DUBAI, 03 Dec 2023: In a significant step towards reducing carbon emissions, Indonesia’s 660-megawatt Cirebon-1 coal-fired power plant (CFPP) is set to retire almost 7 years ahead of its scheduled decommissioning date. This development follows a nonbinding framework agreement signed under the Asian Development Bank’s (ADB) Energy Transition Mechanism (ETM) program at the COP28 summit.
According to Asian Development Bank, the agreement, involving ADB, Indonesian state-owned power utility PT PLN, independent power producer PT Cirebon Electric Power (CEP), and the Indonesia Investment Authority (INA), outlines the early retirement of Cirebon-1 in December 2035, as opposed to the originally planned July 2042. The transaction is expected to be finalized in the first half of 2024.
Indonesia’s Minister of Finance Sri Mulyani and ADB President Masatsugu Asakawa were present at the COP28 event, witnessing the signing of the agreement. Asakawa highlighted the significance of this agreement for Indonesia’s energy transition and its potential impact on reducing greenhouse gas emissions. The early retirement of Cirebon-1, commissioned in 2012, would prevent over 15 years’ worth of emissions, aligning with global climate goals.
CEP President Director Hisahiro Takeuchi emphasized the framework agreement’s role in transitioning from coal to clean energy, ensuring reliable and affordable power for Indonesia. Similarly, PLN’s President Director Darmawan Prasodjo expressed PLN’s dedication to leading Indonesia’s transition towards net-zero emissions. He noted PLN’s efforts in decarbonizing its operations, including cancelling and terminating various coal-fired power projects.
INA CEO Ridha D. M. Wirakusumah reiterated INA’s commitment to supporting Indonesia’s sustainable economic development and transitioning to renewable energy sources. The ETM program, a collaborative initiative, aims to expedite the shift from fossil fuels to clean energy using a market-based approach, combining concessional and commercial capital.
The framework agreement is contingent upon due diligence, including environmental, social, and just transition reviews, and the outcome of a study assessing the impact of Cirebon-1’s early closure on PLN’s electricity system. Discussions on the financing scheme for the plant’s early retirement and its effects on PLN’s clean energy plans are ongoing.
ADB’s ETM program currently operates in five countries – Indonesia, Kazakhstan, Pakistan, the Philippines, and Viet Nam, with Indonesia being the most advanced. The program is also exploring potential transactions in two additional countries. ADB remains committed to fostering a sustainable Asia-Pacific region while combating extreme poverty.