Report Launching and Discussion Delivering Power Sector Transition in Indonesia: Options and Implications of Intervening the 13.8 GW Coal-fired Power Plants Project Pipeline of Indonesia’s State-owned Utility
Background
Indonesia has ratified the Paris Agreement through the Law no 16/2016. As a result, Indonesia is legally bound to contribute to the global struggle of climate change through ambitious efforts and action in mitigating Greenhouse Gas (GHG) emission and limiting the increase of the average global temperature below 1.5 0C. In one of the IPCC climate model results of the 1.5 0C compatible pathway, the global Greenhouse Gas (GHG) emission must decrease by 45% in 2030 compared to 2010 and reach net zero emission by 2050. As of now, Indonesia is among the top 10 greenhouse gas (GHG) emitters and still projected to increase its emissions, with the energy sector as the highest GHG contributor by 2030.
With 66% share of power generation in 2021, the coal power plant has been the major contributor of the energy sector emission (around 40%), and even 90% of power sector emission. The latest PLN’s RUPTL (green RUPTL) still considers the addition of 13.8 GW of Coal power plants in the next decade. The share of renewable energy will only increase to around 24% by 2030 according to the same plan, resulting in overall increase of the power sector (and energy sector) emission. Thus, it clearly goes against the mandate of the Paris Agreement.
Institute for Essential Services Reform (IESR) and the University of Maryland (2022) study found that 9.2 GW of coal must be phased out from the state-owned utility (PLN) grid before 2030 and all unabated coal plants must be phased out by 2045 at the latest, to put Indonesia on track to meeting the 1.5°C Paris Agreement global temperature goal. The study also concluded that the coal emission has to start declining event before the end if this decade. There have been several initiatives and measures to support and realize the early retirement of Indonesia’s CFPP. In addition to the Energy Transition Mechanism (ETM) launched at COP-26, during the G20 summit, Indonesia and the International Partnership Group (IPG) have also signed the Just Energy Transition Partnership (JETP), aimed at meeting the power sector’s peak emission target of 290 million metric tons of CO2 (MtCO2) by 2030, reaching a 34% renewable energy mix by 2030, and having the power sector become net-zero by 2050.
Even though the JETP target is not yet aligned with the Paris Agreement’s goal, it is an important opportunity for Indonesia to accelerate energy transition and open the possibility for early coal plant decommissioning. According to the IESR assessment, under current power system circumstances, meeting the JETP goals would require slashing 8.6 GW of coal power capacity in the PLN grid by 2030, lower than the capacity required to meet the 1.5°C pathway.
This study hence explores the potential of intervening in some of Indonesia’s coal plant pipelines and assesses the legal, financial, system resilience, energy security, and carbon emission reduction of this intervention. The thinking behind this assessment is that, given the average age of coal plants in Indonesia, including those that are currently in the pipeline, their operation will surpass the 2045 or 2050 target year. Meanwhile, the early retirement of existing plants in operation could be very costly given their long-term contract and nature of their PPA’s terms. Therefore, intervention for individual plants in the pipeline, even cancellation of existing projects whenever it is possible could produce a lower-cost carbon emission abatement and might contribute to meeting the target to reach peak emission by 2030 and net-zero emission by 2050. Types of interventions considered in the study include cancellation of planned CFPP, repurposing, and early retirement.
IESR will hold a hybrid seminar to launch the research report titled “Delivering Power Sector Transition in Indonesia: Cost and Benefits and Implication of Intervening in the 13.8 GW Coal-fired Power Plants Project Pipeline of Indonesia’s State-owned Utility”, and invited the related stakeholders to discuss and build out recommendation for decarbonization of the power system.
Objectives
- To disseminate research-based analysis of intervention strategy on carbon emission reduction in power sector to meet the JETP target and even the 1.5°C Paris Agreement global temperature goal in the long-term especially for the pipeline CFPP
- To identify the cost, benefit and implication on intervening Coal-Fired Power Plants Pipeline
- To discuss the opportunity and potential obstacle to overcome the challenges on cancellation, repurposing and/or early retirement of CFPP
