The money will come from the State Investment Agency (PIP), which has been tasked with funding major infrastructure projects. Soritaon Siregar, the chairman of the PIP, said that the agency would provide loans of 2 trillion rupiah to companies to build geothermal power plants and another 1.4 trillion rupiah to firms building micro-hydropower plants.
"We will sign three power projects in the immediate term," Saritaon said recently. The government has been encouraging state power utility firm PLN and independent power producers to invest in "clean" power.
Soritaon said his office had received several proposals from companies seeking loans from the PIP for such projects. Pertamina Geothermal Energy (PGE), the geothermal unit of state oil and gas company Pertamina, plans to build two geothermal power plants with a combined capacity of 110 megawatts in Ulubelu, Lampung, this year.
The construction of the plants, which started earlier this year, is due to be completed by 2014, said Slamet Riadhy, the president director of PGE. The two plants will cost 270 million U.S. dollars combined.
The company’s planned geothermal power plants form a model that will be rolled out across the country. PGE runs a geothermal power project in Muara Enim, South Sumatra. Its other projects include a plan to build a geothermal power plant in Karaha Bodas, West Java, the Jakarta Globe reported.
Indonesia is an archipelago of more than 17,000 islands and has many volcanoes, which makes it desirable to tap these geothermal sources. Renewable power also includes production of electricity from water, wind energy and solar power.
Indonesia had power-generation capacity of 28,462 MW as of the end of last year, according to PLN data. Coal-powered plants account for around 42.2 percent of that capacity, diesel-fired plants 23.7 percent, natural gas 22 percent, hydropower plants 6.7 percent and geothermal energy and other renewable energy 5.4 percent.