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Indonesia Needs $30 Billions to Retire 5.5 Gigawatts Coal Power Plants

There are 5.5 Gigawatts worth of coal power plants in Indonesia that will need to be replaced in accordance with the NDC of Paris Agreement.

Indonesian government plans to implement early retirement for coal-fired power plants and will need approximately $30 billions of funding for the next eight years to do it. The power plant will be replaced with greener energy or new renewable energy.

Minister of Finance, Sri Mulyani Indrawati, has identified the number of coal power plants that will be retired early and the transition needed to renewable energy. The size of the coal-fired power plant being transitioned reaches 5.5 Gigawatts (GW) .

"In the energy sector, Indonesia will open up investment opportunities for early retirement from coal plants which then will be transitioned to renewable energy. Indonesia has identified that there are 5.5 GW of coal-fired power plants that can be included in this project with a funding requirement of USD25-30 billion over the next eight years," Sri Mulyani said through her official Instagram @smindrawati, Wednesday (3/11/2021).

Sri Mulyani said that the plan was carried out following Indonesia's commitment in the National Determined Contribution (NDC) of Paris Agreement. 

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President Joko Widodo held a CEOs Forum meeting with several large British investors, in Glasgow, Scotland, Monday (01/11/2021) morning local time. (Photo: BPMI Setpres/Lukas)
President Joko Widodo held a CEOs Forum meeting with several large British investors, in Glasgow, Scotland, Monday (01/11/2021) morning local time. (Photo: BPMI Setpres/Lukas)

In the NDC document, Indonesia is committed to reducing greenhouse gas (GHG) emissions by 29 % on its own and 41% with international support by 2030. 

This commitment was reiterated when she accompanied Indonesian President Joko Widodo to meet several investors in CEOs Forum in Glasgow on Monday (1/11/2021) during the COP26 summit. 

"CEOs and representatives of global finance companies based in the UK want to hear about the Indonesian government's plans to fulfill climate change commitments. They also have a commitment to support it," wrote the minister.

In the forum, the president also conveyed that a Presidential Regulation regarding the carbon economic value instrument had been signed. The Presidential Regulation regulates the carbon mechanism going forward.

"Indonesia will switch coal plants to renewable energy by 2040, provided that there is cooperation, technology, appropriate economic value, and international funding to assist the energy transition," said President Jokowi during the CEOs forum meeting in Glasgow, on Monday (1/11/2021), as quoted from Cabinet Secretariat website. 

Early retirement of coal-fired power plants must be done because the energy sector has high contribution to carbon emissions. The contribution of this sector will be become worse along with the modernization of economic growth, population growth, and GDP growth.

The government will use a blended finance scheme in the energy transition mechanism (ETM) which will roll out. this funding allow multilateral institutions, the private sector, and philanthropy to contribute to the disbursement of funds.

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