sumitomo Mitsui Banking Corporation, with ADB as the lender on record.
• $15 million concessional loan from the Australian Climate Finance Partnership (ACFP).

ADB, acting as the lead structuring bank, has mobilized private commercial capital while addressing project risk in Indonesia’s greenfield geothermal Independent Power Producer sector. The package also involves parallel lenders like the Japan Bank for International Cooperation and commercial banks under Nippon Export and Investment Insurance guarantees.

Driving Clean Energy Goals

ADB Country Director for Indonesia Jiro Tominaga emphasized the project’s significance: “Geothermal power investments can be challenging, which makes the support of ACFP and the Government of Australia crucial. This collaboration will help Indonesia meet its clean energy goals while ensuring affordable electricity, reducing greenhouse gas emissions, and promoting long-term energy security.”

Indonesia has prioritized geothermal energy development, given its global leadership in geothermal reserves, estimated at 23.1 gigawatts. However, only a small fraction of this potential has been utilized.

Building on a Legacy of Support

Since 2013, ADB has financed multiple geothermal projects in Indonesia, including:

• Muara Laboh Stage 1
• Rantau Dedap
• Sarulla Geothermal Power Project

These efforts reflect ADB’s commitment to advancing renewable energy infrastructure and supporting the nation’s transition to a greener future.

Boosting Local Economies and Communities

SEML President Director Nisriyanto highlighted the project’s broader impact: “This initiative not only strengthens our renewable energy portfolio but also drives local economic growth by creating jobs and fostering community development.”

Australian Climate Finance Partnership (ACFP)

Managed by ADB and funded by the Australian Government, ACFP focuses on climate adaptation and mitigation investments in Southeast Asia and the Pacific. By derisking high-impact projects, ACFP catalyzes private sector financing to address market gaps and accelerate sustainable development.

SEML: A Joint Venture for Geothermal Innovation

SEML, a special-purpose vehicle for geothermal exploration and development in Indonesia, is a joint venture comprising:

• PT Supreme Energy, an Indonesian geothermal power provider.
• Sumitomo Corporation, a Japanese trading and investment company.
• INPEX Corporation, Japan’s largest oil and gas exploration and production company.

Advancing Indonesia’s Renewable Energy Future

This collaboration underscores Indonesia’s commitment to leveraging its renewable energy resources to reduce greenhouse gas emissions, enhance energy security, and provide affordable electricity. By fostering public-private partnerships, ADB and SEML aim to unlock the full potential of geothermal energy, creating a cleaner and more sustainable energy landscape in the region.