Indonesia to abandon coal-fired energy
2022.12.09 07:17
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Indonesia to abandon coal-fired energy
Budrigannews.com – The Institute for Energy Economics and Financial Analysis (IEEFA) stated on Friday that Indonesia needs to improve the transparency of its plans to shut down power plants as the country launches at least five energy transition programs.
In recent months, Indonesia has announced agreements with international organizations to finance its switch from coal to renewable energy. These agreements include a $20 billion agreement arranged by the G7 countries under the Just Energy Transition Partnership (JETP) and a $500 million concessional financing allocation from the Climate Investment Fund (CIF).
CIF and the Indonesian government have published official details of the program’s investment scheme, despite the fact that specifics of some of the plans are still under negotiation.
According to the IEEFA report, the state-run Perusahaan Listrik Negara (PLN) would shut down nine coal power plants under the CIF program, each with a capacity of 4.9 gigawatts. However, some of the plants were already “very old” and “beyond their economic useful life by 2055,” which is when they are supposed to be decommissioned.
According to the report, some of the proposed power plants by PLN would be 40 years old by 2025, the typical lifespan of such facilities, and the utility ought to retire and write them off. A request for comment was not immediately responded to by PLN.
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Elrika Hamdi, an energy finance analyst at IEEFA, stated in the report that “the key flaw in the presentation of the list of plants to retire is a lack of disclosure on the selection criteria.”
“To justify why some plants are better than others, a reasonable level of transparency and disclosure is required,” she said, adding that the level of pollution produced and the overall marginal cost of operation ought to be key factors.
According to Hamdi, the same concern pertains to the lack of disclosure regarding the selection process for the Asian Development Bank’s (ADB) initial potential transaction for an early coal power plant retirement.
Last month, Indonesia, the Asian Development Bank, and a private power company said they would work together to refinance and prematurely retire a 660-megawatt power plant in West Java.
Indonesia also needs to ensure strong governance and long-term political commitment, as all the schemes are running simultaneously and each transition takes a long time.
