An apparent switch in policy by President Joko Widoko’s government has caused some confusion and annoyance among thermal power producers in Indonesia.
Widoko decided to reduce the contribution of coal power to the country’s energy mix following the signing of agreement at COP21 in Paris at the end of last year.
The change in direction, facilitating more renewables into the mix has compromised Widodo’s pledge, on taking office, to master the country’s power shortage problems.
The confusion has angered coal miners and project developers, and threatens to undermine Indonesia’s ability to attract finance for the $132bn of projects on the drawing board, say industry bodies and analysts.
It could also weigh on global markets as coal output earmarked for domestic power plants may be available for export. Indonesia is already the world’s biggest thermal coal exporter.
State power utility, Perusahaan Listrik Negara (PLN) , was charged with implementing the planned 35 GW plan by 2019 but alarmed the industry last month when it cancelled a major tender – the 2,000 MW Java 5 power station in Serang – after seven consortiums involving companies including Japan’s Marubeni Corp and Germany‘s Siemens AG had prepared multi-million dollar bids.
“It sends a very bad signal to the market. Investors want legal certainty,” said Arthur Simatupang, Executive Chairman of the Association of Indonesian Independent Power Producers.State-owned miner PT Bukit Asam has also protested over a $1.6 billion power station project and a high voltage transmission line that had secured financing, but which were excluded from a draft of the next 10-year energy plan.
Indonesia’s energy ministry said 16 GW of power station project tenders have been delayed.
Coal power plants were previously seen making up two-thirds of the energy mix by 2024, but Widodo pared this back to half over climate change concerns.
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