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Early retirement of coal-fired power plants: Are we ready for it?
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World's largest coal producers and consumers in 2021.
(Bank Mandiri/-)
T
he prolonged global energy crisis has been a critical point for countries around the world to review their energy-transition plan. Many believe that energy transition has become a secondary priority as countries race to strengthen their energy security amid the surge in fossil fuel prices.
The plan to shift the world’s energy sources from fossil fuels to renewables became more debatable after most European Union countries, which were the motor of the world energy-transition plan, increased their coal consumption to cope with the world energy crisis, as coal is still relatively the cheapest fuel amid the rising energy prices.
For Indonesia, the rising cost of energy has not affected its economy and energy-transition plan to a large extent. Its resiliency is mainly supported by Indonesia’s position as a major coal exporter. However, the impact is still partly there as we have encountered the upward correction of oil prices.
While the world starts to question the feasibility of the energy transition in the short to medium term, Indonesia just recently announced that it will start to shut down some of its coal-fired power plants (PLTUs), at the soonest by the end of 2022. Although this massive yet sudden decision is in line with Indonesia’s grand plan to shift from fossil fuels to renewables, we are aware that there are three disputes regarding the enactment of this policy that are worth discussing.
First, energy security should be a priority over energy transition. It is surprising to see that this policy comes when the world is suffering from surging energy prices resulting from the ongoing energy crisis. The question is how Indonesia can carry out the plan of early retiring its PLTUs without jeopardizing its energy security.
According to the Energy and Mineral Resource Ministry, Indonesia’s electricity mix in 2021 was still dominated by PLTUs which accounted for 50 percent of the total capacity installed (37 gigawatts out of 74 GW). We must be aware that retiring PLTUs will not instantly increase the capacity of its desired substitution, renewables. Thus, this measure will consequently expose Indonesia to energy security risks until the renewable capacity can match that of the substituted PLTUs.
On the other hand, we also believe that the government decision to initiate the early shut down of some PLTUs could be the groundwork for other upcoming policies to accelerate the development of renewable energy.
