Out-Law News | 08 Jun 2021 | 1:53 am | 1 min. read
The Indonesian government plans to build power plants with a capacity of up to 41 gigawatts (GW) over the next 10 years, according to the draft Power Procurement Plan (RUPTL) of state-owned electricity distributor Perusahaan Listrik Negara (PLN).
According to general director for electricity Rida Mulyana, the Indonesian government this year is targeting an additional, including 5GW from mine mouth power plants, 3GW from gas-fired power plants, 22MW from diesel power plants and 737MW from new and renewable energy-based power plants.
Among the 41GW of new generation capacity in the next 10 years, 35GW have been discussed with the national electric utility PLN, with 6GW still requiring further planned.
In drafting the RUPTL for the next 10 years, the Indonesian government will continue to prioritise the development of fossil fuel power plants over new renewable energy-based power plants at a rate of 52% to 48%.
PLN earlier pledged to stop building coal plants by 2023 after finishing the 35GW worth of projects it had in the pipeline. It aims to gradually retire coal-fired power as Indonesia rolls out its carbon neutrality ambitions to 2050. Reuters reported that Indonesia had planned to bring in carbon taxes to curb greenhouse gas emissions.
Infrastructure expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “For developing nations with high economic growth and low economic affordability, the net zero commitments under the Paris Agreement present the dilemma of balancing that growth with the obligations to decarbonise. In this context it is not surprising Indonesia in the immediate term still relies heavily on fossil fuel.”
“However, Indonesia’s evolving energy policy of pivoting away from carbon intensive forms of power generation in the longer term is consistent with the policy change sweeping across much of the ASEAN region and further afield,” he said.
“Replacing existing coal plants, and meeting new demand, with renewable energy will present multiple challenges, including understanding the priority of carbon intensive plants to be decommissioned before the end of their economic life. Considerations here will include not just economic and environmental considerations, but also regulatory and contractual ones given many of the plants have been developed under an independent power producer (IPP) model. An energy transition plan will need to be put in place so that a clear roadmap towards net zero can be established with all considerations addressed. We can anticipate not just Indonesia but other countries with high reliance on carbon intensive generation to implement such energy transition plans in due course so as to meet their net zero goals,” he said.