Jakarta, April 23, 2025 – The Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia has issued ESDM Regulation No. 10/2025 concerning the Roadmap for the Electricity Sector Energy Transition on Tuesday (15/4). This regulation is a mandate from Presidential Regulation No. 112/2022 article 3. This ESDM Regulation regulates the roadmap for terminating the operation of PLTU to achieve the net-zero emission (NZE) target in 2060 or sooner. One of the strategies is to accelerate the retirement of coal-fired PLTUs based on a number of criteria, as well as a ban on the construction of new PLTUs except those that meet the provisions in Presidential Regulation No. 112/2022. Not long after the issuance of ESDM Regulation No. 10/2025, the Minister of ESDM, Bahlil Lahadalia also signed the early retirement decision for the 650 MW Cirebon I PLTU.
The Institute for Essential Services Reform (IESR) appreciates the government’s steps, especially the Minister of Energy and Mineral Resources Bahlil Lahadalia, Minister of Finance Sri Mulyani and Minister of State-Owned Enterprises Erick Thohir for issuing the energy transition roadmap. This step reflects Indonesia’s energy transition commitment that has been stated since 2021 and which was emphasized by President Prabowo’s statement at the G20 forum in November last year, that Indonesia will end the use of fossil fuels by 2040.
The Executive Director of IESR, Fabby Tumiwa said that this Regulation is an important legal basis that will now guide the development of electricity infrastructure. He also emphasized that this regulation opens up opportunities for accelerating the retirement of PLTUs while still considering the reliability of the electricity system, electricity costs, and the principle of a just energy transition.
“The decision of the Minister of Energy and Mineral Resources to approve the early retirement plan of the Cirebon I PLTU with the Energy Transition Mechanism (ETM) facility is also proof that terminating the PLTU operation earlier than its contract period is technically, economically and legally feasible. The process towards this decision has been carried out since 2021 but has not yet fully reached the end. In the next ten years, PLN and PT Cirebon Electric Power (CEP), under government supervision, must still plan the construction of renewable energy plants to replace the capacity of the PLTU that will be retired. In addition, strengthening the electricity network is needed to integrate the entry of renewable energy plants, especially those of a variable nature (variable renewable energy, VRE). Without these steps, the PLTU’s early retirement plan is at risk of being cancelled due to the potential for a shortage of electricity supply in 2035,” said Fabby Tumiwa.
Fabby hopes that the three-year experience of preparing for the early retirement of the Cirebon I PLTU can be a valuable lesson and increase the confidence of PLN, the government and private electricity to review the possibility of terminating other PLTU operations in the future.
Based on the IESR study, to support climate crisis mitigation efforts so that the earth’s temperature does not exceed 1.5°C, 72 coal-fired power plants with a total capacity of 43.4 GW need to be retired in the 2022–2045 period. In the 2025–2030 period, IESR recommends the termination of operations of 18 coal-fired power plants with a total capacity of 9.2 GW, consisting of 8 PLN-owned power plants (5 GW) and 10 private power plants (4.2 GW).
This IESR study has also considered factors in accordance with those stated in Ministerial Regulation No. 10/2025 in accelerating the termination of coal operations, such as the age and capacity of the power plant, project economics, and environmental impacts, especially greenhouse gas emissions.
In the Ministerial Regulation, the government also considers the availability of domestic and foreign funding support in accelerating the termination of coal-fired power plant operations. IESR estimates that the early retirement cost of coal-fired power plants will reach USD 4.6 billion by 2030 and USD 27.5 billion by 2050. About two-thirds or USD 18.3 billion will come from privately owned coal-fired power plants, and one-third or USD 9.2 billion will come from PLN-owned coal-fired power plants. Although the initial cost of coal-fired power plant retirement is relatively large, the long-term benefits of reduced health costs and coal-fired power plant subsidies will reach USD 96 billion by 2050.
“Funding support for the early retirement of inefficient, expensive and acutely polluting coal-fired power plants owned by PLN can come from the State Budget. However, the funds, which are supplemented by state capital participation, must be used to accelerate the development of renewable energy and strengthen the electricity network. This is similar to moving funds from the left pocket to the right,” explained Fabby.
Fabby also explained that while waiting for the coal-fired power plant retirement period, flexible operation of the coal-fired power plant can be carried out to support the integration of renewable energy, especially solar and wind. This approach will change the operating system of electric power, where the PLTU will operate following an intermittent generation pattern, within the technical limits that are safe for the system. In this way, the penetration of renewable energy in the electricity system can be significantly increased.
