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AsiaElec COMMENTARY AsiaElec
Indonesia to close outdated coal plants and build more renewables
Indonesia has unveiled plans to close coal plants over 20 years old, potentially removing 11,000MW of capacity from the market, writes Richard Lockhart
INDONESIA
WHAT:
Indonesia is to close coal- red TPPs over 20 years old
WHY:
The country aims to double its use of renewables
WHAT NEXT:
The country must wean the power sector of cheap coal and make green investment more attractive
INDONESIA has unveiled ambitious plans to close down coal- red thermal power plants built over 20 years ago and replace them with green generation in a bid to cut the country’s emissions and to meet its climate change commitments.
“Perusahaan Listrik Negara (PLN) is tak- ing inventory of those plants,” Ari n Tasrif, the Energy and Mineral Resources Minister, said.
e minister said that the government had identi ed up to 69 generating units for closure, Reuters reported, with a combined capacity of over 11,000MW.
Coal, which is also a major exporter earner for the country, currently accounts for 60% of the country’s generating output. e govern- ment wants by 2025 to double Indonesia’s share of renewables, which stood at just 5%, or 12% including hydro, in 2018, according to the 2019 BP Statistical Review of Energy. Gas accounts for a further 26% of the country’s 60,000 MW of capacity.
According to a flash note from Carbon Tracker, Indonesia has 15 large coal- red TPPs with 6,400MW of capacity aged 20 years and older, far less than the 11,000MW put forward by the minister.
is capacity represents 22% of Indonesia’s total operating coal capacity, and nearly all of it
is owned by state-owned PLN.
“ e decision to retire ine cient units and
replace that capacity with increasingly lower cost renewableenergyisaneminentlysensibleplan,” the ash note said.
Carbon Tracker said that the levelised cost of electricity (LCOE) was cheaper for new onshore wind projects ($48 per MWh) than for coal units older than 20 years ($57 per MWh).
The decision to retire inef cient units and replace
Falling coal prices that capacity
e Indonesian government’s decision comes at a time as the cost of renewables is falling, with green sources such as solar and wind now under- cutting coal in a number of countries in Asia.
with increasingly lower cost renewable energy
However, the new policy will take time to bed
in, and any move away from coal will be painful
for the Indonesian economy, which is heavily is an eminently reliant on coal production and exports.
In 2019, falling global coal prices hit export revenues, even though coal output, exports and domestic production all rose.
Tasrif said in January that total coal output reached 610mn tonnes in 2019, although the 2020 target was 9.8% lower at 550mn tonnes. However, domestic consumption is set to rise by 12% from 128mn tonnes in 2019 to 155mn tonnes in 2020, he said.
sensible plan
Carbon Tracker
The Sarulla geothermal plant in Indonesia Credit: Sarulla Operations Ltd
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Week 05 05•February•2020