A.D.B. Funds Hydropower Transmission Line Between Indonesia and Malaysia

The Asian Development Bank will be providing a $49.5 million loan for the construction of a cross-border power transmission that will bring hydropower from Malaysia to Indonesia.

The loan provided by A.D.B. will be used to finance a 145-kilometer distribution line, distribution feeder extension, and a new substation that will be built to improve the reliability of power in West Kalimantan, Indonesia. Additionally, an 83-km cross-border high-voltage transmission line and substation will be constructed to connect the West Kalimantan power grid to Sarawak, Malaysia.

“This is a win-win situation. West Kalimantan gets renewable energy and will have the ability to exchange power; Sarawak starts its first export of hydropower; and the region moves one step closer to establishing a regional power transmission link that crosses Brunei Darussalam, Indonesia and Malaysia,” said A.D.B. Energy Specialist Sohail Hasnie.

Currently, Perusahaan Listrik Negara, Indonesia’s state-owned electricity company, uses oil for power generation in West Kalimantan, with costs up to $0.25 kilowatt-hour. But with the power exchange agreement, the cost of power in West Kalimantan could be cut to $0.18 per kWh, at the same time cutting 400,000 tons of carbon dioxide emissions annually by 2020.

The interconnection project is expected to save P.L.N. an estimated $100 million yearly by not using oil for power. Also, around 8,000 households will benefit from training on energy efficiency, provision of energy-efficient lighting, and improved community centers, such as hospitals and schools, which will all have access to reliable power.

Aside from the $49.5 million loan for the project, A.D.B. will administer an additional $49.5 million loan that will be provided by the French development agency Agence Francaise de Development, as well as a $2 million grant provided by the Multi-Donor Clean Energy Fund under the Clean Energy Financing Partnership Facility.

At present, A.D.B. is preparing a second loan project to finance the transmission line on the Malaysia side. Completion of the project is expected by December 2014, and the power flow to begin in the start of January 2015.