PLTU 9,2 GW IS TARGETED TO EARLY RETIRE BEFORE 2030

Indonesia plans to stop the operation of steam power plants (PLTU) early with a total capacity of 9.2
gigawatts (GW) before 2030. The investment requirement for this plan is estimated at US$ 48 billion.

This was stated by the Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif at the COP 26
event in Glasgow, United Kingdom last week. The study on early retirement for PLTU, he said, considers
the shift in the global energy landscape to a low-carbon economy and Net Zero Emission (NZE). “A total
of 5.5 GW of PLTU will be retired early without any replacement from renewable energy power plants.
The remaining 3.7 GW will retire early and be replaced with renewable energy power plants," said Arifin
in his official statement, last weekend. The cessation of the operation of the 5.5 GW PLTU, he continued,
would contribute to a reduction in emissions of 36 million tons of CO2, while the other 3.7 GW would
cut 53 million tons of CO2. The investment requirement for the program is quite large. Just to stop the
5.5 GW PLTU, Arifin explained, an investment of up to US$ 26 billion is needed. Then, to complete the
3.7 GW it will cost US$ 8 billion and to replace it with a renewable energy-based power plant, another
US$ 14 billion is needed. The Executive Director of the Institute of Essential Services Reform, Fabby
Tumiwa, appreciates this PLTU early retirement plan. However, next, the government and the National
Energy Council (DEN) must accelerate the preparation of a roadmap and strategy for the energy
transition in Indonesia in a comprehensive manner. The reason is dependence on fossil energy will not
end if there is no rapid increase in renewable energy capacity.

"So the energy transition needs to be designed really, with priority on developing and utilizing
renewable energy as much as possible and optimizing energy efficiency," said Fabby.

The IESR Transformation Program Manager, Deon Arinaldo, added that the capacity of the PLTU which
was retired early should reach 10.5 GW if it pursues the Paris Agreement target and withstands an
average temperature increase of 1.5 degrees Celsius. "There is still a difference of 1.2 GW that needs to
be retired and this can be targeted to include PLTUs outside PLN's business areas," he said.

PLTU early retirement is one of the steps to achieve emission reduction target of 29% on its own and
41% with international assistance by 2030. To achieve this emission reduction target, the government
initiated the Friend of Indonesia-Renewable Energy (FIRE) Program. "FIRE is a new platform to
coordinate international support in accelerating the energy transition process in Indonesia,"explained
Arifin.

Indonesia cooperates with the Asian Development Bank has launched the Energy Transition Mechanism
(ETM) program which is expected to raise around US$2.5-3.5 billion to stop 2-3 coal-fired power plants
per country. However, according to Fabby, the Indonesian government can also support funding for this
energy transition. "For the acceleration of renewable energy through funding allocation, it can be done
via PT SMI and/or IIF, allocation of PMN to PT PLN (Persero) for early retirement of PLTU assets,
restructuring of PLN's PLTU assets, and allocation of revenue from carbon tax to accelerate transition.

Referring to the study on Decarbonization of the Indonesian Energy System compiled by IESR, Indonesia
needs at least US$ 20-25 billion of renewable energy and other clean energy investments per year until
2030 and increasing thereafter, including getting out of coal use. However, the sooner the phase out of
the coal-fired power plant will be able to avoid the risk of financial loss from the stranded assets of the
power plant which will reach US$ 26 billion after 2040.