United States Pledges USD 126 Million for Ambitious Geothermal Project in Indonesia

Jun 2024

The Deputy Chief Executive Officer (DCEO) of the US International Development Finance Corporation (DFC) unveiled a fresh commitment of up to USD 126 million for PT Medco Cahaya Geothermal, an Indonesian power company. This investment aims to bolster Indonesia’s energy security and support mutual economic objectives between Indonesia and the United States.

The DFC’s commitment to PT Medco Cahaya Geothermal aligns with Indonesian infrastructure bank PT SMI, the existing project financing lender. This support aims to facilitate the construction and operation of the new 31 MW Phase I power plant, Ijen Geothermal. Located in East Java, this project aims to boost renewable energy production in a densely populated province with 40 million residents. It also aims to provide essential low-carbon baseload power to the Java-Bali grid, Indonesia’s most significant power system.

Indonesian officials and analysts view power grid enhancements as crucial for supporting the Just Energy Transition Partnership (JETP), which Indonesia established with global leaders during its G20 presidency. The initiative showcases Indonesia’s ongoing collaboration with the US Government in various vital sectors, such as infrastructure financing, renewable energy, and small business support. These efforts aim to promote Indonesia’s key domestic priorities and regional interests.

In November 2023, DFC unveiled USD 131 million in fresh investments to support small businesses and enhance women’s economic empowerment in Indonesia. These initiatives by DFC are designed to bolster private sector investments in Indonesia, aligning closely with the US-Indonesia Comprehensive Strategic Partnership. They also resonate with key U.S. Government initiatives such as the Indo-Pacific Strategy, the Indo-Pacific Economic Framework, the Partnership for Global Infrastructure and Investment, and Indonesia’s JETP.

(Source: US Embassy in Indonesia)

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