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Masdar enters geothermal market with stake in Indonesia business

Masdar is looking east for growth with an investment in Indonesia’s Pertamina Geothermal Energy PGE
Masdar is looking east for growth with an investment in Indonesia’s Pertamina Geothermal Energy
  • Pertamina is a key player in the Indonesian renewables sector
  • Geothermal harnesses heat in Earth’s core to provide constant power
  • Masdar is also developing a floating solar facility in Indonesia 

Clean energy powerhouse Masdar has announced its first investment in the geothermal energy sector.

The Abu Dhabi state-owned business has invested in Pertamina Geothermal Energy, based in Jakarta. PGE is one of the biggest companies in Indonesia’s geothermal energy sector, which is the second largest in the world (behind the US).

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. 

The Emirati giant bought an undisclosed number of shares in PGE’s initial public offering on the Indonesian stock exchange last week – its latest move to expand its strategic partnerships in Asia-Pacific. 

Masdar is already developing the region’s largest floating solar facility – the 145MW Cirata Floating Solar PV Plant in Indonesia – and last year it signed an agreement with Tuas Power, EDF Renewables and PT Indonesia Power to explore development of up to 1.2GW solar capacity in Indonesia for export to Singapore.

The move comes just days after experts told AGBI that Masdar was likely to look east to expand its global portfolio of energy assets.

Robin Mills, CEO at Qamar Energy, said the potential was “huge”, particularly in India, “although there is competition and dominance by Indian conglomerates and it’s politically complex”.

He added: “Masdar wants to expand in China but hasn’t entered there yet and it is a competitive market dominated by Chinese companies.”

Masdar chairman Dr Sultan Al Jaber, who is also the UAE’s minister of industry and advanced technology and the president of the Cop28 summit, said: “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-utilised, like geothermal. 

“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.”

Ahmad Yuniarto, CEO of PGE, said it planned to develop 600MW in additional installed capacity over the next five years to support Indonesia’s renewable energy mix.

Indonesia has a goal of increasing its installed geothermal capacity from 2.8GW in 2022 to 6.2GW by 2030. Its government is targeting net-zero emissions by 2060 and having renewables provide 23 percent of the energy mix by 2023.

PGE has a portfolio capacity of more than 1.87GW.

Mohamed Jameel Al Ramahi, CEO of Masdar, said: “We are especially excited to add geothermal energy to our clean energy portfolio, a clean energy source that can deliver dispatchable power 24 hours a day, which further underscores our position as a global leader in delivering clean energy solutions that help drive the global energy transition.”

According to the International Renewable Energy Agency, geothermal covers a significant share of electricity demand in countries such as El Salvador, New Zealand, Kenya and the Philippines, and meets more than 90 percent of heating demand in Iceland.

Masdar recently announced a new shareholding structure and additional focus on green hydrogen. 

It has set a goal of achieving 100GW renewable energy capacity and 1 million tonnes of green hydrogen production per annum by 2030, as part of the UAE’s net zero by 2050 initiative.

Established in 2006, Masdar is active in more than 40 countries and has committed more than $30 billion in projects, powering in excess of 14GW of clean energy.