During the G20 Summit in Rio De Janeiro in November, Indonesia’s new president, Prabowo Subianto, issued a bold statement: Indonesia will retire all coal-fired power plants within the next 15 years and build over 75 GW of renewable energy capacity by 2040. The announcement, aimed at showcasing Indonesia’s climate leadership, comes at a time when the country remains heavily reliant on coal. Analysts point out that achieving Prabowo’s 15-year energy transition goal will demand comprehensive policy reforms, such as regulatory streamlining, as well as major investments in renewable energy infrastructure and financial frameworks.
Novita Indri Pratiwi, a fossil fuel campaigner at Trend Asia, said the statement suggests there is political will to address Indonesia’s coal dependence. She warns, however, that “promises made on the global stage won’t mean much without real implementation at home.” In 2023, coal accounted for 61.8% of Indonesia’s energy mix – a record high – according to Ember, a global energy think tank. This makes Indonesia one of the most coal-dependent countries in Southeast Asia, alongside the Philippines. Indonesia’s current renewable target is 23% by 2025. The Ministry of Energy and Mineral Resources (MEMR) predicts that it will achieve only 14% by 2024, however.
Financing the shutdown
During a recent hearing at the House of Representatives, Darmawan Prasodjo, chief executive officer of PLN, the state-owned utility, expressed concerns about financing the shutdown of coal power plants. He explained that the company does not have the budget to retire all coal power plants within 15 years, revealing that shutting down one coal power plant costs between 30-50 trillion Indonesian rupiah (IDR), or between USD 1.8-3.1 billion.
Darmawan argued that reducing greenhouse gas emissions should be a shared global responsibility, not solely Indonesia’s burden. “Retiring coal power plants requires global funding. We have set criteria that any early shutdown must be cost-neutral. If there are additional costs, it will not be the responsibility of the Indonesian government or PLN because the impact of reducing emissions benefits the global community, not just Indonesia,” he said. Darmawan further explained that PLN is approaching the transition cautiously, as significant funding will be required to build renewable energy infrastructure, which remains expensive.
Yes, there will be upfront costs for renewable energy, but this is a good investment that’s in the national interest, and we need to approach it from that perspectiveFabby Tumiwa, executive director of the Institute for Essential Services Reform
Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), an Indonesian think tank, said that retiring coal power plants is financially feasible, but only if renewable energy development is prioritised. “The challenge is that we need to immediately develop renewable energy infrastructure before these coal power plants are retired, because we still need electricity to be up and running,” he said.
Dinita Setyawati, senior electricity policy analyst for Southeast Asia at Ember Energy, called for innovative financing mechanisms and more attractive incentives to support the coal phase-out. “Implementing or expanding carbon-pricing mechanisms, such as carbon taxes or emissions trading schemes, could generate revenue to fund coal retirement,” she said. She highlighted challenges in accessing international funding and the limited experience with financing local renewable energy projects. “The government could address these barriers by organising training programmes, workshops and outreach sessions to attract more local players to participate in the renewable energy and coal phase-out markets,” she added.
Fabby also noted the long-term economic benefits of retiring coal power plants, explaining that savings could be as high as USD 18.7 billion by 2045, in addition to reducing the health costs associated with coal. “Yes, there will be upfront costs for renewable energy, but this is a good investment that’s in the national interest, and we need to approach it from that perspective,” he said.
Transition to renewable energy
During COP29 in Baku, Azerbaijan, Indonesia’s special envoy for climate change, Hashim Djojohadikusumo, announced that the country plans to allocate 75 GW of renewable energy capacity by 2040. Hashim estimated that this transition will need a total investment of USD 235 billion, with a focus on developing hydropower plants, geothermal energy, solar power, wind farms and nuclear energy projects. Indonesia has set a target of achieving 23% of its energy mix from renewable sources by 2025. However, the MEMR reported that the country is already falling short on the interim 19.5% target for 2024, citing regulatory and financial hurdles as the main factors.
Neighbouring countries have set much more ambitious renewable energy targets. The Philippines, for example, has pledged to increase the share of renewables in the electricity mix to 35% by 2030 and 50% by 2040. Vietnam, meanwhile, targets 30% to 39% by 2030. Recent analysis by Ember suggests that Indonesia could adopt a more ambitious energy strategy by adding 8 GW of renewable energy annually and reducing coal power generation by 3 GW each year until 2040. With electricity demand expected to grow by around 5% annually in the coming years, the report shows that Indonesia can meet the projected 806 TWh of electricity demand by 2040, provided the renewable energy share reaches 65%. Under this scenario, solar energy would contribute 20%, wind 11%, and other renewables, such as nuclear, geothermal, bioenergy and hydro, would account for 34%.
Dinita stressed that achieving this target is feasible but requires prioritising the right measures. Among these, she suggested focusing on accelerating renewable development, securing investment for infrastructure such as grids and energy storage, and improving planning processes to streamline renewable energy integration. “Enabling PLN to accurately project supply and demand by compiling and advancing feasible renewable-based projects will further enhance the likelihood of success,” said Dinita.
Trend Asia’s Novita adds that shutting down coal power plants also raises social concerns that must be addressed. “We can’t just shut down coal power plants and leave. The impacts on workers, the environment and its recovery, and on communities must also be carefully managed,” she said. CELIOS and Yayasan Cerah, two NGOs focusing on energy, co-published a study in 2023, examining the social and economic impacts of early coal retirement. The study found that shutting down Cirebon, Pelabuhan Ratu and Suralaya power plants would result in at least 14,000 job losses and a total loss of income of 3.96 trillion IDR (USD 243 million). However, if coal power plant closures were accompanied by renewable energy development, it could generate 639,269 new jobs and boost income by 82.6 trillion IDR (USD 5 billion).
While Indonesia’s pledge to phase out coal by 2040 marks a significant political shift, its feasibility depends on overcoming substantial financial, infrastructural and social challenges. Experts stress that without careful planning, innovative financing and strong international support, the transition risks stalling. With electricity demand rising and the health and economic costs of coal escalating, the bold promises of Prabowo’s administration represent both an urgent challenge and an opportunity for Indonesia’s sustainable energy future.
