ADB finances Indonesia's first utility PV plants

Loan is part of a two-phase portfolio financing amounting to about USD 160 million for investments in new renewable energy.

The Asian Development Bank (ADB) today announced a private sector financing program totaling approximately USD 40 million to invest in the first photovoltaic solar power (PV) installations of public services in Indonesia based on the project-finance basis.

The loan is part of a two-phase portfolio financing amounting to about USD 160 million for investments in new renewable energy in the country.

The ADB will invest in two phases in renewable energy assets developed by Vena Energy, formerly known as Equis Energy, the largest renewable energy independent power producer (IPP) in Asia and the Pacific, with 11 gigawatts in operation and under construction.

The investment will help build, operate and maintain a portfolio of energy projects, including a wind farm and four photovoltaic solar plants in eastern Indonesia.

The first phase, which was signed in December 2017, consisted of a 72-megawatt (MW) wind plant in Jeneponto, south of Sulawesi. the financing of the ADB to PT Bayu Energi Jeneponto, subsidiary of Vena Energía, amounted to USD 120.8 million, including the financing of two trust funds administered by the Bank, namely, Asia's Private Infrastructure Fund (LEAP) and the Canadian Climate Fund for the Private Sector in Asia II (CFPS II).

The second phase, completed today, includes a 21 MW photovoltaic solar power plant Likupang, north of Sulawesi and three 7 MW photovoltaic solar plants Pringgabaya, Selong and Sengkol in Lombok, West Nusa Tenggara.

The ADB financing amounted to USD 40.2 million for four of Vena Energy's respective subsidiaries. The second phase also includes the administration of LEAP and CFPS II loans.

The wind and solar power plants will supply energy to Perusahaan Listrik Negara (PLN), the Indonesian national power company. "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 Infrastructure Finance Division Director for Southeast Asia, East Asia, and the Pacific at ADB's Private Sector Operations Department Mr. Jackie B. Surtani.

The CFPS II loans for both phases of the project helped the proponents fill the financing gap in a relatively low tariff environment in Indonesia and put these projects on the market.

Concessional financing was required to improve performance in order to overcome the risks of those entering for the first time and to address various technical and regulatory challenges. These transactions must demonstrate the commercial viability of limited-use financing for renewable energy projects and help Indonesia unlock its renewable energy markets for the private sector.

(With inputs from ADB)