Jakarta, INTI – Indonesia and Japan have signed a strategic agreement to finance a renewable energy project. Through the Japan Bank for International Cooperation (JBIC), Japan has officially disbursed USD 500 million (approximately IDR 8.2 trillion) to support the development of the Muara Laboh Geothermal Power Plant (PLTP) Unit 2 in West Sumatra. This agreement marks a strong commitment from both countries to support the low-carbon energy transition in Asia.
Muara Laboh Geothermal Plant: A Concrete Symbol of Indonesia-Japan Collaboration in Green Energy
The governments of Indonesia and Japan have strengthened their strategic energy partnership through the financial close of the Muara Laboh Geothermal Power Plant Unit 2 project. Located in Solok, West Sumatra, the project is initiated by PT Supreme Energy Muara Laboh (PT SEML) and financed by JBIC.
With a generation capacity of 88 megawatts (MW), the project carries a significant investment value of around USD 500 million. The signing took place during a series of meetings between Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, and Japan’s Special Envoy from Prime Minister Fumio Kishida on Monday (May 5, 2025), in Jakarta. The meeting followed a bilateral dialogue between President Prabowo Subianto and Prime Minister Kishida the day before.
Airlangga stated that the Muara Laboh project serves as a flagship initiative under the Asia Zero Emission Community (AZEC)—a Japanese-led platform aimed at promoting clean energy transformation in Southeast Asia. AZEC is designed as a multilateral cooperation framework that encourages Asian countries to decarbonize through investment in environmentally friendly technologies and green financing.
Muara Laboh: From West Sumatra’s First Geothermal Plant to National Expansion
The Muara Laboh Geothermal Power Plant is not a new initiative in West Sumatra. The first unit, with a capacity of 85 MW, has been operational since 2019, becoming the province’s first geothermal power plant. Its success laid the foundation for the development of the second unit, which is currently under construction.
In January 2025, the Asian Development Bank (ADB) also approved USD 92.6 million in funding to support the expansion of the project. The funding sources include Sumitomo Mitsui Banking Corporation and the Australian Climate Finance Partnership (ACFP), demonstrating strong international confidence in Indonesia’s clean energy projects.
The funds are being used to build, operate, and maintain a new plant with a capacity of approximately 83 MW. With additional support from JBIC, the development of PLTP Muara Laboh Unit 2 now has a robust financial foundation for realization.
AZEC and Other Strategic Projects: Pillars for a Low-Carbon Economy
In addition to Muara Laboh, the Indonesia-Japan collaboration under AZEC includes several other strategic projects prioritized for funding. These include the waste-to-energy project in Legok Nangka, the development of Sustainable Aviation Fuel (SAF), the Sarulla Geothermal Power Plant, and the construction of a power transmission line from Java to Sumatra.
According to Airlangga, these projects are expected to soon reach commercial stages and serve as the backbone of Indonesia’s energy transition agenda. In the face of global uncertainties from trade wars and climate change, bilateral cooperation such as this is seen as crucial to ensuring sustainable national development.
Fumio Kishida’s visit to Indonesia further reinforced Japan’s commitment to strengthening its strategic partnership with Indonesia, particularly in the fields of energy and climate.
Conclusion: Muara Laboh Geothermal Plant, a Beacon for Indonesia’s Clean Energy Future
The IDR 8.2 trillion investment from Japan in Muara Laboh Geothermal Plant Unit 2 is not just an infrastructure project but also a symbol of international trust in Indonesia’s energy policy direction. The collaboration between Indonesia and Japan under the AZEC initiative represents a tangible synergy in addressing climate change challenges and the future demand for clean energy.
Through projects like this, Indonesia is making firm strides toward a more sustainable, inclusive, and low-carbon energy system—while strengthening its position as a leader in the energy transition across Southeast Asia.
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