Abu Dhabi renewable energy company Masdar and Indonesia's state-owned power utility PT PLN have reached financial close on a floating solar plant and have begun construction work on the project.
The companies secured financing for the 145-megawatt Cirata Floating Photovoltaic Power Plant from Sumitomo Mitsui Banking Corporation, Societe Generale and Standard Chartered Bank, they said on Tuesday.
Commercial operation of the plant, which was developed by Pembangkitan Jawa Bali Masdar Solar Energi, a joint venture between Masdar and PT PJBI, a subsidiary of PT PLN, is expected to begin in the fourth quarter of 2022.
The project was in line with the South-East Asian nation's efforts to raise the share of renewable energy to 23 per cent by 2025, Indonesia's investment minister Bahlil Lahadalia said.
“This project represents the UAE’s first investment in Indonesia’s renewable energy sector and we look forward to further collaboration between our countries as we leverage our natural resources to build a more sustainable future," he said.
The floating solar plant will be one of the largest in the world when completed. It is being built on the Cirata reservoir in Indonesia's West Java province and will generate enough electricity to power 50,000 homes.
The project will offset 214,00 tonnes of carbon dioxide when it becomes operational and create up to 800 jobs.
“The designation of this project as a national strategic project has been invaluable in enabling us to make such significant progress and demonstrates that the government recognises the economic and social benefits the Cirata project will bring to the local community and to all of Indonesia," said Masdar's chief executive Mohamed Al Ramahi.
The UAE and Indonesia, which enjoy strong political, economic and cultural ties, have also registered an increase in cross-border investments over the past year.
The Emirates signed various agreements with Indonesia in 2020, including a deal to invest $23 billion in the Asian country through a sovereign wealth fund created by Indonesian President Joko Widodo.
Adnoc also signed a preliminary agreement with Indonesia's Pertamina and Chandra Asri to explore the possibility of developing a crude-to-petrochemicals complex in the South-East Asian country, in addition to a deal on the potential supply naphtha.
Earlier this year, the UAE invested $10bn with the Indonesia Investment Authority, the country’s sovereign wealth fund.
The funds will be used in strategic sectors such as road and port infrastructure, tourism and agriculture, and other promising industries that can contribute to Indonesia’s economic growth and social progress, UAE state news agency Wam said at that time.