Indonesia's Energy Ministry (ESDM) has reached out to the Asian Development Bank (ADB) for financial assistance in expediting the phase-out of its coal-fired power facilities, a crucial component of Indonesia's decarbonization strategy. The ESDM seeks external funding due to the substantial financial requirements of this initiative, which surpass the capacity of the state budget.
Request Access To The Latest Price Trends of Coal
In November 2022, Indonesia and the ADB entered into an initial agreement to collaboratively explore the premature retirement of the 660MW Cirebon-1 coal plant under the ADB's Energy Transition Mechanism. This endeavor to curtail the operational life of the plant by 10-15 years is estimated to necessitate financing in the range of $250-350 million. The ESDM envisions similar financing opportunities for other coal power plants marked for early retirement.
Initially, the Indonesian government intended to utilize funding commitments from the international Just Energy Transition Partnership (JETP), amounting to $20 billion, for the early retirement initiative. However, JETP sponsors expressed hesitation and preferred to allocate the funds towards the development of new renewable energy projects. The government's rationale for early retirement is to address the existing power oversupply, as additional renewable energy ventures would exacerbate this surplus. The JETP, established between Indonesia and its international partners, mandates that renewable energy constitute 34% of Indonesia's power generation by 2030.
Read More About Coal Production Cost Reports - Get Free Sample Copy in PDF
Jakarta aims to eliminate up to 6.7GW of coal-fired generation capacity by 2040, divided into two phases: decommissioning older coal power plants totaling 3.2GW and early retirement of newer plants amounting to 3.5GW. Indonesia's overarching goal is the complete elimination of coal-fired power plants from its generation mix by 2058, aligning with its net-zero target for 2060, as affirmed by the ESDM.
According to the article by Procurement Resource, Indonesia's Energy Ministry (ESDM) seeks Asian Development Bank (ADB) support to accelerate the phase-out of coal-fired power plants as part of its decarbonization plan. The ESDM needs external funding due to the high costs exceeding the state budget. An initial agreement with ADB in November 2022 focuses on retiring the 660MW Cirebon-1 coal plant, requiring $250-350 million. Initially, international funding from JETP was considered, but it will now prioritize renewable energy projects. Jakarta aims to eliminate 6.7GW of coal capacity by 2040, aligning with its net-zero goal for 2060.
Vice President - Sales and Operations
Driving growth and operational excellence at Procurement Resource by partnering with global enterprises on procurement consulting and client solutions, with expertise in scaling research operations and delivering actionable commodity intelligence.
We are Just a Text away
