GE Energy Financial Services, a unit of global diversified business giant GE, has agreed to extend a US$50 million loan for Indonesia's largest geothermal power plant project in West Java, in what it says is part of its commitment to develop renewable energy in Asia.
The loan, which is extended through its local subsidiary Star Energy which specializes in energy development in Indonesia, will support the financing of emission-free 220 megawatt (MW) plant in Pangalengan, about 45 kilometers south of Bandung, surrounded by tea and kina plantations, a media statement said over the weekend.
The elecricity produced from the field, called Wayang Windu, will be sold to state utility PT PLN to support its power distribution network in West Java.
The loan is GE Energy's first investment in geothermal projects outside of the US.
The Wayang Windu field made headlines last month when dozens of residents in Pengalengan angrily thronged the nearby geothermal exploration site shortly after a series of big bangs or explosions on the site.
They protested that three explosions strongly shook Margamukti village, causing a number of local villagers to faint.
The accident took place around three months after the Energy and Mineral Resources Minister inaugurated the Wayang Windu geothermal generator worth $200 million at the exploration site.
But GE Energy had no doubts over the benefits of the project.
"The Wayang Windu project is ideal for our first investment in Indonesia's energy sector in this past decade," James Berner, head of GE Energy for Asia operations, said in a statement.
Indonesia with its position on the Pacific Ring of Fire - an arc of volcanoes and fault lines encircling the Pacific Basin, is rich with geothermal energy resources.
Based on data from PLN, Indonesia has a known total geothermal reserve of approximately 27,000 MW, of which about 9,600 MW is in Sumatra, 5,400 MW in Java, 1,500 MW in Sulawesi, and the rest scattered over other parts of the country.
But until now it only managed to generate 1,155 MW from 16 geothermal power plants already in operation in Java, Sumatra, and Sulawesi. They are Darajat (I, II, III), Dieng I, Kamojang (I, II, III, IV), Lahendong (I, II, III), Salak (I, II), Sibayak, and Wayang (I, II).
Based on data from the IFC, Indonesia will need a total investment of $24 billion to develop its geothermal potential up until 2014.
The government has targeted to have an installed power generation capacity of 9,500 MW of geothermal power by 2025, estimated to contribute about 6 percent of the country's electricity consumption by then.
Under the government's second electricity crash program, geothermal-fired power plants are expected to contribute about 48 percent of the total power output of up to 10,580 MW under this program.
The program, the second 10,000 MW program set up by PLN, is expected to be planned and implemented between 2010 to 2014.
According to the statement, GE's total investment in Indonesia since its presence was established in 1940 has totaled $1.2 billion.
In the renewable energy sector, GE Energy has invested more than $4 billion worldwide.
