Indonesia identifies 32 coal plants for possible early closure, minister says

Indonesia, the world’s top thermal coal exporter, generates about 60 per cent of its power from polluting coal. PHOTO: REUTERS

SINGAPORE - Indonesia has identified 32 older-generation coal-fired power plants for possible closure, a step that could help the nation meet its key climate target of net-zero emissions by 2060, a senior minister said.

Indonesia’s Minister for Energy and Mineral Resources Arifin Tasrif told The Straits Times the government had been conducting an exercise to see which power plants could be closed before the end of their operational life.

This could potentially see some plants closing five to 10 years before the end of their operational lifespan.

Indonesia, the world’s top thermal coal exporter, generates about 60 per cent of its power from polluting coal. Figuring out how to pay for the earlier phasing out of coal power plants is a priority for the country’s government and multilateral organisations such as the Asian Development Bank (ADB), which wants to drive the switch to renewable energy.

“We have done an exercise. There are 32 units so far with total capacity of 16.8 gigawatts (GW),” he said, adding that Indonesia’s total coal-fired generation capacity at present was more than 45GW, from a total of 72GW of power generation from all sources.

Mr Arifin, speaking during an interview on Wednesday on the sidelines of the Singapore International Energy Week, said most of the power plants were owned by state power utility PT Perusahaan Listrik Negara and were located in Java, Madura and Bali islands.

He said there needed to be more discussions on how to pay for the early retirements, and that cleaner energy investments needed to be built to replace the old power plants. But he said the identified plants could be closed five to 10 years earlier than previously planned.

Indonesia last year set a goal to achieve net-zero emissions by 2060 to help limit global warming to 1.5 deg C above pre-industrial levels. Burning coal is the largest source of mankind’s greenhouse gas emissions.

But achieving this target is tough because of generous state subsidies for coal and attractive power purchasing agreements with plant owners. The nation remains heavily reliant on subsidised coal for power generation and also offers power purchasing contracts that guarantee a fixed fee to some plant owners regardless of the amount of power they generate.

Consequently, early retirements could be costly, and that is why the government is looking for external funding.

In September, the government issued a regulation to encourage renewable energy use, including a plan to retire some coal plants early, a presidential decree said.

Indonesia and the Philippines have backed a pilot programme by the ADB, which the bank says has the potential to be one of the biggest carbon reduction programmes in the world.

The programme, called the Energy Transition Mechanism (ETM), would ultimately comprise separate funds for the early retirement or repurposing of coal-fired power plants and clean-energy investments. The programme requires billions of dollars to succeed.

ADB says further progress might be announced at the Group of 20 summit in Bali next month, and Mr Arifin said he was hoping there would be a significant funding pledge.

In an early coal plant retirement deal, Indonesian state coal firm PT Bukit Asam said last week it was collaborating with PLN on shortening the operational life of a coal power plant in Pelabuhan Ratu, West Java, to 15 years from 24.

“The decrease in operational life is accompanied by the potential for cutting carbon dioxide emissions amounting to 51 million tonnes,” PT Bukit Asam said in a statement.

Join ST's Telegram channel and get the latest breaking news delivered to you.