Jakarta, Klinik Farma – The Indonesian government plans to close coal-fired thermal power plants (PLTUs) to achieve net zero emissions (NZE) by 2060 or earlier.
However, in reality, it is not easy for Indonesia to destroy PLTU, which is currently still the “life” of Indonesia’s power industry. Moreover, the funds required to stop and accelerate the early retirement of this PLTU are very large, potentially reaching hundreds and even thousands of trillions.
So where will the funds come from to ruin coal power plants? Could Indonesia implement an early retirement program for coal power plants?
Coordinating Minister for Maritime Affairs and Investment (Menko Marwes) Luhut Binsar Pandjaitan and Finance Minister Sri Mulyani Indrawati also admitted that they were having trouble finding sources of funding for early retirement for this PLTU.
Luhut said his party estimates that up to US$100 billion or about Rp 1,500 trillion (at an exchange rate of Rp 15,000 per US dollar) will be needed to implement the energy transition, especially the closure of PLTU.
Although developed countries have committed to funding of US$20 billion or about Rp 300 trillion under the Just Energy Transition Partnership (JETP) initiative for Indonesia, he admitted that there was still no clarity on the distribution financing. .
“Yes, JETF. Yes, we still don’t know the money,” Luhut said in Jakarta, quoted on Thursday (07/09/2023).
Luhut said these developed countries have asked Indonesia to first develop a program and detail program plans to phase out coal and create new renewable energy sources (EBT).
“Yes, those who asked us to do this, yes, we are doing it. Those who promised money, where is the money now? He said.
Not only Luhut, Sri Mulyani also admitted that she has a headache in sourcing funding for PLTU’s early retirement.
Sri Mulyani admitted that taking early retirement from PLTU is not an easy matter. Apart from the funding issues, Sri Mulyani also admitted that she had to rack her brains to find other sources of energy to fill the gap when the coal power plant was taken offline.
“Currently, we are really at the level of discussing the size of the pension fund, the size of which will affect the balance sheet of PT PLN,” Sri Mulyani said during the Indonesia Sustainability Forum 2023 gala dinner at the Park Hyatt Jakarta on Thursday evening (7 /9 /2023) .
The government is currently studying lethal injection plans for two power plants, namely PLTU Cirebon-1 and PLTU Pelabuhan Ratu. Early retirement is financed through the Energy Transition Mechanism (ETM). PLTU Cirebon-1 is included in the list of pilot projects or early retirement test cases selected by the Asian Development Bank (ADB).
Sri Mulyani said that when the coal power plant is taken offline, it will become an idle asset for PLN. He said that when these assets can no longer be used, the government should fill them by building renewable energy sources.
The next challenge, he said, is that decommissioning PLTU and replacing it with renewables will require a lot of capital. He said capital for development would be a real burden, especially with interest rates currently soaring. “Right now, the expensive exchange rate is a real identified problem, and we’re not just talking about trillions of money,” he said.
Sri Mulyani gave the example of the PLTU Cirebon-1 lethal injection project, which has a capacity of 660 megawatts. The project is expected to reduce carbon dioxide emissions by 4.4 million gigatons of CO2.
According to him, to implement this project, 330 million US dollars are needed, one of which is loans.
“Loans, when interest rates become expensive, who will pay for them,” he said.
The government never backs down
While this poses a number of challenges, particularly funding, the government says it remains committed to decommissioning PLTU early to reduce carbon emissions.
“So yeah, it’s not an easy task. But, again, the government is very interested in this. Because of the financing we have to prepare so you know to overcome all the problems except early retirement if there is a fire in Asia. as well as by the government and PLN. “They are also preparing 2.5 gigabytes or one renewable energy every year,” Luhut said.
It’s the same with Sri Mulyani. Even though things are complicated, Sri Mulyani said concrete actions still need to be taken to reduce emissions, such as early retirement of coal-fired power plants.
Otherwise, he said, efforts to reduce emissions will simply be discussed in one forum after another without any real action.
“And we are creating an even worse situation for the world,” he said.
We note that, referring to data from PT PLN (Persero), the total installed electrical capacity of the Holding and PLN subsidiaries until December 2022 reached 44,939.88 MW, with 31,328.92 MW (69.71%) in Java. The largest capacity was provided by coal power plants – 20,418.50 MW (29.57%).
PLN is not the only electricity producer in Indonesia. The country’s total installed capacity, including leased generators and private power producers (Independent Power Producers/IPP), will be 69,039.60 MW by the end of 2022.
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