IEEFA says Indonesia needs transparency of coal plant shutdown plans

The Institute for Energy Economics and Financial Analysis said on Friday that Indonesia needs to improve transparency of its power plant shutdown plans, as the country launches five energy transition schemes.

In recent months, Indonesia has announced agreements with international organizations to finance its transition from coal to renewable energy, including a $20 billion deal with G 7 countries under the Just Energy Transition Partnership JETP and the Climate Investment Fund's $500 million allocation of concessional financing.

Details of the programmes are still being negotiated, but CIF and the Indonesian government have released formal details of the programme's investment scheme.

The IEEFA report said that under the CIF programme, the state-owned Perusahaan Listrik Negara PLN would shut down nine coal power plants with a total capacity of 4.9 gigawatts but some were already very old and beyond their economic useful life by the year 2055 when they are due to be decommissioned.

The report said that some of the proposed power plants would be proposed by PLN by the year 2025, the average life of such facilities, and the utility should retire and write them off. PLN didn't respond immediately to a request for comment.

Elrika Hamdi, energy finance analyst at IEEFA, said in the report that the presentation of the list of plants to retire has a lack of disclosure on the selection criteria.

She said that pollution generated and the marginal cost of operation should be factors that need to be considered in order to justify why some plants are better than others.

The lack of disclosure on the selection process of the Asian Development Bank's ADB first potential transaction for an early coal power plant retirement is a concern, according to Hamdi.

Indonesia, the ADB and a private power firm announced last month that they are teaming up to refinance and prematurely retire a 660 megawatt power plant in West Java.

The report said that Indonesia also needs to ensure strong governance and long term political commitment with all schemes running simultaneously and the long lead time of each transition.