The plan is backed by the Asian Development Bank (ADB), realized through the signing of a Memorandum of Understanding (MoU) that outlines the exploration of early retirement of the first PLTU owned by a private power producer (IPP), namely PLTU Cirebon-1.

The signing was attended by ADB president Masatsugu Asakawa, PLN president director Darmawan Prasodjo, Cirebon Electric Power (CEP) president director Hisahiro Takeuchi and Indonesia Investment Authority (INA) CEO Ridha D. M. Wirakusumah. It was carried out at the launch of the ETM Country Platform in Nusa Dua, Bali on Monday (13/11).

The ETM itself was launched with the expectation of PLTU IPP being an example for other developing member countries and to show cooperation between the government and other clean energy projects in the country. It was formed to provide transparency for investors, international donor agencies and the private sector. In terms of financing clean energy projects in Indonesia, the ETM can be collaborated through mixed financing from all sectors.

"Through this ETM scheme, we will provide a more transparent platform. By providing this ETM platform, all stakeholders, whether funding from multilateral development banks (MDbs), bilateral, private sector, will have the same regulatory scheme to make the energy transition this can be achieved," said Finance Minister Sri Mulyani.

She added that the scheme would lower the burden of PLN in the energy transition period, as well as provide a clean and cheap energy source for the people of Indonesia. She explained further that it could still encourage more significant carbon reductions and made energy financing in Indonesia more efficient and competitive.

Meanwhile, PLN president director Darmawan Prasodjo said, as a commitment to the energy transition, PLN had developed a comprehensive roadmap to achieve net-zero emissions by 2060. He reiterated the need for collaboration between the government and other stakeholders to transition to clean energy and ensured the success of this ETM scheme.

"We want more space for renewable energy to enter our ecosystem. And how are we going to conduct early retirement of coal-fired power plants? So, under the leadership of Finance Minister Sri Mulyani Indrawati, we are building an energy transition mechanism," said Darmawan.

ADB president, Masatsugu Asakawa, expressed his pride in contributing to Indonesia’s transformation of the energy landscape. ADB agreed to open detailed discussions regarding efforts to accelerate the termination of CEP's 660 megawatt PLTU Cirebon-1 in West Java, per the MoU.

The model from the Cirebon facility will be replicated and applied to other IPPs in Indonesia, as well as other regions in the Asia Pacific and beyond. ADB will provide an early retirement facility in the form of senior debt, on the condition that the tenor of the power purchase agreement between CEP and PLN will be shortened through the ETM.

This is in line with ADB's commitment to realizing a prosperous, inclusive, resilient and sustainable Asia and Pacific region, while continuing its efforts to eradicate extreme poverty.

“The ETM also provides an example for other countries to forge a path towards zero emission targets. In the future, ADB is committed to supporting these efforts across Asia and the Pacific,” Masatsugu said.

The excitement was also echoed by president director of CEP, Hisahiro Takeuchi, who welcomed this collaboration by saying he is proud to be able to take part in the energy transition initiative in Indonesia to provide clean energy.

"The ETM provides an innovative approach for companies like CEP to transition from coal to clean energy while providing reliable and affordable power for Indonesia's energy infrastructure. This MoU is a big step forward for Indonesia and we are proud to be working with ADB and the Indonesia Investment Authority," he concluded.

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