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Powering Indonesia’s Future with Geothermal Energy

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15 Jan, 2025

This post was originally published on Climate Links

Powering Indonesia’s Future with Geothermal Energy
jschoshinski
Tue, 01/14/2025 – 16:19

Indonesia ranks second behind the U.S. in installed geothermal capacity and is home to some of the world’s largest geothermal reserves. However, despite its vast geothermal potential, Indonesia faces challenges in securing financing and navigating regulatory hurdles for large-scale geothermal projects. One such project, the Ijen geothermal power plant in East Java, experienced delays after initial agreements in 2013, with investors pulling out and development stalling. Given Ijen’s importance in the nation’s energy transition and its inclusion in Indonesia’s 10-year Electricity Supply Business Plan, it was critical that the project secure funding to help Indonesia meet its clean energy goals.  

USAID played a pivotal role in overcoming these barriers by providing essential transaction advisory services to the project financing lender Indonesian infrastructure bank PT Sarana Multi Infrastruktur (PT SMI). Through the USAID Sustainable Energy for Indonesia’s Advancing Resilience (USAID SINAR) activity, USAID provided legal due diligence, identified development risks, and prepared term sheets, facility agreements, and corporate approvals. With the Agency’s support, the Ijen project is expected to leverage $227 million in financing and achieve generation capacity of 110 MW, helping to strengthen Indonesia’s energy security. 

In 2024, the U.S. International Development Finance Corporation (DFC) announced a commitment of up to $126 million for Indonesian geothermal developer PT Medco Cahaya Geothermal (MCG) to support the first phase of development at Ijen. DFC’s commitment  is in cooperation with PT SMI, which signed its own financing agreement with MCG in 2023.  

The first phase of the Ijen geothermal project, which will generate 31 MW of renewable energy capacity to the interconnected Java-Bali grid, is now on track for commercial operation by the end of this month. Once operational, the plant will provide a low-carbon energy source to two of the country’s most populous regions, helping Indonesia reduce its reliance on coal and decrease its carbon emissions. This achievement aligns with USAID’s regional priorities of advancing clean energy, reducing greenhouse gas emissions, and enhancing energy resilience in Southeast Asia.

The success of the Ijen geothermal project highlights the importance of transaction advisory services, innovative financing, and strategic partnerships in overcoming financial and regulatory hurdles for renewable energy projects. Innovative financing leverages U.S. Government, Government of Indonesia, and private sector investments to support the development of renewable energy infrastructure, ultimately advancing the energy transition towards a more sustainable future. Future energy transition efforts in Indonesia will benefit from similar approaches, emphasizing the need for strong public-private partnerships and clear legal frameworks to accelerate the deployment of advanced energy technologies.

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The USAID Sustainable Energy for Indonesia’s Advancing Resilience (USAID SINAR) activity provided support to the Ijen project, which is expected to leverage $227 million in financing and achieve generation capacity of 110 MW.

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Tue, 01/14/2025 – 12:00

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Circularity roadmap for construction industry announced

Circularity roadmap for construction industry announced

World Green Building Council (WorldGBC) has launched the Asia Pacific Regional Network (APN) Resources and Circularity Readiness Framework, presented at the WorldGBC hosted accelerator session, ‘Retrofitting buildings: Lessons from a global network’, as part of the World Circular Economy Forum 2025 (WCEF2025), a global event dedicated to the circular economy.

Developed by WorldGBC’s APN of 17 Green Building Councils (GBCs) as well as knowledge partners, the framework is a practical roadmap aimed at policymakers and businesses across the region to assess their circularity readiness and identify strategic priorities for action to decarbonise their building stock on both a national and regional scale.

The framework can be used as a tool to quantify the business case for circular, sustainable principles in the built environment, and support businesses and governments to reduce waste, conserve resources and lower carbon emissions. It shows the industry the practical steps it can take now towards circularity, based on its current capabilities. It sets out clear assessment criteria, specific readiness indicators and actionable guidance based on five interconnected elements:

Government leadership: Policies and regulations driving circularity at all levels.
Technical solutions: Innovative approaches enabling resource efficiency and circular material flows.
Data: Measurement systems tracking resource use and circularity progress.
Finance: Funding mechanisms supporting circular business models and infrastructure.
Mindset: Cultural shifts prioritising resource conservation and sustainable consumption.
 

The Framework further supports WorldGBC’s 2025–2027 strategic plan, which outlines the vision for a sustainable built environment, guided by global 2030 decarbonisation goals.

Joy Gai, Head of Asia Pacific Network, WorldGBC said, “The framework has been developed by sustainability experts from the Asia–Pacific, one of the most diverse regions in the world, which is defined by remarkable complexities of culture, building stocks and environmental conditions. Our network recognises that harnessing diversity is fundamental to shaping a more resilient, resource-efficient future — but we need a guide to show us how to put our ambition into action. That is why we developed the APN Resources and Circularity Readiness Framework.

“WorldGBC is proud to join our Green Building Councils and partners in launching this timely resource. It creates a common language to guide businesses through collaboration, identifying their needs and applying circular methods which support our shared vision for a sustainable and regenerative future for Asia–Pacific and beyond.”

Jeff Oatman, chair of the Asia Pacific Regional network, Head of Collaboration and membership at Green Building Council of Australia (GBCA), added, “The Resources and Circularity Readiness Framework is a timely and much-needed initiative to accelerate the transition to a more regenerative and resource-efficient built environment across our region. By offering a clear pathway for assessing readiness and driving action, it empowers governments, industry and communities to make smarter, more sustainable decisions around circularity. I’m proud to be part of this collaboration and to contribute to a tool that not only fosters innovation but also supports practical outcomes that matter for people and the planet.”

Takuji Kohama, Chief Representative, AGC Group for Asia Pacific, also commented, “A resilient built environment relies on understanding ecological interconnections and making a conscious shift from linear consumption to cyclical resource stewardship. Designing buildings and infrastructures with their lifecycle in mind maximises material efficiency and minimises waste through a holistic approach from resource sourcing to end-of-life. Prioritising design for disassembly, material recovery, reuse and repurpose transforms buildings into dynamic material banks, significantly reducing construction’s environmental impact and fostering economic and environmental sustainability.

“Participating in the formulation of Resources and Circularity Readiness Framework offers a practical path to sustainable growth in our resource-constrained and climate-challenged region. This framework empowers built environment stakeholders to adopt a regenerative, resilient mindset focused on long-term value creation, redefining design, construction and living beyond waste minimisation. We aim to catalyse greater collaboration, innovation and systemic change, positioning AGC as a regional leader in circular economy practices and a model for urban sustainability.”

GBCs will use the framework to assess their own readiness to accelerate the transition to a circular economy in the built environment, as well as supporting the Asia–Pacific market. To find out more, head to the Green Building Council of Australia website.

Image credit: iStock.com/Benjamas Deekam

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