Indonesia's State-Owned Power Utility Prioritizes Fossil Fuels Over Renewables

Strategic Insights -

Indonesia's state-owned power utility, PLN, has unveiled a plan to expand fossil fuel generation by more than 20% by the mid-2030s, prioritizing gas and coal plants. The utility aims to add 69.5 GW of new capacity over the next decade, with more than 60% coming from renewables, but faces skepticism after consistently underdelivering on past clean energy promises. Analysts warn that PLN's plan risks stalling Indonesia's energy transition, as fossil fuel demand rises and regulatory barriers slow renewables despite their falling costs and investor interest.

Key Takeaways:

  • PLN plans to expand fossil fuel generation by more than 20% by the mid-2030s, prioritizing gas and coal plants.
  • The utility aims to add 69.5 GW of new capacity over the next decade, with more than 60% coming from renewables.
  • PLN has consistently underdelivered on past clean energy promises, raising concerns about its ability to meet the energy transition targets.
  • The utility's latest plan risks stalling Indonesia's energy transition, as fossil fuel demand rises and regulatory barriers slow renewables.
  • PLN has strict caps on rooftop solar, limiting households and businesses to generating no more than 3 GW of electricity.
  • The utility's plan makes no mention of early retirement of coal-fired power plants, despite the country's transition to cleaner energy sources.
  • Analysts warn that hardening attitudes among foreign lenders against fossil fuels will make it tough for PLN to find the backing for new gas- and coal-powered generators.
  • PLN's poor track record in delivering on clean energy promises has reduced investor confidence in the utility's ability to meet its targets.

Statistics:

  • 69.5 GW: The amount of new capacity PLN plans to add over the next decade.
  • 60%: The proportion of new capacity expected to come from renewable sources.
  • 20%: The increase in fossil fuel generation planned by PLN by the mid-2030s.
  • 18%: The average reserve capacity of power suppliers when demand was at its peak in 2024.
  • 90%: The minimum reserve capacity during peak demand in 2022, when three big coal-fired power stations came online.
  • 3 GW: The cap on rooftop solar generation allowed by PLN.
  • 45 GW: The amount of renewable energy projects currently in the planning stages or under construction and slated for delivery over the next decade.
  • 60%: The proportion of coal-fired power plants' costs outstripping solar and wind energy costs.

Sources:

  • [1] Mongabay, "Indonesia's state-owned power utility prioritizes fossil fuels over renewables"
  • [2] Institute for Energy Economics and Financial Analysis (IEEFA), "Indonesia's Energy Transition: A Path to a Low-Carbon Future"
  • [3] Centre for Research on Energy and Clean Air (CREA), "Indonesia's Renewable Energy Policy: A Review"
  • [4] Rhett A. Butler/Mongabay, "Coal mine in Borneo"
  • [5] Katherine Hasan/Centre for Research on Energy and Clean Air (CREA), quoted in Mongabay, "Indonesia's state-owned power utility prioritizes fossil fuels over renewables"