On January 14, 2025, the Asian Development Bank (ADB) signed a significant financing agreement with PT Supreme Energy Muara Laboh (SEML) to bolster Indonesia’s geothermal power resources. This $92.6 million agreement aims to expand the geothermal facility at Muara Laboh in West Sumatra, supporting the construction, operation, and maintenance of a new geothermal power plant with an approximate capacity of 83 megawatts (MW)[5][8].
Financing Structure and Partners
The financing package is structured with $38.8 million from ADB’s ordinary capital resources, a $38.8 million syndicated ADB B loan from Sumitomo Mitsui Banking Corporation, and a $15 million concessional loan from the Australian Climate Finance Partnership (ACFP)[5]. ADB acts as the lead structuring bank, mobilizing private commercial capital with uncovered project risk for the first time in Indonesia’s greenfield geothermal Independent Power Producer sector. Parallel lenders include the Japan Bank for International Cooperation and a set of commercial banks under guarantee from Nippon Export and Investment Insurance[5].
Impact on Indonesia’s Energy Transition
Indonesia, with the world’s largest geothermal energy reserves estimated at 23.1 GW, is prioritizing the development of geothermal plants to meet its clean energy targets[5]. Despite its vast potential, only a fraction of this resource is currently utilized. The ADB’s support is crucial in helping Indonesia achieve its renewable energy goals and enhance long-term energy security[5].
ADB Country Director for Indonesia, Jiro Tominaga, emphasized the importance of this project in reducing greenhouse gas emissions and promoting sustainable energy solutions. He highlighted the need for public and private sectors to collaborate in advancing geothermal development[5].
ADB’s Commitment to Geothermal Development in Indonesia
Since 2013, ADB has supported four geothermal transactions in Indonesia, including Muara Laboh Stage 1, Rantau Dedap, and the Sarulla geothermal power project[5]. This commitment demonstrates ADB’s role in fostering Indonesia’s geothermal sector and contributing to the country’s economic growth and environmental sustainability[5].
SEML and the Muara Laboh Project
SEML, a joint venture between PT Supreme Energy, Sumitomo Corporation, and INPEX Corporation, is dedicated to exploring and developing geothermal resources in Indonesia[5]. The Muara Laboh project not only strengthens SEML’s renewable energy portfolio but also contributes to local economic development by creating jobs and fostering community growth[5].
The ADB’s financing agreement with SEML marks a significant step in Indonesia’s journey towards a greener energy mix. By leveraging geothermal resources, Indonesia is poised to reduce its reliance on fossil fuels and meet its ambitious renewable energy targets. The collaboration between ADB, SEML, and other stakeholders underscores the importance of public-private partnerships in advancing sustainable energy solutions in Southeast Asia.
Indonesia: Muara Laboh Geothermal Power Project Stage 2
Project Result / Case Study: Indonesia - Muara Laboh Geothermal Power
