Indonesia's green transition efforts hampered by eight-year dam delay

A $17 billion hydropower plant by Kayan Hydro Energy, which is hailed as the backbone of Indonesia’s green industry dream, has failed to take off due to an 8-year-long delay in dam construction.

Kayan Cascade, powered by five dams, claims to be the largest project in Southeast Asia and is part of the Renewable Energy Based Industry Development plan of the Indonesian government. It would provide 9,000 megawatts of power to a neighboring green industrial zone, called the Indonesia Strategis Industri (ISI).

As per sources, only a section of the road leading to the site was constructed in eight years, and not a single dam has been built. CEO of Kayan Hydro Energy, Andrew Suryali, stated that the construction had been delayed due to sluggish permit approvals and initial refusal by locals to hand over their land.

Such delays would require the development of a new temporary coal-fired unit in North Kalimantan province. However, Suryali wants to finish the project early to prevent the construction of the said coal plant, enabling a complete switch to green energy.

To shut down every coal-fired unit and achieve its net-zero emissions target by 2060, Indonesia will need to use its entire 75-gigawatt hydropower potential, sufficient to supply electricity to the whole archipelago.

Kayan Cascade will be constructed on a 28,600 square kilometer watershed of the same name. According to reports, the first dam will necessitate the relocation of 150 households, inundation of two villages and clearing of 170 hectares of land to connect to the nearest roadway.

As per Suryali, the company’s project funding consists of 75%bank loans and 25% equity and so far, 2 trillion rupiah ($130m) has been spent on the project. Furthermore, in anticipation of a due diligence process, Sumitomo Corp. allegedly agreed to lead a syndicated financing for the project.

After receiving explosives permit from the police, Suryali plans to begin the first dam’s construction by next year. The entire complex is expected to be completed by 2035.

Source- https://financialpost.com/pmn/business-pmn/eight-year-dam-delay-hinders-indonesias-move-away-from-coal#:~:text=PMN%20Business-,Eight-Year%20Dam%20Delay%20Hinders%20Indonesia's%20Move%20Away%20From%20Coal,is%20struggling%20to%20take%20off