ASIATODAY.ID, JAKARTA – A new analysis from Ember raises concerns that Indonesia’s latest electricity masterplan could significantly increase coal power generation, undermining the country’s low emission pathway and Just Energy Transition Partnership (JETP) targets, and potentially driving up electricity costs. The plan includes 26.8 GW of new coal capacity over the next seven years, with more than 20 GW coming from captive coal expansion.
This expansion also contradicts Indonesia’s pledge to phase out coal by 2040, announced by President Prabowo at the G20. Instead of declining, coal generation is projected to grow by 62.7%, peaking in 2037. This risks locking the country into expensive, high-emission power generation that is increasingly uncompetitive compared to renewables.
“Producing materials for green technology using high-emission energy sources is counterproductive. Indonesia must decarbonise its smelter industries with renewables to enhance sustainability and the market competitiveness of its products,” said Dody Setiawan, Senior Analyst Climate and Energy for Indonesia at Ember, quoted Monday, February 24, 2025.
Katherine Hasan, Analyst at the Centre for Research on Energy and Clean Air (CREA), said: “The lack of clarity around how much additional captive power capacity remains in national planning is jeopardising Indonesia’s efforts to realise the Golden 2045 Vision. With planned growth largely concentrated in Sulawesi and North Maluku islands, those residing near the industrial sites where the coal power plants will operate will have to bear the highest health and economic burden from pollution exposure, not to mention the irreversible environmental impacts from the spread of toxic particles.”
The report also highlights that new captive coal plants will face financial and regulatory challenges. Under existing policies, they can only operate until 2050, must cut emissions by 35% within 10 years and will not benefit from the government’s capped coal price, forcing operators to pay market rates.
The cost of new captive coal generation could exceed that of grid power and renewables. Estimates suggest it could reach 7.71 USc/kWh, significantly higher than PLN’s generation cost in 2020 (7.05 USc/kWh) and recent solar and wind tariffs of between 5.5 and 5.8 USc/kWh.
“Expanding captive coal while global markets shift to clean energy makes little economic sense. Indonesia has a clear opportunity to scale up renewables instead of committing to more coal,” said Dody Setiawan.
“Committing to a clear path for coal phase-out while prioritising renewables would help Indonesia address the multi-faceted challenges that all coal-dependent economies must face in these crucial decades. Now is the time for Indonesia to walk the talk and realise true energy affordability and security as outlined in the RUKN,” added Katherine Hassan.
Reassessing the captive coal expansion plan while at the same time enforcing emissions regulations and accelerating renewables would help Indonesia stay on track with its climate commitments, reduce long-term energy costs, attract investment in clean energy and enhance sustainability of its mineral products. (AT Network)
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