JAKARTA, 5 November 2024 – The government’s energy transition commitment has passed from Indonesia’s 7th President, Joko Widodo (Jokowi), to President Prabowo Subianto, with the hope that Indonesia will remain consistent in pursuing the energy transition, particularly by accelerating the retirement of coal-fired power plants (PLTUs). As part of Indonesia’s energy transition, the government needs to recognize the benefits of early PLTU retirement as a step toward achieving net-zero emissions by 2060 or sooner.
The phaseout of coal-fired power plants is now attracting the attention of various parties, including the Asian Development Bank (ADB), which plans to retire 13 PLTUs, including Cirebon-1, ahead of schedule. However, Finance Minister Sri Mulyani recently expressed concern about potential losses to the state from the early retirement of PLTU Cirebon-1, citing the high costs to PLN and the state budget, particularly those related to expanding the grid and transmission infrastructure for renewable energy.
According to Bhima Yudhistira, Executive Director of CELIOS, the concerns raised by the Ministry of Finance, the Ministry of Energy and Mineral Resources (ESDM), and PLN are entirely unfounded. “If grid and transmission upgrades require investment, that is the government’s responsibility, through the state budget (APBN) and private-sector partnerships, to increase the share of renewable energy. This should not be viewed as a loss to the state, but as a benefit from savings on subsidies, electricity compensation, and healthcare costs,” Bhima said.
Infrastructure and financial constraints seen as a burden are in fact caused by excess electricity supply, particularly in Java and Sumatra, which resulted in estimated financial losses of Rp18 trillion in 2023 due to unused capacity.
Bhima added that the way losses to the state are defined is also problematic. “Increased government spending on fossil fuel-based projects, such as airports and the new capital city of IKN Nusantara, has drained financial resources, reducing the funds available for renewable projects. Is that not a loss to the state?”
Indonesia needs to move quickly. Southeast Asian countries such as Vietnam have invested heavily in transmission upgrades to support renewable energy and adopted smart grid technology to improve efficiency and reliability. This can potentially lower costs for consumers and support renewable energy integration, offering a model for Indonesia.
“Overall, the urgent need to restructure financial commitments and develop innovations in power-grid technology to achieve Indonesia’s renewable energy goals is the responsibility of the state; it should not be classified as a loss to the state,” Bhima concluded.
Leonard Simanjuntak, Country Director of Greenpeace Indonesia, stressed that the early retirement of coal-fired power plants is an integral part of a rapid and just energy transition, enabling Indonesia to address the impacts of the climate crisis. “The costs of the energy transition, including early PLTU retirement, cannot be viewed as losses to the state. Rather, the costs incurred because of negligence in the energy transition are what could potentially cause losses in a broader context,” Leonard said.
Tata Mustasya, Executive Director of Kesejahteraan Berkelanjutan Indonesia (Sustain), said that accelerating smart grid development as a result of early coal-fired power plant retirement is an investment that benefits Indonesia. “The Ministry of Finance must act as a state willing to invest boldly in future progress. Accelerating the energy transition and developing smart grids are key to Indonesia’s transformation into a developed country,” Tata said.
Tata added that major government investment in key sectors such as information technology, aeronautics, medicine, and healthcare has proven essential to the success of developed countries. “Developing smart grids and accelerating the energy transition will strengthen energy security, inclusive access to energy, and climate crisis mitigation. Reluctance to build transmission infrastructure will impose a high cost on Indonesia over the next five to 30 years. A clear government commitment will also send a positive signal to the public and investors to finance renewable energy in Indonesia,” Tata said.
Adhinda Maharani Rahardjo, Coordinator of the Koalisi Rakyat Bersihkan Cirebon (Karbon), emphasized that the narrative about potential ‘losses to the state’ resulting from early PLTU retirement is irrelevant, particularly from the perspective of communities in eastern Cirebon. “Local communities have felt the harmful effects of the PLTU for years—air pollution that harms their health, environmental damage that affects their livelihoods, and a decline in their quality of life,” she said.
She added that ignoring the voices of local communities would only prolong the social and environmental burdens they have borne for years. “If the government focuses only on financial ‘losses,’ we need to ask: what about the losses experienced by communities around the PLTU? Every day they face real health risks and environmental impacts that undermine the sustainability of local life. This energy transition is not just about shifting infrastructure, but also about creating a cleaner, fairer, and more sustainable future,” Adhinda concluded.
Indonesia’s energy transition commitment has now passed from the 7th President, Joko Widodo, to elected president Prabowo Subianto, with the expectation that the country will remain consistent in accelerating the retirement of coal-fired power plants (PLTU). In the context of Indonesia’s energy transition, early PLTU retirement is viewed as a key step toward achieving net-zero emissions by 2060—or sooner.
The early retirement of coal plants has drawn attention and support, including from the Asian Development Bank (ADB), which plans to retire 13 PLTUs, including Cirebon-1, ahead of schedule. However, Finance Minister Sri Mulyani recently expressed concerns over potential state losses due to PLTU Cirebon-1’s early retirement, citing high costs for PLN and the state budget related to renewable energy grid expansion. Bhima Yudhistira, Executive Director of CELIOS, countered: “If grid-transmission upgrades require investment, then it is the government’s responsibility, through the state budget and private partnerships, to improve the renewable energy mix. This should not be seen as a state loss, but as a benefit from savings on subsidies, electricity compensation, and health costs.”
Environmental and social perspectives reinforce this urgency. Leonard Simanjuntak, Country Director of Greenpeace Indonesia, stressed: “The costs of the energy transition, including early PLTU retirement, cannot be seen as state losses. In fact, the costs incurred from negligence in the energy transition are the ones that could truly cause losses in a broader context.” Tata Mustasya, Executive Director of Sustain, added: “Accelerating smart grid development due to early PLTU retirement is an investment that benefits Indonesia. The Ministry of Finance must act as a state willing to invest heavily for future progress. Energy transition and smart grid development are key for Indonesia to transform into a developed nation.”
Adhinda Maharani Rahardjo, Coordinator of the Cirebon Clean People’s Coalition (KARBON), emphasized the local perspective: “If the government focuses only on financial ‘losses,’ we must ask: what about the losses experienced by communities around the PLTU? Every day they face real health risks and environmental impacts. The energy transition is not just about shifting infrastructure, but about creating a cleaner, fairer, and sustainable future.”
CELIOS_Early Retirement of Coal-Fired Power Plants: Where Is the State Loss? Download