Coal Domination in Indonesia, What are the Opportunities for Sustainable Energy?

Jakarta, June 14, 2024 – Coal-fired power plants (CFPPs) still dominate the energy industry in Indonesia. According to data from the National Energy Council (DEN), 2023, the energy mix comprised approximately 40.46% coal, 30.18% petroleum, 16.28% natural gas, and 13.09% renewable energy. This information was presented by Raden Raditya Yudha Wiranegara, Research Manager at the Institute for Essential Services Reform (IESR), during the Investortrust Power Talk event entitled “The Future of the Coal Industry Amid the Energy Transition Trend” held on Thursday, June 13, 2024.

“Currently, more than two-thirds of Indonesia’s electricity is generated by burning coal. State-owned electricity company (PT PLN) predicts an additional 13,822 MW of coal-fired capacity by 2030. This would make Indonesia the third largest coal-fired power plant planning country in the world, following China and India.Simultaneously, through the Just Energy Transition Partnership (JETP), Indonesia aims to reach the peak energy sector emissions of 295 million metric tons of CO2 per year by 2030 and achieve net-zero emissions in the energy sector by 2050,” Radit said.

Radit emphasized that as one of the recipients of the JETP funding commitment, Indonesia is dedicated to reaching a peak emissions target of 290 million tons of CO2 by 2030. Additionally, the country aims to increase the renewable energy mix in the electricity sector to 44% by 2030. In the 2021-2030 Electricity Supply Business Plan (RUPTL), Raditya stated that PLN still plans to add power plants with a total capacity of 13.8 gigawatts (GW). However, in line with Indonesia’s energy transition plan, PLN must significantly reduce its new power plant development plans until 2030.

According to a study by IESR, nine CFPPs could be canceled, most of which are still in the financing stage or have failed to secure funding. PLN can also shift the planned 220 MW CFPP development towards biomass generation. Moving away from coal can significantly reduce economic dependence, especially since demand is projected to decline by around 2.3 percent by 2026, as per the International Energy Agency (IEA) report.

“The declining use of coal-fired power plants reduces fuel and variable costs across the system, which combined with the shift towards cost-effective renewable energy, is a strong driver in helping to lower system costs. Implementing the energy transition also requires the involvement of all parties between the central government, local government, private sector and the community,” said Radit.

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