JETP Secretariat Launched, Government Needs to Remove Barriers for Renewable Energy Development

Jakarta, 17 February 2023 – The Government of Indonesia has launched a secretariat for the Just Energy Transition Partnership (JETP) work team, which will work today. Some of the targeted work results planned to achieve within the next 6 (six) months include the availability of a road map for early retirement for coal-fired power plants (CFPP) and the completion of a comprehensive investment plan (CIP) which will also reflect support for communities affected by the energy transition process.

The Institute for Essential Services Reform (IESR) appreciates the progress made by the government and IPG towards implementing the JETP agreement. IESR encourages the JETP work team to compile beyond just a coal-fired power plant early retirement roadmap as targeted by JETP, but also more ambitious by aligning the target with the Paris Agreement.

“JETP is an opportunity to accelerate the energy transition and reduce GHG emissions. Indonesia’s stakes must go even further, such as encouraging green economic growth and strengthening the renewable energy industry. Indonesia should not hesitate to accelerate the energy transition because through it we can grow our economy higher,” said Fabby Tumiwa, Executive Director of IESR.

IESR calculates that to reach peak emissions in the electricity sector in 2030, it is necessary to retire the CFPP and increase the capacity of renewable energy generators at the same time.

“In the IESR analysis, to achieve the renewable energy mix target in the electricity system of 34% in 2030 according to the JETP target, instead of the 20.9 GW of renewable energy projects that have been planned in the 2021-2030 RUPTL, an additional minimum of 5.4 GW of renewable energy capacity will be needed. The addition of this renewable energy needs to be planned along with the retirement of up to 8.6 GW of CFPP, therefore, the reliability of the electricity system can be maintained,” explained Deon Arinaldo, IESR Energy Transformation Program Manager.

Reflecting on the achievement of Indonesia’s renewable energy mix in primary energy, which only reaches 12.3%, the government must be able to overcome obstacles to the development of renewable energy, such as by providing support to local producers and industries to meet the Local Content Requirements (LCR), improve procurement procedures or renewable energy auctions and diverting fossil subsidies to the renewable energy sector and eliminating the DMO policy.

“In the last five years, investment in renewable energy has always been below the target, and the installed capacity of renewable energy has only grown 300-500 MW per year. Meanwhile, the need for additional renewable energy generators will reach 26 GW more in the next 8 years or around 3-4 GW per year. The large funding commitment from JETP, which will be outlined in this investment plan, can only be realized if obstacles to renewable energy investment, such as procurement procedures at PLN, LCR regulations for solar PV that are not aligned with industrial developments and coal price subsidies through the DMO price policy can be resolved immediately in this year,” said Fabby.

As the operation of coal-fired power plants is about to end, the government must also start preparing for proper management of electricity infrastructure such as networks and energy storage, planning economic diversification in coal-producing areas, and providing training and incentives to workers and communities affected by the CFPP closure. 

“Energy transition planning needs to provide clear direction in the long term, so that the negative impacts of the energy transition, for instance, on workers in CFPP & coal supply chain, reduction of regional and national revenues from coal, and others, can be identified clearly. From this, strategies can be developed to carry out the social and economic transformation, such as preparing new job opportunities, and relevant skills training for workers,” said Deon.