Masdar invests in Indonesia’s Pertamina Geothermal Energy

The Southeast Asian country aims to become carbon neutral by 2060

A worker inspects solar panels at a solar power plant on Karampuang Island, in West Sulawesi, Indonesia. AP

Abu Dhabi’s clean energy company Masdar has invested in Pertamina Geothermal Energy (PGE), a unit of Indonesia's state energy firm Pertamina.

The investment marks Masdar’s entry into the Southeast Asian country’s geothermal energy sector, the second largest after the US, the company said in a statement on Friday.

Masdar did not reveal the size of the investment.

“Achieving the 1.5ºC target set out in the Paris Accords will require humanity to leverage all sources of low-carbon energy, including sources that are currently under-utilised, like geothermal,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, chairman of Masdar and President-designate for the UN Cop28 climate change summit in Dubai this year.

“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,” added Dr Al Jaber, who is also managing director and group chief executive of Adnoc and the UAE special envoy for climate change.

Indonesia, the largest country in Southeast Asia, is planning to generate at least 51 per cent of its total energy from renewable sources by 2030. The country also aims to become carbon neutral by 2060 or sooner, with renewable energy providing up to 85 per cent of the 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.

PGE, which has been operating in Indonesia for four decades, has a portfolio capacity that surpasses 1.87 gigawatts.

“Masdar’s strategic investment in PGE will complement our already strong footprint in Indonesia,” said Mohamed Al Ramahi, chief executive of Masdar.

“We are especially excited to add geothermal energy to our clean energy portfolio … which further underscores our position as a global leader in delivering clean energy solutions that help drive the global energy transition.”

Masdar is already active in Indonesia. Last year, the company formed a joint venture with Jakarta-based Mitrabara to provide renewable energy solutions.

In 2020, Masdar formed a joint venture with PT PJBI, a subsidiary of Indonesia’s state electricity company, to develop the country’s first floating solar project, which is also one of the largest in the world.

“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,” said PGE chief executive Ahmad Yuniarto.

“We endeavour to develop 600 megawatts in additional installed capacity over the next five years to support Indonesia’s renewable energy mix.”

In December, Masdar announced its new shareholding structure as part of a deal with the Abu Dhabi National Energy Company, better known as Taqa, Mubadala Investment Company and Adnoc, along with the creation of a green hydrogen business unit.

As part of the deal, Masdar is looking to aggressively expand and has set a renewable energy portfolio capacity target of at least 100 gigawatts by 2030, with the lion's share coming from wind and solar technology.