PowerChina, Japan’s Sumitomo to Develop USD17.bn Hydropower Plant in Indonesia

Japanese trading house Sumitomo Corp [8053:JP] signed an agreement with Indonesian power company Kayan Hydro Energy (KHE) to participate in the development of a 9-gigawatt (GW) hydroelectric complex in Borneo, Indonesia, as reported by Nikkei Asia on October 7. KHE is affiliated with Chinese state-owned PowerChina [601669:CH], which will undertake the main construction work of the hydropower project named Kayan Cascade. Sumitomo will help develop the project through investment and technology transfer. Under a memorandum of understanding (MOU) signed between PowerChina and KHE in 2018, PowerChina will provide USD17bn to finance the Kayan Cascade with a plan to build up a 900-megawatt (MW) power plant by 2026 and finish the construction of five dams by 2035. Once completed, the project is expected to become the largest hydroelectric station in Southeast Asia.

The gigantic hydropower complex will mainly supply electricity to Indonesia Strategis Industri (ISI), a green industrial park to be built in North Kalimantan. The industrial park would include a range of green businesses, including green ammonia, battery materials, and electric vehicles. Most participants in the ISI will be Chinese-Indonesian joint ventures with the possible inclusion of some Japanese manufacturers. The Kayan Cascade is a strategic project and will be supported by the government, according to Moeldoko, Indonesia’s presidential chief of staff. At present, Indonesia meets 65% of its energy demand with coal. The country has vowed to double the share of renewables in its energy mix from less than 12% to 23% by 2025, in a move to achieve its commitment to net-zero emissions by 2060.

Sources:

https://asia.nikkei.com/Business/Energy/Japan-s-Sumitomo-joins-17.8bn-Indonesia-hydropower-project

https://www.globalconstructionreview.com/18bn-hydroelectric-scheme-to-break-ground-in-borneo-next-year/

https://www.reuters.com/article/indonesia-energy-idAFL1N2XV030