The World Bank’s Board of Executive Directors has approved a US$150 million loan for Indonesia to scale up investments in geothermal energy by reducing the risks of early-stage exploration. The loan is accompanied by $127.5 million in grants from the Green Climate Fund and the Clean Technology Fund, two institutions supporting climate-friendly development, based on a statement from the World Bank received in Jakarta Saturday.
Geothermal energy is expected to play a significant role in reducing Indonesia’s greenhouse gas emissions. As a clean and renewable energy source that provides power continuously, geothermal can reduce the country’s dependence on coal-fired power and other fossil fuels. If geothermal resources can be accessed easily, costs are competitive with coal and natural gas.
Geothermal is environmentally sustainable and developing this sector is an integral part of Indonesia’s overall energy security, as well as making the country less dependent on imported fuels.
Therefore, the Government of Indonesia is strongly committed to encourage participation by developers in exploring the geothermal potential and to provide support through this risk mitigation facility, Sri Mulyani remarked as quoted by Antara.
Under the Indonesia Geothermal Resource Risk Mitigation (GREM) project, the financing will help public and private sector developers to mitigate risks in exploration of geothermal resources, including covering a part of the cost in case of unsuccessful exploration.
The project will also finance technical assistance and capacity building of key stakeholders in the geothermal sector.