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Accelerate a Fair and Equitable Sustainable Energy Transition in Indonesia by Termination of CFPP Op

Jakarta, June 27, 2023 – Environmental sustainability and overcoming the climate crisis have driven the need for an energy transition toward cleaner and more sustainable energy sources. The early termination of fossil energy generation operations as one of the largest emitters is a fundamental step towards accelerating the energy transition in Indonesia.

Director of Electricity Program Development at the Ministry of Energy and Mineral Resources (ESDM), Wanhar, explained that Indonesia already has regulations regarding the termination of coal fired power plants (CFPP) contained in Presidential Regulation (Perpes) Number 112 of 2022 concerning Acceleration of Renewable Energy Development for the Supply of Electricity which was stipulated and promulgated in September 13, 2022. Furthermore, Wanhar emphasized that in the Perpres, it was stated that new PLTUs were prohibited from being built except those that had been stipulated through the Electricity Supply Business Plan (RUPTL).

“The strategy related to the early retirement of the PLTU based on Presidential Decree No. 112 is currently being discussed in depth in the general energy planning. In addition, Indonesia also needs to accelerate the acceleration of the national electricity general plan (RUKN). We prioritize using renewable energy and tighten licenses for captive PLTUs, except for those from the government,” said Wanhar at the JETP Convening for Exchange and Learning event at Ayana Midplaza.

Wanhar mentioned that the Government of Indonesia and the State Electricity Company (PLN) have a shared vision to encourage renewable energy by considering four factors: the newly built substitution network, guaranteeing a fair transition, affordability, and international financial support. Terminating the PLTU must be accompanied by using renewable energy, for example, solar power.

David Elzinga, Senior Energy Specialist at Asian Development Bank, explained there is concern about the return on investment in ending PLTU operations early. Considering that some financial institutions are still hesitant to fund the coal-fired power plant early retirement program. For that, the Asian Development Bank (ADB) decided to take over this matter.

“There are several challenges in the energy transition, including managing energy reliability and supply. With the existence of a just energy transition partnership (JETP), it is hoped that green job opportunities for people working in coal production will be wide open as well as capacity building (skills) need to be strengthened,” said David.

On the other hand, Vikesh Rajpaul, General Manager of Just Energy Transition at Eskom Holdings SOC Ltd explained, in carrying out JETP implementation, extending the life of the CFPP was not considered for old generators. However, some units may need to remain operational longer than planned to overcome a power crisis.

“There is no energy transition without transmission, and equality is the key to implementing the energy transition, considering that the process will have environmental, economic, and social impacts. We have seen the potential for an energy transition in South Africa, including the abundant solar and wind power potential. For this reason, South Africa can encourage using renewable energy,” said Vikesh.

Jerredine Morris, Senior Manager at Carbon Trust, said that the management of JETP funds in South Africa is carried out by protecting vulnerable groups and workers with early retirement from CFPP. In addition, in implementing JETP, the most important thing is to consider the interests of local residents or what is commonly called a bottom-up approach.

“In implementing the CFPP’s early retirement, we look at the eligibility of retirement from the age of the CFPP, as well as maintenance costs. We also look at the economic feasibility and social impact of these retirements. The main obstacle is the retiring capacity of the coal-fired power plants and how we build renewable energy around it,” said Jerredine.

Pariphan Uawithya, Asia Director for the Global Energy Alliance for People and Planet (GEAPP), stated that there are three essential stakeholders in the early retirement process for coal fired power plants (CFPP) in Indonesia: the government, the private sector, and the community. According to him, the early termination of CFPP operations in Indonesia is critical in reducing greenhouse gas emissions and air pollution. Retiring old power plants will also open up opportunities for investment in alternative energy sources, such as renewable energy, increasing the country’s energy sustainability.

“Along with the energy transition, the government has also issued regulations regarding carbon markets as a form of Indonesia’s commitment to the issue of climate change. However, remember that in the energy transition process, coal is not the only asset; diesel generators can also be replaced by renewable energy,” he said.

The Ford Foundation in Indonesia organizes the Just Energy Transition Partnership (JETP) Covening, the Institute For Essential Services Reform (IESR), and the African Climate Foundation (ACF), with support from the Global Energy Alliance for People and Planet (GEAPP) to facilitate the forum exchange of learning between stakeholders.

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