Towards an early phase-out of coal power: Strategies and challenges of transitioning to renewable energy

Photo: Enlit Asia panel discussion titled “Leapfrogging to NZE: Accessing ASEAN Readiness to Retrofit or Early Retire Coal Fleets”, Wednesday (11/15). (Sumber: IESR)

Jakarta – The Institute for Essential Services Reform (IESR) said the government’s move in drafting the coal-fired power plants (PLTU) retirement roadmap is a first step towards more significant renewable energy development.

The government is currently drafting a roadmap to end the operation of coal-fired power plants as a follow-up step after issuing Presidential Regulation (Perpres) No. 112/2022 on the Acceleration of Renewable Energy Development for Electricity Supply.

Deon Arinaldo, Energy Transformation Program Manager at IESR, highlighted the need for a regulatory framework that supports the structure or financing scheme to end the operation of coal-fired power plants in Indonesia after the roadmap is developed.

He said several proposed structures for terminating PLTU operations, such as write-offs or deleting PLTU assets from company records, because they are no longer considered economical. Another alternative is a spin-off, which sells assets to a new company to manage them with a shorter operating period.

“It is important to create a pilot project for the operational termination of existing PLTUs, such as the Cirebon PLTU, to prove the concept and provide certainty to PLN and Independent Power Producers (IPP) as PLTU asset owners,” Arinaldo said in a written statement at the Enlit Asia panel discussion entitled “Leapfrogging to NZE: Accessing ASEAN readiness to retrofit or early retire coal fleets”.

Furthermore, he highlighted the need for a funding allocation mechanism from early retirement of PLTU to renewable energy generation. According to Arinaldo, current regulations in Indonesia do not yet support this, and changes need to be considered and proposed so that renewable energy funding can be used to retire PLTU assets while making renewable energy more affordable.

He said that much work needs to be done to implement the early retirement of PLTU, including ensuring that a legal umbrella explains that early termination of PLTU operations is part of the country’s policy to transition energy and reduce emissions. In addition, regulations that allow modifications to the power purchase agreement (PJBL) are also a critical factor in facing this challenge.

“It is even better if the strategy to end PLTU operations is part of an energy transition effort that wants to integrate renewable energy on a large scale, thereby reducing greenhouse gas emissions,” Arinaldo added.

If this is the case, then PLTU assets can be optimised to support the penetration of renewable energy quickly and economically. For example, in addition to waiting for retirement, PLTU can be operated flexibly to maintain the stability and reliability of the electricity system along with the increasing use of intermittent Solar Power Plants (PLTS) and Wind Power Plants (PLTB). (Hartatik)

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