Jakarta, November 14, 2025 – The government is currently drafting amendments to Presidential Regulation (Perpres) No. 112 of 2022 on the Acceleration of Renewable Energy Development for Electricity Supply. Some of the proposed revisions include relaxing provisions that would allow the construction of new coal-fired power plants under the justification of maintaining system reliability. Additionally, the draft introduces regulations on hybrid power plants, which permit combining fossil fuels with renewable energy sources.
The Institute for Essential Services Reform (IESR) considers these proposed changes to pose risks of increasing electricity prices, weakening competitiveness, raising the likelihood of stranded fossil assets, and undermining the overall energy transition.
The rationale for building new coal-fired power plants to maintain system reliability contradicts President Prabowo’s ambition and directive to achieve 100% renewable energy use within the next ten years.
IESR emphasizes that system reliability can be ensured without adding new coal-fired power plants. Expanding the grid and transmission network, as well as accelerating the development of geothermal, hydropower, and variable renewable energy sources such as solar and wind, supported by energy storage systems, can effectively replace the role of coal-fired power plants in maintaining reliability.
Moreover, various pieces of evidence show that the presence of coal-fired power plants does not necessarily guarantee system reliability. For instance, the blackout on Timor Island in November 2025 was caused by a disruption at the Timor coal-fired power plant, even though the 2 × 50 MW plant had only been in operation since 2023.
IESR Chief Executive Officer (CEO) Fabby Tumiwa stated that, given the accelerating global energy transition, the revision of this Presidential Regulation should reinforce provisions to end the operation of coal-fired power plants by 2050 and prohibit the construction of new coal-fired power plants, including those integrated with industrial facilities, starting in 2025.
“Indonesia has agreed to the Just Energy Transition Partnership (JETP), which targets a 34 percent renewable energy mix by 2030, as set by the previous government. President Prabowo has also repeatedly expressed his commitment to ending coal-fired power plants within the next 10–15 years. A policy framework that remains permissive toward new coal plant development will undermine Indonesia’s credibility and send a negative signal to investors because it is inconsistent with the country’s energy-transition ambitions,” Fabby explained.
Furthermore, the practice of mixing renewable energy with fossil fuels in hybrid power plants risks extending the use of fossil fuels and increasing greenhouse gas (GHG) emissions. IESR stresses that hybrid power plants should be limited to combinations of renewable energy sources only.
IESR Energy System Transformation Program Manager Deon Arinaldo stated that hybrid power plants combining fossil fuels with renewable energy would further lock Indonesia into fossil-based infrastructure and increase the risk of stranded assets. Electricity-sector emissions also have the potential to rise above the current average (0.85–0.87 kgCO₂e/kWh) if restrictions on building new coal-fired power plants are relaxed.
“The surge in electricity-sector emissions will affect the competitiveness of industries that are being pushed to improve efficiency and electrify their operations to reduce the carbon footprint of their products. Indonesian products risk losing competitiveness in the global market, including exports to the European Union, which has implemented strict emission standards. This situation could hinder Indonesia’s economic growth target of 8%,” Deon said.
Deon also expressed concern that if Indonesia continues to rely heavily on fossil fuels, many multinational companies, particularly RE100 members committed to achieving 100% renewable energy, may delay business expansion or even exit the Indonesian market.
For this reason, IESR urges the government to remain committed to ending coal-fired power plant operations by 2050, including pursuing early retirement options for older and inefficient coal units, and prohibiting the development of new coal-fired power plants, including those built for industrial processing and downstream activities. Moreover, the government must accelerate the deployment of renewable energy supported by energy storage systems, as well as the expansion of electricity networks, to ensure system reliability throughout the transition process.