Masdar makes investment in Pertamina Geothermal Energy

Masdar, a global clean energy powerhouse, is entering the geothermal energy sector, through a strategic investment in Pertamina Geothermal Energy (PGE), one of the world’s largest geothermal players.

The investment marks Masdar’s entry into geothermal energy, in the second-largest geothermal market in the world.

Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and Chairman, Masdar, 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-utilized, 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, Chief Executive Officer, PGE, said, “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. We endeavour to develop 600 megawatts (MW) in additional installed capacity over the next five years to support Indonesia’s renewable energy mix.”

Mohamed Jameel Al Ramahi, Chief Executive Officer, Masdar, said, “Masdar’s strategic investment in PGE will complement our already strong footprint in Indonesia, the world’s second largest geothermal market. 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.” Indonesia has a goal of increasing its installed geothermal capacity from 2.8 gigawatts (GW) in 2022 to 6.2 GW by 2030. The Government is targeting net-zero emissions by 2060 and having renewables provide 23 per cent of the energy mix by 2023. PGE has been operating geothermal facilities in Indonesia for the last 40 years, with a portfolio capacity exceeding 1.87 GW.

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. These attributes mean geothermal energy could potentially play a significant role in the clean energy transition, helping nations with a high concentration of geothermal activity to reduce carbon emissions.

The PGE investment is the latest in Masdar’s ongoing effort to expand and increase its strategic partnerships in the Asia-Pacific region. Masdar is already developing the region’s largest floating solar facility - the 145-MW Cirata Floating Solar PV Plant in Indonesia - and last year signed an agreement with Tuas Power, EDF Renewables, and PT Indonesia Power to explore development of up to 1.2 GW solar capacity in Indonesia for export to Singapore.

Masdar recently announced a new shareholding structure and additional focus on green hydrogen, making it one of the largest clean energy companies of its kind. With a goal of achieving 100 GW renewable energy capacity and green hydrogen production of 1 million tonnes per annum annually by 2030, the new Masdar is a clean energy powerhouse that will spearhead the UAE’s Net Zero by 2050 Strategic Initiative and drive the global energy transition.

Masdar has recently signed an agreement with the International Finance Corporation (IFC), the largest global development institution focused on the private sector in developing countries, to explore collaboration in supporting climate action for emerging markets.

The collaboration framework was signed by Mohamed Jameel Al Ramahi, Chief Executive Officer, Masdar, and Mohamed Gouled, Vice President of Industries at IFC, on the sidelines of the World Government Summit 2023, in Dubai this week. Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, COP28 President-Designate, and Masdar Chairman, witnessed the signing, along with Makhtar Diop, Managing Director of the IFC.

 Al Jaber said, “As the UAE prepares to host COP28, we have placed a special emphasis on ensuring better, more efficient and more equitable access to climate finance. The UAE is a trusted partner of many nations and actively supports the development of emerging nations. The IFC has been a key partner for Masdar in many emerging markets, and this agreement carries forward the UAE’s commitment to equitable climate finance and inclusive, sustainable development.”

Under the agreement, Masdar and the IFC will explore support for establishing green hydrogen platforms for emerging markets and the potential collaboration on bankability and structuring issues for African renewable energy projects.