PowerChina is investing $17.8bn to develop five hydropower facilities in North Kalimantan, Indonesia. Sebastian Shehadi reports.

China’s state energy company PowerChina is investing $17.8bn to develop five hydropower facilities in North Kalimantan, Indonesia. It is the world’s most costly greenfield FDI project in the renewable energy sector, according to greenfield investment monitor fDi Markets.  

In late April 2018, PowerChina subsidiary Sinohydro Corporation signed a memorandum of understanding with PT Indonesia Kayan Hydropower Energy, to jointly build the hydropower plants, which will have an output of 9000 megawatts (MW).

The Kalimantan project has been a decade in the making. “PowerChina began studying hydropower resources of the Kayan River in 2008 and completed the development plan for the whole basin of the river as well as the feasibility study and preliminary design of the first hydropower plant in 2013,” says Sinohydro Corporation representative Guo Xiaodan. He expects the project to create significant multiplier effects in North Kalimantan’s economy.

The region is known for its abundant natural resources, and the local administration says the province has a hydroelectricity potential amounting to about 33,000MW. The Kalimantan government has been trying to develop the region, which suffers from frequent electricity shortages. Completion of the project is expected within four years.

China is one of the leading sources for greenfield FDI in renewable energy. Following Spain, Germany and the US, Chinese capital expenditure in the sector is the largest in the world (2003 to date), valued at $62bn, according to fDi Markets.

In 2017, a total of $47bn was invested into renewable energy projects. Appetite in the sector has grown in 2018, with $40bn invested between January and the end of April. The record for largest greenfield investment in alternative energy was previously held by SkyPower’s $5bn solar power project in Nigeria, announced four years ago, says fDi Markets.

This article is sourced from fDi Magazine
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