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Coal power projects in doubt as Chinese funding dries up
Following similar vows from South Korea and Japan, China’s pledge to stop building new coal-fired power plants jeopardizes planned coal energy projects in Indonesia.
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Unit 2 of the Cirebon coal-fired power plant in the West Java Cirebon regency, West Java, slated to begin operating in 2022, is under development as seen on Nov. 30, 2019. (Antara/Dedhez Anggara)
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hina’s recent pledge to stop building new coal-fired power plants overseas is expected to throw a spanner in Indonesia’s coal energy development.
During his address at the United Nations General Assembly on Sept. 21, President Xi Jinping announced that China would stop building new coal-fired power plants abroad as part of its climate pledge.
Local stakeholders said the Chinese decision would disrupt plans to build new coal power plants in Indonesia. Meanwhile, projects included in the electricity procurement plan (RUPTL) and those that had reached power purchase agreements (PPAs) or financial closure would continue.
Experts have acknowledged, however, that China’s move would significantly affect coal power projects in Indonesia. They also recommended that state-owned electricity company PLN and the Energy and Mineral Resources Ministry review the RUPTL and planned coal energy projects, for which it would become increasingly difficult to obtain international funding.
APAC coal market analyst Shirley Zhang of global energy, chemicals and minerals consultancy Wood Mackenzie said that the projects most affected would be those that lacked financial commitments and relied heavily on foreign investment, including Indonesian coal power plants totaling 29 gigawatts in output capacity that were set to start operating after 2025.
“The key is whether and when countries can afford to retire existing [coal plants],” she said in a statement on Sept. 22.
The move from China, the world's largest financier of coal energy projects, alongside earlier vows from Japan and South Korea this year to exit coal, leaves a large number of the world’s planned coal energy projects in limbo.
