by: Hartatik
Jakarta – Indonesia’s captive coal-powered plant capacity (PLTU) is projected to reach 26.24 gigawatts (GW) by 2026, surpassing Australia’s total capacity of 22.9 GW. This finding comes from a recent report released by the Center for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM) titled “Tracing Indonesia’s Captive Power Growth: No Sign of Slowdown in 2024”.
Over the past five years, the capacity of captive power plants in Indonesia has increased sharply, from 5.7 GW in 2019 to 15.2 GW in July 2024. This is equivalent to an almost threefold increase. Capacity is expected to reach 17.1 GW by the end of 2024, with an additional 11.04 GW still under development.
Katherine Hasan, Senior Analyst at CREA, said on Monday, November 11, that the growth of captive coal-powered plant capacity in Indonesia is quite significant, showing no signs of slowing down until 2026. She said the increase is mainly driven by energy-intensive industries such as metals, pulp and paper, chemicals, cement, and textiles.
Strong rejection of new captive power plant construction
A number of environmental and energy organizations have strongly criticised government policies that open up opportunities for constructing new captive coal-powered plants, especially in industrial areas. The government has committed to reducing dependence on fossil energy and achieving a net-zero emissions target by 2060.
The policy is contained in Article 3 Paragraph 4 letter b in Presidential Regulation Number 112 of 2022 concerning the Acceleration of Renewable Energy Development. They see this article as a step backwards in Indonesia’s efforts to achieve the clean energy transition target.
Satya Bumi Director Andi Muttaqien, highlighted the potential negative impacts of the policy. According to him, the construction of new captive power plants, especially in areas without coal resources, will prolong dependence on fossil energy and increase pollution emissions.
“This is illogical and counterproductive,” Andi said. “The government should focus on developing renewable energy that is more environmentally friendly and sustainable.”
Most of these PLTUs are used by the metal industry, mainly to meet the energy needs of nickel smelters. Between 2023 and 2024, captive PLTU capacity in Central Sulawesi increased from 2.86 GW to 5.19 GW, while in North Maluku, it increased from 1.87 GW to 4.02 GW. This capacity is estimated to continue to grow until it reaches 3.16 GW in Central Sulawesi and 3.02 GW in North Maluku in 2026.
GEM researcher Lucy Hummer said that the study found huge energy demand from the nickel processing industry. She said the high demand became one of the main drivers of the increase in captive power plant capacity,
Roadmap for captive power plant retirement
The CREA and GEM report highlights the need for a clear roadmap for the early retirement of captive power plants as part of Indonesia’s national energy transition plan. This is in line with the government’s target of achieving decarbonization and attracting investment in renewable energy.
Hummer said that reducing reliance on coal in the industrial sector is a power challenge and part of Indonesia’s energy transition strategy. She said as one of the main suppliers of critical minerals to the global clean energy supply chain, Indonesia needs to accelerate the integration of renewable energy in its national plans.
With abundant renewable energy potential and support from global climate partnerships such as JETP, Indonesia can transition away from captive power plants and lead industrial decarbonization efforts in Southeast Asia. However, Hummer said using captive coal-fired power plants increases the risk of carbon emissions, contrary to the global climate commitments agreed in the JETP.
Indonesia’s potential to lead global decarbonisation
CREA and GEM also highlighted the financial benefits that Indonesia could gain from switching to renewable energy. According to the report, by 2025, the average levelized electricity (LCOE) cost of solar power generation in Indonesia will be lower by USD 0.01 per kilowatt hour (kWh) compared to coal power generation. This difference will increase to more than 0.03 USD cents per kWh in the next decade.
Hasan said the cost of generating electricity from renewables is already more competitive than coal, presenting a great opportunity for Indonesia to shift and strengthen its position as a leader in industrial decarbonisation.
This opportunity will be lost if Indonesia persists in allowing the construction of new captive power plants in industrial areas. Celios Director Bhima Yudhistira said that constructing a new PLTU would hamper Indonesia’s efforts to achieve sustainable industrialisation.
“Industrial products produced in areas with a lot of air pollution will find it difficult to compete in the global market,” Bhima said. “Communities affected by air pollution will also experience a decline in productivity, which will ultimately harm the economy as a whole.”
Bondan Andriyanu, Greenpeace Indonesia’s Climate and Energy Campaigner, said the policy was “an unfortunate step backwards. Instead of accelerating the shift to clean energy, the government is opening the door wider for investment in dirty energy sectors that damage the environment and endanger public health.”
Environmental activists are urging the government to immediately revise these counterproductive policies and take a more serious approach to a clean energy transition. They have also called on the government to prioritise the development of more environmentally friendly and sustainable renewable energy.
