Indonesia’s newly released National Electricity Master Plan outlines a significant expansion of coal power, projecting an increase of 26.8 gigawatts (GW) in coal-fired capacity over the next seven years. The majority of this growth—over 20 GW—will come from captive coal plants built to serve specific industries, particularly in mineral processing.
The plan anticipates coal generation will peak by 2037, reaching a level 62.7% higher than today’s output. However, this strategy clashes with global climate commitments and may pose economic challenges due to rising generation costs.
Rising Coal Use Conflicts with Climate Goals
The coal-focused strategy contradicts Indonesia’s climate pledges under the Just Energy Transition Partnership (JETP) and the Paris Agreement. It also runs counter to President-elect Prabowo Subianto’s recent commitment to retire coal-fired power plants within 15 years.
The master plan was issued under Ministerial Decree No. 314.K/TL.01/MEM.L/2024 and will guide long-term electricity planning until 2060. It sets out supply projections for both grid-connected systems and independent, or “captive,” power producers. It serves as a blueprint for state utility PLN and private power utilities (PPUs) to develop their business plans.
Although the plan includes strong growth in renewable energy, its coal expansion—especially beyond 2030—puts it at odds with Indonesia’s Low Carbon Scenario in the 2050 Long-Term Strategy for Low Carbon and Climate Resilience (LTS–LCCR). Critics warn this direction could undermine both international commitments and domestic policy goals.
Captive Coal Booms Amid Industrial Demand
Indonesia currently operates 49.7 GW of coal-fired power plants. Of this, 38.5 GW is grid-connected thermal power, while 11.2 GW comes from captive coal units. This capacity has doubled in the past decade, creating an electricity surplus that has strained PLN’s finances and slowed renewable energy growth.
Captive coal in particular has surged, growing nearly fivefold from 2.3 GW in 2014 to 11.2 GW in 2023. This boom has been driven by rapid development in the mineral smelting industry, especially in North Maluku and Sulawesi. These industries require reliable and continuous power for energy-intensive processes.
Looking ahead, the master plan projects total coal capacity to reach 76.5 GW by 2031. This includes 6.6 GW of new grid-connected coal power and over 20 GW of new captive capacity—primarily for industrial use. If built, Indonesia’s captive coal capacity could rival the entire coal fleet of Poland, which stands at 31.54 GW.
Room to Reconsider Coal Push
Not all captive coal projects have been publicly identified. According to estimates from the Center for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM), captive coal could reach 26.2 GW by 2026. This suggests around 5.2 GW of future capacity has yet to be confirmed, leaving room for potential course correction.
Experts suggest this is a key moment for Indonesia to revisit its energy priorities. A study on decarbonising captive coal and updating the Comprehensive Investment and Policy Plan (CIPP) could help the country realign with its climate goals.
There are also legal and economic barriers. Under Presidential Regulation No. 112/2022, new captive coal plants must shut down by 2050 and reduce emissions by 35% within 10 years. Moreover, these plants cannot access subsidised coal prices and must buy at market rates—raising their operating costs.
Renewables Offer Cheaper, Cleaner Alternatives
According to the Institute for Essential Services Reform (IESR), new captive coal generation could cost 7.71 US cents per kilowatt-hour (kWh), higher than the 2020 national average of 7.05 US cents/kWh and significantly more than the levelised cost of grid-connected coal (5.68 US cents/kWh).
In contrast, recent power purchase agreements for solar and wind energy have shown lower costs. These cleaner options not only help cut emissions but also offer a more cost-effective solution for meeting industrial power needs.
A Turning Point for Indonesia’s Energy Future
Indonesia stands at a crossroads. The master plan outlines a path that heavily leans on coal, particularly for industrial power. But economic signals and global climate responsibilities point in another direction.
By re-evaluating its energy mix and embracing renewable alternatives, Indonesia could reduce long-term costs, ease financial pressure on its utility system, and reinforce its commitment to a more sustainable future.
Related Topics:
- Can a Gas Leak Smell Like Sewage?
- Should a Gas Meter Smell? A Detailed Guide
- How to Detect a Gas Leak in Your Basement: A Comprehensive Guide