The five hydro projects to be built in Indonesia under the pact include the Genyem project in Papua and the Poigar scheme in North Sulawesi, which will have a combined installed capacity of 50MW. Three other plants are planned and their total capacity will be 4.2MW.

Financial terms of the Emission Reduction Purchase Agreement (ERPA) between EcoSecurities and PLN were not disclosed, but project costs will be partly offset by the deal on carbon credits which will provide additional finance to the utility.

While EcoSecurities focuses on originating, developing and trading carbon credits, on these projects it will develop the design, register the schemes with the UN, monitor and verify the emission reductions, and finally purchase the carbon credits.

The pact between the companies also includes construction of a 60MW geothermal plant in West Java, which is to start commissioning works early next year.

However, PLN noted it was one of the largest transactions of its type by volume in the country. Under the deal, the forecast volumes of carbon credits is more than 2.6M up to and until 2012.

EcoSecurities said it intends to demonstrate how carbon finance can drive renewables development in Indonesia. PLN added that it is keen to see the development of more renewables through the assistance of the carbon finance mechanism.