The Asian Development Bank (ADB) is providing loans worth US$160mn for Indonesian renewables projects.
The deals include a US$40mn loan for the country’s first utility-scale photovoltaic (PV) plants, which will be funded on a project finance structure.
It is also arranging US$120.8mn for a 72MW wind power plant in South Sulawesi, a deal that was signed in December 2017, but which has achieved first draw-down this week.
This package also attracted funding from two trust funds within the ADB’s umbrella: the Leading Asia’s Private Infrastructure Fund (LEAP) and the Canadian Climate Fund for the Private Sector in Asia II (CFPS II).
The ADB’s director of infrastructure finance for Southeast Asia, Jackie Surtani, describes the deals as “sector-changing financing for renewable energy”, in a country which is largely dependent on heavily-polluting fossil fuels.
Both projects will be developed by Vena Energy, a Singaporean company formerly known as Equis Energy, which was acquired by Global Infrastructure Partners earlier in 2018.
Vena is the largest independent renewable energy power producer in Asia Pacific, with more than 180 projects generating more than 11GW, spanning Australia, India, Indonesia, Japan, the Philippines, Taiwan and Thailand.
The solar project will see four solar PV projects constructed in eastern Indonesia. The offtaker on both projects is the national power utility, Perusahaan Listrik Negara (PLN).
In total, the two projects will add 114MW to Indonesia’s electricity grid, as the country works towards its target of generating 23% of its energy mix from renewable energy by 2025.
The International Energy Agency (IEA) has praised “Indonesia’s steady progress in tackling fossil fuel subsidies”. The country long provided under-priced energy for transportation. But in 2015, it removed subsidies for many sectors, with spending on fossil fuel subsidies falling from 3% of GDP in 2014 to less than 1% in 2016.
“Vena Energy is leveraging our regional project development track record, technical capabilities and economies of scale to generate low-cost clean energy to support the government initiative, as well as create employment opportunities and drive economic growth in local communities,” says company CEO, Nitin Apte.