Indonesia’s latest electricity masterplan could lead to a significant increase in coal power generation, threatening its low-emission pathway and Just Energy Transition Partnership (JETP) targets.
A new analysis from Ember highlights that the plan includes 26.8 GW of new coal capacity over the next seven years, with over 20 GW coming from captive coal expansion. This contradicts Indonesia’s commitment to phase out coal by 2040, as coal generation is now projected to grow by 62.7 percent, peaking in 2037. The expansion risks locking the country into expensive, high-emission power that is becoming less competitive than renewables.
Experts warn of economic and environmental consequences. Producing green technology materials with high-emission energy sources is counterproductive, and Indonesia must decarbonize its smelter industries with renewables to enhance sustainability and competitiveness.
The lack of clarity around additional captive power capacity in national planning threatens Indonesia’s Golden 2045 Vision. The impact will be felt most in Sulawesi and North Maluku, where coal power plants are concentrated, exposing local populations to pollution-related health and economic burdens. The spread of toxic particles also poses irreversible environmental risks.
Captive coal plants will also face financial and regulatory hurdles. Under current policies, they can only operate until 2050, must cut emissions by 35 percent within ten years, and will not benefit from the government’s capped coal price, making operators pay market rates.
The cost of new captive coal generation could reach 7.71 USc/kWh, surpassing PLN’s 2020 generation cost (7.05 USc/kWh) and recent solar and wind tariffs (5.5–5.8 USc/kWh). Expanding captive coal as global markets shift to clean energy is economically unviable, and scaling up renewables presents a more sustainable and cost-effective path.
A clear coal phase-out strategy, stronger emissions regulations, and accelerated renewable energy adoption would help Indonesia meet its climate commitments, lower long-term energy costs, attract clean energy investment, and improve the sustainability of its mineral products.
Baburajan Kizhakedath