Pentagreen Capital and Nordic-backed investor Tinfund have agreed on up to $45 million of multi-tranche construction financing to build a pipeline of small run-of-river hydropower plants in Indonesia, according to an announcement.
The facility will be drawn in stages. It will begin with an $18 million first tranche for the Nagajaya plant in Banten province on Java, with further tranches available as additional sites reach permitting and construction milestones.
The Nagajaya plant is expected to deliver about 34 gigawatt-hours of power annually, enough to supply roughly 4,700 households, and avoid nearly 30,000 tonnes of carbon dioxide emissions each year, Pentagreen said
The facility is designed to expand, allowing for efficient scale-up up of Tinfund’s portfolio of run-of-river projects. Tinfund is a joint venture between Tinfos AS and Norfund.
Pentagreen, a sustainable infrastructure debt platform set up by HSBC and Temasek, is providing the loans under Singapore’s Financing Asia’s Transition Partnership (FAST-P), a blended-finance initiative designed to de-risk early-stage green infrastructure.
FAST-P’s first fund, the Green Investments Partnership, secured $510 million at first close in September and is targeting up to $1 billion for projects across Southeast and South Asia.
“The Pentagreen debt facility provides a blueprint for financing this asset class repeatedly and efficiently, unlocking the delivery of stable and reliable electricity to the grid from local Indonesian renewable resources,” according to the announcement.
The project comes as Indonesia’s latest 10-year electricity plan targets 42.6 gigawatts of new renewable capacity by 2034 and positions solar, hydro, and geothermal as the core of a cleaner grid, even as gas and previously approved coal plants remain in the mix.
Small run-of-river plants, which generate electricity by diverting part of a river’s flow through turbines without building large reservoirs, can offer steadier output than solar or wind and fit remote or industrial load pockets.
“Indonesia’s abundant domestic renewable resources provide the country with a competitive edge in delivering sustainable and climate-smart industrial growth and prosperity for its population,” said Pentagreen Capital CEO Marat Zapparov.
Set up in 2021, Pentagreen Capital is a 50-50 venture between Singapore state investor Temasek and London-headquartered bank HSBC. It provides debt financing for the development of sustainable infrastructure projects in South and Southeast Asia, including energy, transport, and water and waste management.
In March, Pentagreen and the UK’s development finance institution British International Investment jointly committed $80 million in financing to solar energy company ib vogt Singapore.
Last month, Pentagreen announced a $55 million loan to Citicore Solar Energy Corporation to finance solar, hybrid solar, and battery storage projects across the Philippines.
