Indonesia has paved the way towards the first deal to be made under a newly-set up energy transition fund focusing on renewables.
Under this, the country’s state wealth fund has inked a non-binding agreement to help fund the early retirement of a 660-megawatt coal-fired plant.
The plant is located in the city of Cirebon, West Java.
The coal plant is jointly owned by Marubeni Corp., PT Indika Energy, Samtan Co., Korea Midland Power Co. and Jera Co. It has been reported that the fund will be used to retire Unit 1 of the plant. The plant may be retired as early as 2037 with plans to replace it with renewable energy.
It comes at a time when Indonesia is aims to raise funds via the Energy Transition Mechanism to help phase out its coal-fired plants.
The country has pledged to achieve net zero emission by 2060.
“The severe impact of Covid 19 and climate change will definitely hinder our fiscal space, so for all of us to deliver our credible commitment, financing is very important,” Finance Minister Sri Mulyani Indrawati said.
According to state utility Perusahaan Listrik Negara (PLN), as much as 6.7 gigawatt of coal-fired power plant will be shut down before 2030. The company has also made a roadmap to deploy much larger funds.
Recently, PLN signed a deal with Amazon.com Inc. to supply 210 MW of electricity from four solar plants in Java and Bali to power its Indonesian operations.
