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Energy Transition Polemic: Massive Development of Captive Power Plant

Captive power coal-fired powerplant (PLTU) is a coal powerplant owned by a company that is independent from the public power grid. This captive power PLTU is generally used for the exclusive needs of company operations in industrial areas. Its private status and being in protected industrial areas as national vital objects has made this captive power PLTU miss much attention from the public and regulations.

In Indonesia, many captive power plants recently were built by investors and developers from China as part of the Belt and Road Initiative (BRI). China itself in September 2021 announced its commitment to stop building captive power plants outside China’s territory as a step to advance the Green Belt and Road Initiative. However, there are still ongoing construction of captive power plant in Indonesia industrial area by China’s investors and do not get much attention from the public.

The construction of a captive power plant has negative impacts not only from an environmental standpoint but also from the economic sustainability and Indonesia’s ability to achieve the energy transition and meet the targets of the climate commitments that have been signed. Economic losses are obtained from the risk of stranded assets, increased cost of capital due to reduced investor attractiveness, as well as not accepted product by the international market. This loss will not only be suffered by Indonesia, but also on the Chinese government and investors who also potentionally damaging the reputation of their energy transition commitments. So far, financial institutions in China have experienced financial losses from continuing to push for coal powerplants development.

The large potential for the development of industrial estates with renewable energy in Indonesia adds to the urgency of stopping the construction of captive power plants. Weak regulations for the transition from coal are challenges to phase out captive power plants in Indonesia.

 Please download the full report below:
Celios Captive Power Plant Paper Indonesia

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