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.
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.
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."
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:
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.
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:
ADB has commended these initiatives as models for mainstreaming gender equity into large-scale infrastructure development.
The $180 million loan is part of ADB's broader energy strategy in Indonesia, which emphasizes:
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.
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.