Abu Dhabi, United Arab Emirates: Abu Dhabi-based clean energy company Masdar has entered the geothermal energy sector by making an investment in Indonesia’s state energy firm Pertamina Geothermal Energy (PGE), one of the world’s largest geothermal players.
The investment marks Masdar’s entry into Indonesia, the world’s second-largest geothermal market after the US. Masdar did not reveal the size of the investment.
Indonesia has a goal of increasing its installed geothermal capacity from 2.8 gigawatts (GW) in 2022 to 6.2 GW by 2030. The Government is targeting net-zero emissions by 2060 and having renewables provide 23 percent of the energy mix by 2023.
PGE has been operating geothermal facilities in Indonesia for the last 40 years, with a portfolio capacity exceeding 1.87 GW.
“Achieving the 1.5C target set out in the Paris Accords will require humanity to leverage all sources of low-carbon energy, including sources that are currently under-utilized, like geothermal,” said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and Chairman Masdar.
“Through its investment in PGE, Masdar is demonstrating its continuing commitment to Indonesia’s energy transition and its support of one of the major focus areas of the upcoming COP28, which is to provide practical energy security solutions while reducing emissions,” said Al Jaber, the president-designate for the UN Cop28 climate change summit in Dubai this year.
Ahmad Yuniarto, Chief Executive Officer, PGE, said, “We look forward to working with Masdar in the areas which complement and grow further our capabilities to be a world class green energy company, with the largest geothermal capacity globally. We endeavor to develop 600 megawatts (MW) in additional installed capacity over the next five years to support Indonesia’s renewable energy mix.”
Geothermal energy harnesses the heat generated within the Earth’s core to provide a constant energy source, unlike solar or wind, which are intermittent in nature. Geothermal energy plants also have high-capacity factors, meaning they can run at maximum power for longer periods.
These attributes mean geothermal energy could potentially play a significant role in the clean energy transition, helping nations with a high concentration of geothermal activity to reduce carbon emissions.
The PGE investment is the latest in Masdar’s ongoing effort to expand and increase its strategic partnerships in the Asia-Pacific region. Masdar is already developing the region’s largest floating solar facility – the 145-MW Cirata Floating Solar PV Plant in Indonesia – and last year signed an agreement with Tuas Power, EDF Renewables, and PT Indonesia Power to explore development of up to 1.2 GW solar capacity in Indonesia for export to Singapore.
Masdar recently announced a new shareholding structure and additional focus on green hydrogen, making it one of the largest clean energy companies of its kind. It is pursuing the goal of achieving 100 GW renewable energy capacity and green hydrogen production of 1 million tons per annum annually by 2030.