“Indonesia’s Bold Plan to Phase Out Coal by 2040: Challenges and Opportunities Ahead”

Indonesia’s President Prabowo Subianto has set a bold goal to phase out coal by 2040, despite the country currently relying on coal for 62% of its electricity production. As the president’s first 100 days in office progress, there is a pressing need to establish a clear and achievable plan to reach this ambitious target.

The recently published National Electricity Master Plan (RUKN) 2024-2060 in Indonesia includes strategies for phasing out coal, such as co-firing with biomass fuel and retrofitting existing coal infrastructure with carbon capture and storage technology. However, these strategies seem to conflict with the country’s decarbonization goals and divert from the necessary acceleration of renewable energy to meet the growing demand for power by 2040.

To effectively transition away from coal, systemic changes in the power sector are essential. One crucial step could be developing a blueprint to retire coal power plants with significant emission footprints, including captive coal plants that operate off-grid. Addressing captive coal plants is crucial to ensure a comprehensive shift to clean energy and avoid undermining Indonesia’s climate objectives.

Additionally, revising the contractual obligations between PLN (Indonesia’s state electricity company) and power producers is necessary to facilitate a faster reduction in coal power operations. Current contracts often lock PLN into purchasing fixed amounts of coal-generated electricity, hindering the integration of renewables into the grid.

Improving the flexibility of coal-fired power plants is another key challenge in reducing reliance on coal. Enhancing downward coal flexibility, which allows coal plants to quickly reduce output when renewable energy sources are available, is crucial for prioritizing renewables in the grid and minimizing carbon emissions.

One proposed scenario to achieve the coal phase-out target by 2040 involves increasing the share of renewable energy to 65%, with solar accounting for 20%, wind for 11%, and other renewables like nuclear, geothermal, bioenergy, and hydro making up the remaining 34%. This scenario also includes incorporating 68GWh of battery capacity in stationary applications to stabilize solar energy output.

Successfully retiring coal power plants early will require dedicated financial support. Collaboration between the Indonesian government, power plant owners, financiers, and international partners is crucial to develop viable funding solutions that ease the financial burden of the transition. Exploring funding mechanisms like climate finance, carbon markets, and public-private partnerships can accelerate the coal phase-out process and support renewable energy projects.

Incentivizing clean energy, particularly through storage systems to address solar power intermittency, is essential for a reliable renewable energy supply. Current policies may need to be adjusted to provide sufficient incentives for integrating battery storage solutions into solar projects.

Furthermore, expanding renewable energy deployment in Indonesia presents significant economic opportunities, including job creation, attracting green investments, and accessing cleaner and more sustainable power sources. Taking decisive action now will not only help Indonesia achieve long-term economic growth but also ensure environmental stability and energy security in the future.