Indonesia to stop building coal power plants, phase them out
President Joko “Jokowi” Widodo told a limited Cabinet meeting on May 11 that Indonesia will not build new coal-powered power plants (PLTU) starting 2025 and phase out PLTU from its energy mix in 2030 to achieve carbon neutrality by 2060. Following Jokowi’s instruction, government officials and executives of state-owned electricity company PLN started reworking PLN’s 2021-2030 electricity procurement plan (RUPTL) to be in line with Jokowi’s instruction.
Jokowi’s sudden preference toward renewables is surprising considering the strong lobby of the coal barons inside the government. Coal barons have just succeeded in amending the restrictive 2009 coal and mineral mining (Minerba) law, allowing coal barons to retain their expiring, large-scale coal mining concessions.
Jokowi’s right-hand Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan – himself a coal miner and has a stake in one major coal power plant – said Indonesia needed to adjust to the global trends, where fossil power plants were becoming unwanted and increasingly fewer financial institutions were willing to finance their constructions. Therefore, Luhut said Indonesia had to phase out coal-power plants and move to cleaner energy.1
The Energy and Mineral Resources Ministry’s electricity director general, Rida Mulyana, explained that the new policy that put more emphasis on renewables would be translated into PLN’s 2021-2030 RUPTL. In the 2021-2030 RUPTL, the share of new and renewable power plants would be increased to 48 percent, while fossil power plants would have the remaining 52 percent. This is much higher than the 2019-2028 RUPTL, where new and renewables account for only 30 percent.2
Rida, however, warned that the 2021-2030 RUPTL would still have new PLTUs coming on stream from this year to 2027, with combined capacity of 13,565 megawatts (MW). They are projects that have already been approved and have at least secured financial closing. No new PLTU projects would be allowed.
For a country that has long been addicted to fossil fuels, phasing out coal is not easy. Indonesia consumes about 30 percent of its total coal output of 550 million tons per annum. But PLN has no other choice but to follow the President’s instruction.3 PLN deputy president director Dharmawan Prasodjo told a hearing with the House of Representatives’ Commission VII on energy that PLN would start phasing out PLTU and gas-powered power plants (PLTMG) beginning in 2030, when 1 gigawatts (GW) PLTUs and PLTMGs, including PLTUs in Muarakarang, Tambaklorok and Gresik, would be retired. Then, a total of 9 GW PLTUs and PLTMGs would be retired by 2035, 10 GW by 2040, 24 GW by 2045 and 5 GW in 2050. By 2060, there will be no more PLTUs and PLTMGs.4
Darmawan said that among the renewables, solar power plants could become the alternative as the technology has made it possible to offer lower electricity prices. Solar panels, with redox-based batteries, could offer electricity prices at the range of 6 to 7 US cents per kilowatt hour (kWh) – almost equal with the prices of electricity produced by coal-powered power plants. The next priority of renewables would be geothermal, hydro energy, and biomass.
The new policy of phasing out PLTUs and PLTMGs and putting renewable on the map gives optimism that the country is on track to achieve its national target of 23 percent of renewable energy in the country’s primary energy mix by 2025. With only around 400 to 500 MW of electric capacity per annum coming on stream from renewable energy sources in the past five years, many parties question if the country is serious about its renewable energy targets.
Renewable energy contribution into Indonesia’s energy mix currently stands at 11.2 percent – consisting of 7.38 percent electricity and 3.82 non electricity – still far from the target. The country must at least quadruple the number of its renewable energy sources to achieve the targeted 2000 to 3000 MW capacity per year. Indonesia has huge potentials of renewable energy of 442 gigawatts of electricity, but now only 10.4 GW or 2.3 percent is utilized.5
Of the total potentials of renewables, solar offers the highest potential with 207.89 GW of electricity, followed by hydro power with 94.35 GW, wind energy with 60 GW, biomass with 31.6 GW, geothermal with 28.5 GW, and tidal wave energy with 17.9 GW. Of the total installed capacity of 10.4 GW of renewables, the largest coming from hydro power plants, including micro hydro, with total combined capacity of over 5 GW, followed by geothermal with 2.1 GW, and biomass by 1.9 GW, mostly off-grid. Renewable from other sources are tiny.
Source: Bisnis.com, CBNCINdonesia.com
To players in the clean-energy sector, the government’s plan to start phasing out coal-fired power plants (PLTU) and gas-fired power plants in 2025 is both delighting and nerve-wracking. They fear that the good news is a mere nonsensical rumor. Especially given the fact that PLN has demonstrated an unserious attitude to promoting renewable energy.
Our source said that it was no longer a secret that PLN found it difficult to shift from PLTU. Besides being cheap, many conglomerates’ businesses depend on fossil fuels. Some of them also own power plants, such as Adaro and Sinar Mas group. Those coal barons also have a strong lobby at PLN.
Prior to this, some foreign players were reportedly looking to invest in neighboring countries instead if PLN and the government remained uninterested in promoting renewable energy. That is why, the news that PLN is removing new PLTU projects from its electricity procurement business plan (RUPTL) 2021 – 2030 came as a relief. However, according to another source, players in the clean-energy sector remain cautious as the renewable energy share in the RUPTL is still uncertain.
Nevertheless, they are optimistic that the plan can proceed smoothly due to the global pressure of renewable energy’s importance. This will affect Indonesia’s plans to seek new loans—which reportedly will be easier if the country makes a strong commitment to developing renewable energy. In other news: the government is set to reshuffle PLN’s board of directors so that the new executives will be pro-renewable energy.
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