World Bank Supports Development of Geothermal Power in Indonesia

Contact :
World Bank Office
Jakarta Stock Exchange Building
Tower 2, 13 Floor,Jl. Jend Sudirman

In Jakarta – Randy Salim
Tel :(62 21) 5299-3259
rsalim1@worldbank.org

In Washington DC – Mohamad Al-Arief
Tel: (1 202) 458-5964
malarief@worldbank.org

World Bank Board of Executive Directors approve a US$4 million GEF grant to help develop Indonesia’s eco-friendly geothermal sector

Jakarta, June 3, 2008 – The World Bank approved a project to help scale-up the development of clean geothermal energy in Indonesia and contribute towards global climate change mitigation. The Geothermal Power Generation Development Project is funded by a US$ 4 million grant from the World Bank’s Global Environment Facility, and seeks to help the Indonesian government overcome the current obstacles in geothermal energy development. Despite its potential, the level of geothermal development in Indonesia has been limited in recent years.

“Through this project, we are helping the Indonesian government work towards its target of increasing geothermal power capacity to 6,000 megawatts by 2020 – this is six times Indonesia’s current geothermal capacity,” said Joachim von Amsberg, Indonesia Country Director, World Bank. “In the long-term, the project will have a positive impact on the global environment as the added capacity could reduce CO 2 emissions by up to 500 million tons. Indonesia’s huge geothermal potential presents a wonderful win-win opportunity for Indonesia to develop a cheap and reliable domestic energy source and at the same time contribute to the protection of the global environment.”

The project will be implemented by the Ministry of Energy and Mineral Resources through the Directorate General for Mineral, Coal and Geothermal. Growth in the geothermal sector has been limited mainly due to inadequate policies and lack of investment. The project will address these two key issues through an integrated set of actions, which include:

• Creating a pricing policy that provides sufficient economic incentives for developers.
• Addressing risks associated with geothermal development.
• Attracting investors to geothermal development opportunities, and offer it to them through a transparent competitive tender process.
• Building domestic capacity in Indonesia so that advancements in the geothermal sector can be sustained.

“Greater development of Indonesia’s vast geothermal resources will not only be environmentally beneficial, but will also improve energy security in the country, and help off-set the impacts of price volatility in the global market for fossil fuels,” said Migara Jayawardena, Senior Infrastructure Economist, World Bank, and project team leader. “Through this grant, the World Bank will not only help increase power-generation capacity in the geothermal sector, but also help Indonesia keep pace with the rapidly rising energy demand that is fueled by its growing economy.”

To read more about the World Bank’s support for Indonesia visit: www.worldbank.org/id