ADB finances first ever utility-scale solar PV plants in Indonesia in US$160-million renewables deal
As announced on 24 May, the Asian Development Bank (ADB) announced a private sector financing package totaling approximately $40 million to invest in Indonesia’s first utility-scale solar photovoltaic (PV) plants on a project-finance basis.
The investment will help construct, operate, and maintain a portfolio of energy projects, including a wind farm and four solar PV plants in eastern Indonesia.
“By supporting a sector-changing financing for renewable energy, with an innovative portfolio approach, ADB and Vena Energy have been able to add over 114 MW of clean energy to Indonesia’s electricity grid, while helping reduce the country’s dependence on fossil fuels and promoting renewable energy development,” said Mr Jackie B. Surtani, Infrastructure Finance Division Director for Southeast Asia, East Asia, and the Pacific at ADB's Private Sector Operations Department.
The loan package is part of a two-phased portfolio financing totaling approximately $160 million for new renewable energy investments in Indonesia. In this $160-million renewable energy investments, ADB will invest in two phases in renewable energy assets being developed by Vena Energy which is currently the largest renewable energy independent power producer (IPP) in the Asia and Pacific region, with 11 gigawatts in operation, under construction, and in development.
ADB’s financing package totaled $40.2 million to four respective subsidiaries of Vena Energy. The second phase comprises a 21 MW solar PV power plant in Likupang, North Sulawesi and three 7 MW solar PV power plants in Pringgabaya, Selong, and Sengkol in Lombok, West Nusa Tenggara. The wind and solar power plants will supply energy to Perusahaan Listrik Negara (PLN), Indonesia's national power utility.
The second phase also involves the administration of loans from two trust funds administered by ADB, namely, the Leading Asia’s Private Infrastructure Fund (LEAP) and the Canadian Climate Fund for the Private Sector in Asia II (CFPS II).
Launched in August 2016, LEAP is one of ADB’s co-financing vehicles dedicated to private sector infrastructure in Asia and the Pacific. The Japan International Cooperation Agency (JICA) supports the fund through a $1.5 billion equity commitment. Combined with ADB’s own capital and that of commercial partners, the fund is expected to provide financing of at least $6 billion and enables ADB to boost support for quality and sustainable infrastructure.
At the same time, the CFPS II loans for the project’s two phases have been instrumental in assisting the sponsors bridge the financing gap in the relatively low-tariff environment in Indonesia and bring these projects to market.
CFPS II was established in March 2017 with an approximately $150 million contribution from the Government of Canada to support greater private sector participation in climate change mitigation and adaptation projects and promote gender equality and the empowerment of women and girls in projects supported by the fund.