ADB will invest in two phases in renewable energy assets being developed by Vena Energy, formerly known as Equis Energy—the largest renewable energy independent power producer (IPP) in the Asia and Pacific region, with 11 gigawatts in operation, under construction, and in development. The investment will help construct, operate, and maintain a portfolio of energy projects, including a wind farm and four solar PV plants in eastern Indonesia.
The first phase, which was signed in December 2017, consisted of a 72 megawatt (MW) wind power plant in Jeneponto, South Sulawesi. ADB’s financing package to PT Energi Bayu Jeneponto, a subsidiary of Vena Energy, totaled USD120.8 million, including financing from two trust funds administered by ADB, namely, the Leading Asia’s Private Infrastructure Fund (LEAP) and the Canadian Climate Fund for the Private Sector in Asia II (CFPS II).
The private sector financing package will be used to invest in Indonesia’s first utility-scale solar photovoltaic (PV) plants on a project-finance basis. (Photo: ADB)
The second phase, which achieved first drawdown today, comprises a 21 MW solar PV power plant in Likupang, North Sulawesi and three 7 MW solar PV power plants in Pringgabaya, Selong, and Sengkol in Lombok, West Nusa Tenggara. ADB’s financing package totaled USD40.2 million to four respective subsidiaries of Vena Energy. The second phase also involves the administration of loans from LEAP and CFPS II. The wind and solar power plants will supply energy to Perusahaan Listrik Negara (PLN), Indonesia's national power utility.
“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.
“Indonesia has made a strong commitment to renewable energy, pledging to leverage the country’s considerable solar and wind energy resources to take renewables to 23% of Indonesia’s overall energy mix by 2025,” said Vena Energy Chief Executive Officer Mr. Nitin Apte. “Vena Energy is leveraging our regional project development track record, technical capabilities, and economies of scale to generate low-cost clean energy to support the government initiative, as well as create employment opportunities and drive economic growth in local communities.”
The CFPS II loans for the project’s two phases have been instrumental in assisting the sponsors bridge the financing gap in the relatively low-tariff environment in Indonesia and bring these projects to market. Concessional financing was needed to improve returns to overcome first-mover risks as well as address various technical and regulatory challenges. These transactions are expected to demonstrate commercial viability of limited recourse financing for renewable energy projects and help Indonesia unlock its renewable energy markets to the private sector.
CFPS II was established in March 2017 with an approximately USD150 million contribution from the Government of Canada to support greater private sector participation in climate change mitigation and adaptation projects and promote gender equality and the empowerment of women and girls in projects supported by the fund.
Launched in August 2016, LEAP is one of ADB’s cofinancing vehicles dedicated to private sector infrastructure in Asia and the Pacific. The Japan International Cooperation Agency (JICA) supports the fund through a $1.5 billion equity commitment. Combined with ADB’s own capital and that of commercial partners, the fund is expected to provide financing of at least $6 billion and enables ADB to boost support for quality and sustainable infrastructure./.