February 2, 2023

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Indonesia needs to be more open to plans to close coal plants -IEEFA by Reuters

©Reuters. FILE PHOTO: Coal is seen at the port of Karya Citra Nusantara in North Jakarta, Indonesia on January 13, 2022 as a heavy machine unloads it from the barges into a truck for distribution. Picture taken January 13, 2022. REUTERS/Willy Kurniawan /File Photo

JAKARTA (Reuters) – Indonesia needs to improve transparency on its power plant shutdown plans, the Institute for Energy Economics and Financial Analysis (IEEFA) said on Friday as the country enacts at least five energy transition plans.

Indonesia has in recent months announced deals with international groups to fund its transition from coal to renewable energy, including a $20 billion deal backed by G7 countries under the Just Energy Transition Partnership (JETP) and Arranged the $500 million Climate Investment Fund (CIF) allocation of concessional funding.

While details of some programs are still being negotiated, CIF has released formal details of the program’s investment plan together with the Indonesian government.

The IEEFA report said state-owned Perusahaan Listrik Negara (PLN) would shut down nine coal-fired power plants with a total capacity of 4.9 gigawatts under the CIF program, but some are already “very old” and “beyond their economic lives”. 2055″, the year in which they are to be decommissioned.

Some of PLN’s proposed power plants would reach 40 by 2025, the average lifetime of such plants, and the utility should shut them down and write them off, the report said. PLN did not immediately respond to a request for comment.

“The main flaw in presenting the list of assets to be decommissioned is the lack of disclosure of the selection criteria,” said Elrika Hamdi, energy financial analyst at IEEFA, in the report.

“A reasonable level of transparency and disclosure is required to justify why some plants are better than others,” she said, adding that the level of pollution generated and the total marginal cost of operation should be key factors.

The same concern applies to the lack of disclosure of the selection process of the Asian Development Bank’s (ADB) first potential coal-fired early closure transaction, Hamdi said.

Indonesia, ADB and a private energy company announced last month that they were joining forces to refinance and early decommission a 660-megawatt power plant in West Java.

The report added that Indonesia also needs to ensure strong governance and long-term political commitment, given the programs running concurrently and the long lead time of each transition.