ADB Approves $180M Loan to Boost Indonesia's Geothermal Power Capacity

The Asian Development Bank (ADB) has approved an additional $180 million loan to PT Geo Dipa Energy (GDE), a state-owned geothermal developer in Indonesia, to accelerate the country's geothermal energy capacity and strengthen its commitment to a low-carbon future. This marks the second additional financing to the ongoing Geothermal Power Generation Project, reinforcing ADB's long-term partnership with the Indonesian government in transitioning toward cleaner and more resilient energy systems.

The new financing responds to rising project costs and aims to ensure the timely completion of two key geothermal power plants currently under development in Java Island. These plants will play a pivotal role in meeting Indonesia's renewable energy targets and delivering base-load electricity to the energy-hungry Java–Bali grid.

Expanding Green Power Infrastructure in Java

The financing will support the construction and commissioning of two 55-megawatt geothermal power units at Dieng and Patuha, key geothermal fields managed by PT Geo Dipa Energy. Once operational, these plants are expected to deliver 110 megawatts of clean, reliable, base-load electricity to the grid.

The environmental benefits are significant: the facilities are projected to reduce over 550,000 tons of CO₂ emissions annually, displacing fossil fuel-based generation and aligning with Indonesia's Nationally Determined Contributions (NDCs) under the Paris Agreement.

"ADB is pleased to partner with the Government of Indonesia in advancing the country's sustainable energy transition," said ADB Country Director for Indonesia Jiro Tominaga. "PT Geo Dipa Energy plays a catalytic role in driving the next phase of geothermal development. We look forward to continuing our close collaboration to expand Indonesia's geothermal capacity and accelerate the shift toward a cleaner, more resilient energy future."

Unlocking Indonesia's Vast Geothermal Potential

Indonesia is home to the world's largest estimated geothermal resource potential, with a capacity of 29 gigawatts. However, despite this immense promise, the country's installed geothermal capacity stands at just 2.1 gigawatts, making it the world's second-largest geothermal producer—but with much room for growth.

The slow pace of development has been attributed to:

• High upfront exploration costs

• Long project development cycles

• Exploration risk and lack of risk-sharing mechanisms

• Limited private sector investment in early-stage development

ADB's ongoing project with GDE, initially approved in 2020, is addressing these challenges by supporting geothermal exploration, power plant development, and the capacity-building of GDE. The initiative is also aimed at de-risking future investment by supporting government-backed drilling programs, thus encouraging private sector participation.

First Additional Financing: Introducing Advanced Tech

This latest loan follows a $10 million grant approved in 2023 from the Japan Fund for the Joint Crediting Mechanism (JFJCM). That first additional financing was targeted specifically at integrating advanced geothermal technologies at the Patuha Unit 2 power plant, including binary cycle systems that improve efficiency and reduce environmental impact.

By layering financing instruments—loans and grants—ADB is creating a more sustainable and scalable geothermal development model in Indonesia, tailored to national climate objectives and international best practices.

Empowering Communities, Especially Women

Beyond energy generation, PT Geo Dipa Energy's strategy includes a strong social responsibility component, especially focusing on gender equity and community empowerment. As part of its inclusive development mandate, GDE allocates project funds to:

• Support women-led small businesses

• Award scholarships to girls and women in science and technical fields

• Promote gender-sensitive recruitment practices across its staff and contractors

ADB has commended these initiatives as models for mainstreaming gender equity into large-scale infrastructure development.

ADB's Broader Clean Energy Engagement in Indonesia

The $180 million loan is part of ADB's broader energy strategy in Indonesia, which emphasizes:

• Decarbonizing power generation

• Improving energy access

• Mobilizing private investment

• Supporting institutional reforms

This latest financing aligns with ADB's Energy Policy 2021, which commits to supporting its developing member countries in achieving net-zero emissions, universal energy access, and sustainable development.

Looking Ahead: Building a Clean, Resilient Energy Future

With this new financial injection, ADB and PT Geo Dipa Energy are set to push forward a transformative geothermal development phase for Indonesia. As the country seeks to meet renewable energy targets under its Energy Transition Mechanism (ETM) and Long-Term Strategy for Low Carbon and Climate Resilience 2050, geothermal energy will be central to its clean energy landscape.

ADB's support continues to play a key role in bridging the financing and capacity gap, ensuring projects like this serve both climate goals and inclusive development.