Sarulla precedent to heat up Indonesian geothermal

Author: Ashley Lee | Published: 3 Jun 2014

The Sarulla geothermal power project was a rare geothermal project where multiple units were financed as a single package. It has also sparked renewed interest in Indonesian geothermal energy.

The $1.17 billion debt financing for Sarulla’s three units closed on May 23 after 24 years of work. Although Indonesia has 40% of the world’s geothermal reserves, it was the first new geothermal project to be financed in Indonesia since Wayang Windu in 1997.

The geothermal power project, which will produce up to 330 megawatts of energy, is reportedly the largest ever. Deal counsel predicted Sarulla’s closing will encourage sponsors and lenders to contemplate new projects.

Financing the three Sarulla units together presented some novel challenges but inspired some truly innovative solutions, said Joseph Bevash of Latham & Watkins. "Sarulla sets an important new precedent that will benefit geothermal power development in Indonesia," he added.

Financing resources risk