ADB approves USD-600m loan for power grid rehab in Java

Transmission lines. Author: Nayu Kim. License: Creative Commons, Attribution 2.0 Generic.

December 14 (Renewables Now) - Indonesian state-owned power company Perusahaan Listrik Negara (PLN) has been approved a USD-600-million (EUR 533m) loan from the Asian Development Bank (ADB) to fund the power grid overhaul in the western and central regions of Java island and promote the use of clean energy.

ADB is extending the results-based loan as part of its Sustainable and Reliable Energy Access Program, which is aimed at supporting PLN’s efforts to improve its transmission lines, power grid automation, waste and asset management, and other resources and services, the bank said.

Java’s strengthened grid will help the island transition to a low-carbon economy and have the ability to incorporate more renewables.

The lending programme is expected to lead to positive social and economic outcomes in five provinces in Java that are home to around 112 million people. The includes some 30 million people living in poverty of near the poverty line and 11.3 million micro and small enterprises (MSEs), all of which stand to benefit from access to sustainable and reliable energy, commented ADB senior finance specialist Daniel Miller.

“By providing reliable and sustainable electricity, the program will improve the quality of life, support the delivery of essential public services, and create jobs. It will accelerate Java’s economic recovery and help transform its poorer areas into growth engines through agro-industries, tourism, and MSEs,” Miller added.

Java boasts universal electricity access, but poor power quality, frequent outages and electricity losses hamper the island’s economic growth, according to ADB. The island will need 259 TWh of power by 2030, or 66.4% of Indonesia’s projected demand, to achieve a sustained and higher economic growth, the lender said.

The programme will further receive a USD-500,000 grant from the Republic of Korea e-Asia and Knowledge Partnership Fund, which ADB will administer. This technical assistance will finance PLN’s staff training, including power grid system planning and automation, grid operation with increasing amounts of renewable generation capacity, electric vehicle charging services, and utility-scale energy storage systems, ADB’s press release reads.

(USD 1.0 = EUR 0.888)

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