Pentagreen Capital — a sustainable infrastructure debt financing platform established by HSBC and Temasek — and Tinfund — a joint venture between Norwegian renewable energy firm Tinfos and development fund Norfund — have signed a financing facility of up to US$45 million ($58.83 million) to support the implementation of “small, run-of-river power plants” in Indonesia.
The multi-tranche construction loan will finance a series of projects developed by Tinfund in Indonesia with an initial funding of US$18 million for the Nagajaya power plant in Banten province on Java Island.
The facility is designed to expand, allowing the efficient scale up of Tinfund’s portfolio of run-of-river projects.
Indonesia’s 2025-2034 Electricity Supply Business Plan (RUPTL) calls for 42.6 gigawatts (GW) of additional renewable energy by 2034, representing 76% of the total planned new power generation capacity.
According to a Nov 20 announcement, small, run-of-river power plants provide stable, reliable renewable energy supply to the grid and have significantly higher capacity factors — the ratio of actual energy produced to maximum possible production — than intermittent renewable sources such as solar or wind.
This supports Indonesia’s industrial development and rural electrification strategy, contributes to its energy independence and reduces carbon emissions.
However, financing run-of-river plants like these can be challenging due to their distributed and small-scale nature.
The Pentagreen debt facility provides a blueprint for financing this asset class “repeatedly and efficiently”. The Nagajaya plant is expected to deliver 34 gigawatt-hours (GWh) of renewable energy to the grid annually, based on a capacity factor of approximately 65%. This generates enough clean energy to power approximately 4,700 households, resulting in an estimated 29,700 tonnes of carbon dioxide emissions avoided annually.
Pentagreen is the manager of the Green Investments Partnership (GIP), a blended finance strategy under Singapore’s Financing Asia’s Transition Partnership (Fast-P).
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Øyvind Frydenberg, CEO of Tinfos, says: “This partnership marks an important milestone in our commitment to accelerating the energy transition in Southeast Asia. By leveraging Tinfos’ extensive experience in developing and operating medium-sized run-of-river plants together with Pentagreen’s innovative financing solutions, we are creating a scalable model to deliver reliable renewable energy to Indonesia’s grid.”
Frydenberg adds: “Pentagreen’s facility enables Tinfos to accelerate development and construction across its project pipeline. Together with Norfund, our trusted partner and 35% owner in Tinfund, we are committed to creating lasting impact by supporting local communities and industries with sustainable power, contributing to Indonesia’s long-term energy security and development goals.”
Bjørnar Baugerud, head of the Climate Investment Fund in Norfund, says: “The Climate Investment Fund is delighted to invest together with Tinfos and unlock up to US$45 million of financing for small-scale run-of-river power plants in Indonesia from Pentagreen. Through our collaboration, we're channelling vital resources into scalable, low-impact run-of-river projects that bolster Indonesia's renewable energy ambitions and drive meaningful progress toward a low-carbon future.”
Read more about Pentagreen Capital and the Financing Asia’s Transition Partnership (Fast-P):
- Fast-P’s Green Investments Partnership achieves first close with US$510 mil from MAS, Temasek, IFC (September)
- S’pore’s blended finance initiative Fast-P to set up office, management team (May)
- Australia approves US$50 mil investment into Singapore’s Fast-P blended finance initiative (December 2024)
- Temasek-backed Pentagreen to manage Fast-P’s Green Investments partnership, seeking to deploy US$1 bil (November 2024)
- BlackRock, MAS spearhead collaboration on blended finance debt initiative (November 2024)
- Clifford Capital and Pentagreen Capital announce US$30 mil green loan collaboration with BECIS (July 2024)
- Singapore announces Asia-focused blended finance initiative Fast-P with US$5 bil target fund size (December 2023)
- Temasek and HSBC establishes sustainable infrastructure debt financing company; commits a combined US$150 mil of equity (August 2022)
