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 committed to the energy transition, particularly accelerating the retirement of coal-fired power plants (PLTU). 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 phase-out of coal-fired power plants has attracted the attention of several 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 significant costs to PLN and the state budget (APBN), particularly those related to expanding the transmission grid for renewable energy.
According to Bhima Yudhistira, CELIOS Executive Director, the concerns of the Ministry of Finance, the Ministry of Energy and Mineral Resources (ESDM), and PLN are entirely unfounded. “If transmission-grid upgrades require investment, then it 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 rather as a benefit from savings on subsidies, electricity compensation, and healthcare costs,” Bhima said.
The infrastructure and financial constraints considered a burden are in fact caused by excess electricity supply, particularly in Java and Sumatra. This 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, IKN Nusantara, has drained financial resources, leaving less funding for renewable projects. Isn’t that a loss to the state?”
Indonesia needs to act quickly. Southeast Asian countries such as Vietnam have invested heavily in transmission upgrades to support renewable energy and adopted smart-grid technologies to improve efficiency and reliability. These measures could lower costs for consumers and support renewable-energy integration, providing an example for Indonesia.
“Overall, restructuring financial commitments and developing innovations in electricity-grid technology to achieve Indonesia’s renewable energy goals are urgent responsibilities of the state, and should not be categorized as losses 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 through negligence in the energy transition are what could cause losses in a broader context,” Leonard said.
Tata Mustasya, Executive Director of Indonesia Sustainable Welfare (Sustain), said that accelerating smart-grid development as a result of early coal-fired power plant retirement is an investment that will benefit 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 pharmaceuticals has proved essential to the success of developed countries. “Smart-grid development and accelerating the energy transition will strengthen energy security, inclusive access to energy, and climate-crisis mitigation. Reluctance to build transmission infrastructure will instead impose significant costs 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 Cirebon Clean People’s Coalition (Karbon), stressed that the narrative of potential ‘losses to the state’ resulting from early PLTU retirement is irrelevant, particularly from the perspective of communities in East Cirebon. “For years, local communities have felt the harmful effects of the PLTU—air pollution that damages their health, environmental degradation that affects their livelihoods, and a declining 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; it is 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.”