Indonesia's plan to shut coal plants over next 30 yrs struggles for support

Indonesia plans to retire a swath of its coal-fired power plants over the next three decades although its plan to do so has drawn a lukewarm response from potential supporters.

The Southeast Asian country plans to eliminate 15 Gigawatt of coal-generation over that time, requiring more than $600 billion of capital support, said Erick Thohir, the state-owned enterprise minister in an interview on late Thursday. The reduction would equate to about 60% of the country’s current coal-fired generation.

The government has been on roadshows to several countries including Saudi Arabia and the United Arab Emirates as well as some European nations to promote its energy-transition plans. “But, no one responded to our offer,” Thohir said.

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Indonesia doesn’t want to rely on bond issuance to support the shift and it needs developed countries to invest, he said. The cost and scale of the work, and the lackluster response to the plan, are a reminder of the challenges the world faces in weaning developing nations off fossil fuels.

“If investment flows in and our company’s cash flow stays positive, then it can reinvest itself into renewable energy,” he said.

Energy mix
 

The southeast Asian country wants to strike a balance between boosting economic growth and developing green energy, he said. It seeks to reduce fossil fuels demand by promoting the use of electric stoves and vehicles, as well as developing alternative energy sources.

“We want our energy mix later to consist of electricity, palm-based biodiesel and ethanol, just like Brazil and India,” Thohir said. 

To support the plan, the government plans to tell state-owned firms to open 700,000 hectares of land for sugar cane crops for producing ethanol and cutting imports.

The government also plans to push projects for processing coal into dimethyl ether, a colorless gas that can be used in fuel, in the next three to four years to help lower the nation’s $4 billion-a-year bill for liquefied petroleum gas.

“We must have energy security and we agree for transformation with our own pace, not what other countries wants us to do,” he said.

Other comments from the interview:

• Indonesia wants to boost the use of lakes for installing floating solar power plants
• State-owned energy company Pertamina plans to build wind farm for electricity and green hydrogen
• State-owned fertilizer company Pupuk Indonesia may produce blue hydrogen in the future
• Government allocates 300 billion rupiah in state budget to distribute electric stoves this year