World Bank approves US$380m loan for Indonesia's first pumped storage

Out-Law News | 16 Sep 2021 | 6:51 am | 1 min. read

The World Bank (WB) has approved a US$380 million loan to Indonesia state-owned electricity company Perusahaan Listrik Negara (PLN) for the country’s first pumped-storage hydropower plant.

The loan is for the Upper Cisokan pumped storage hydropower plant in West Java, Indonesia, with an estimated capacity of 1.04 gigawatts (GW). It follows WB and Asian Infrastructure Investment Bank's (AIIB) proposals in July to finance the project.

The project consists of three parts including the plant development, environmental and social impact management of the plant and technical assistance and capacity building for PLN.

The first part will be co-financed by US$230-250 million from AIIB, US$333m from WB and US$110m from PLN. The second part will be funded with US$5m from WB and US$35m from PLN, and the third part will receive US$42m from WB. 

Renewables expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said:

“In the recent past, we have rarely seen pumped storage projects being built and commissioned in this part of the world. However, with the push for net zero and the increasing amount of intermittent generation on the system, fast start capability of storage, be it pump storage or battery, will play increasingly important roles.”

“It is therefore encouraging to see the financing of this project, which takes into account important environmental considerations such as hydrological impact as well,” he said.

The project aims to expand electricity generation capacity at times of peak demand and to support Indonesia’s energy transition and decarbonization goals. The country set its goal for achieving net zero emissions by 2060.