The 35 GW coal power program will
largely stay on track
10 of 12 ‘troubled’ small coal plants that were targeted for
cancellation were actually cancelled two years ago in 2019 RUPTL
Steam Plants Age
Indonesia : Putting PLN’s Net Zero
Ambition into Context
The Numbers Will Need to Add Up
Implementing Accounting Standard SFAS 73 would have created a very
different financial result for PLN 6.8 GW of NEW coal power ‘modifications’ or
In contrasts to other companies in Indonesia, PLN is exempted from implementing
‘postponement’ in the DRUPTL 2021 but draw little
emphasis from PLN and MEMR?
SFAS 73 on its PPAs & ESCs by OJK Regulation
With SFAS 73 PLN’s lease liabilities would increase by an estimate of 1,314% from IDR
18.5 trillion to IDR 261.4 trillion
PLN’s net profit would drop significantly from IDR 5.9 trillion to IDR 990 billion, 2020
Elrika Hamdi & Putra Adhiguna
Energy Finance Analysts
PLN’s Announcement in a Parliamentary Hearing
27th May 2021
Replacement of coal Retirement of Retirement of Retirement of
and machine gas subcritical coal ultra-supercritical the last ultra-
generators with plants phase 2 coal plants phase supercritical coal
renewable baseload (9 GW) 1 (24 GW) plants (5GW)
(1.1 GW)
2021 2025 2030 2035 2040 2045 2050 2055 2060
Retirement of Retirement of Gradual retirement of
subcritical coal supercritical coal ultra-supercritical coal
plants phase 1 plants phase 1 plants 2045 – 2056
(1 GW) (10 GW)
2
MEMR’s Press Release
4th June 2021
Indonesia’s Electricity Production 2021–2060 (TWh)
Scenario 1 Scenario 2
Source: MEMR Press Release 4 June 2021, 2019 RUPTL 3
New Optics, Old Substance
Existing Steam Power Plants (PLTU) Capacity Age and Additional Plans
1
This is not an early retirement plan for coal.
All coal plants are still on track to operate for their
forecast economic/contractual life.
Includes 1GW of legacy steam power plants running on oil or gas.
Source: RUPTL, MEMR, PLN.
Source: RUPTLs 4
New Optics, Old Substance
Coal Power Plants Project Pipeline
2
The 35 GW coal power programme will
largely stay on track.
Despite the looming over-capacity in Java-Bali
grid and Sumatera grid
Around 16 GW of NEW coal capacity will
come online between 2021 and 2030 (1.7 GW
of which are still “under further discussion”)
5
New Optics, Old Substance
Coal Plants Still in Financing Stage Status According to PLN Annual Report 2020
Plant Capacity
Province Plant Name Ownership COD
Name (MW)
PLTU MT Jambi-1 Unit 1 IPP PLN Subsidiary (PT Putra Indotenaga & PLN BB) 300 2027
PLTU MT Jambi-1 Unit 2 IPP PLN Subsidiary (PT Putra Indotenaga & PLN BB) 300 2027
Jambi
PLTU MT Jambi-2 Unit 1 IPP PT Pembangkitan Perkasa Daya 300 2026
PLTU MT Jambi-2 Unit 2 IPP PT Pembangkitan Perkasa Daya 300 2026
MT Sumbagsel 1 Unit 1 IPP PT Sumbagsel Energi (Sakti) Perwali 150 2024
South Sumatera
MT Sumbagsel 1 Unit 2 IPP PT Sumbagsel Energi (Sakti) Perwali 150 2024
Indramayu Unit 4 (FTP2) PLN 1,000 2029
PLTU Jawa-3 (FTP2) Unit 1 IPP Bakrie Power (B&Brothers Tbk 20%, YTL Corporation 80%) 660 2025
West Java aka Tanjung Jati A
PLTU Jawa-3 (FTP2) Unit 2 IPP Bakrie Power (B&Brothers Tbk 20%, YTL Corporation 80%) 660 2026
aka Tanjung Jati A
MT Kalselteng 3 Unit 1 IPP PLN Subsidiary (PT PJBInvest & PLN BB) 100 2024
Central Kalimantan
MT Kalselteng 3 Unit 2 IPP PLN Subsidiary (PT PJBInvest & PLN BB) 100 2025
South Kalimantan MT Kalselteng 5 Unit 1 IPP PLN Subsidiary (PT PJBInvest & PLN BB) 100 2025
TOTAL 4,120
The 35 GW coal power programme will largely stay on track.
4.1 GW out the 16 GW were still under ‘Financing Stage’ according to PLN Annual Report 2020
- meaning it HAS NOT reached financial close
2 projects were from the FTP-2 program : PLTU Jawa-3 / Tanjung Jati A and PLTU Indramayu
Most of the projects are IPP owned
6
New Optics, Old Substance
First Phase 2030 1 GW Potential Retirement Are Long Overdue
3 The first phase of PLN’s 1 GW
retirement planned for 2030 are
very old plants.
They would have been in service for 50-60
years by then.
What are the steps that PLN has taken to
prepare for these decommissioning plans,
including the environmental remediation?
Source: Compiled Sources 7
PLN Annual Reports, PLN, PJB & IP Statistics
New Optics, Old Substance
Small Coal Plants Cancellation List
Region Name Capacity (MW) Owner Status IEEFA Remarks
Sumatera PLTU Tembilahan 2x5.5 11 IPP Cancelled Already changed to Substation (GI) in RUPTL 2019
Sumatera PLTU Kuala Tungkal 2x7 14 PLN Cancelled Already changed to Substation (GI) in RUPTL 2019
Sumatera PLTU Ipuh Seblat 2x3 6 PLN Cancelled Already changed to Substation (GI) in RUPTL 2019
Sumatera PLTU Bengkalis 2x10 20 PLN Cancelled Already changed to Substation (GI) in RUPTL 2019
Kalimantan PLTU Tarakan 2x7 14 PLN Cancelled Already changed to Gas Engine Units (PLTMG) in RUPTL 2019
Kalimantan PLTU Kuala Pambuang 2x3 6 PLN Cancelled Already changed to Substation (GI) in RUPTL 2019
Kalimantan PLTU Bontok 2x7 14 PLN Cancelled Already changed to Substation (GI) in RUPTL 2019
Sulawesi PLTU Raha 2x3 6 PLN Cancelled Already changed to Substation (GI) in RUPTL 2019
Sulawesi PLTU Bau-Bau 2x10 20 PLN Cancelled New cancellation
Sulawesi PLTU Wangi-Wangi 2x3 6 PLN Cancelled Already changed to Diesel Units(PLTD) in RUPTL 2019
Maluku & Papua PLTU Ambon-FTP1 2x15 30 PLN Cancelled New cancellation
4
Maluku & Papua PLTU Jayapura 2x15 30 PLN Cancelled Already changed to Mobile Power Plant (MPP) in RUPTL 2019
10 out of 12 ‘troubled’ small coal plants that were targeted for
cancellation were actually cancelled two years ago in 2019 RUPTL.
Source: RUPTL2019 8
New Optics, Old Substance
Different PLN and MEMR 2060 Net Zero Scenarios (TWh)
5 MEMR’s and PLN’s Net Zero Emission (NZE) scenarios are based
on different assumptions.
Different electricity growth projection
Different approaches in the use of technologies - solar, wind, nuclear,
gas/gasified fuel, and biomass
9
So, What is New?
Major changes but little emphasis in announcements
1
6.8 GW of NEW coal power “modifications” or
“postponed” in the DRUPTL 2021
Changed to renewable baseload, shifted to other sources of
generation or postponed until further notice.
Almost all of the scrapped coal plants affect projects that
are owned by PLN’s directly or indirectly via one of PLN’s
fully-owned subsidiaries
PLN’s and MEMR’s announcements have not drawn more
attention to this initiative
Source: DRUPTL 2021 and IEEFA estimates. *Modified here means postponed or changed 10
to renewable baseload or other baseload
So, What is New?
Proportion of Renewables vs Fossil Fuel in 2019 RUPTL and 2021 DRUPTL
RUPTL 2019-2028 DRUPTL 2021-2030
Generation
(MW) % (MW) %
New & Renewables 16,762 30% 19,899 48%
Fossil Fuel 39,633 70% 21,069 52%
2 Proportion of renewables is higher in DRUPTL 2021 as
compared to the 2019 RUPTL.
BUT higher share comes from the sharp decline in new fossil fuel capacity
instead of sharp increase in the renewables itself.
11
Source: MEMR Press Release 4 June 2021, 2019 RUPTL
So, What is New?
PLN’s Electricity Growth Projection
3
PLN’s Electricity Growth Projection (TWh) Average 10 years
Electricity demand growth
projection for the next 10 years
is toned down.
A persistent issue in previous RUPTLs
Source: MEMR Press Release 4 June 2021, 2019 RUPTL 12
So, What is New?
Biomass, Hydro, and Geothermal updates
4 Rapid increase in biomass co-firing, large scale hydro and geothermal are the
chosen shortcut to reach the Paris Agreement target in 2025
Large hydro remains crucial
New Renewable Energy Based Industry Development (REBID) 6-9 GW of hydro in Kayan river
Large hydro are well-known with unstated risks including construction risk, environmental risk,
and operational risk
Geothermal Power Installed Capacity Planned (MW)
Unrealistic geothermal development target updated
Although there seemed to be different targets from
PLN vs MEMR
Meanwhile biomass is considered as the fast-track
to reach 2025 target (from less than 1% to 6% in
2025)
PLN sees biomass as less capital intensive, and the
risk of price setting is pushed onto the suppliers and
the government.
Source: MEMR Press Release 4 June 2021, 2019 RUPTL 13
So, What is New?
MEMR Power Generation Capacity Scenarios (GW)
5 Placing a big bet on novel technologies while downplaying proven options for the Net Zero
target – Biomass, gasification and carbon capture instead of solar and wind.
HUGE ambition on biomass capacity
Approximately 250 GW of biomass in 2060 means 1.4 billion ton/year of biomass aka more than 200
times the biomass capacity of the US!
IGCC + CCS – neither are economically proven technology. IGCC = gasification of fuel (from coal?? Or biomass??)
Source: MEMR Press Release 4 June 2021, 2019 RUPTL 14
So, What is New?
Solar Power Additions (MW)
Placing a big bet on novel technologies while
downplaying proven options for the Net Zero target –
Biomass, gasification and carbon capture instead of
solar and wind.
Solar and wind power – still being on the back
burner
PLN’s current plan to increase solar power is still
far from ambitious:
• 612 MW of floating solar on existing dams
(to be combined with hydro power)
• 435.5 MW on ex-mining sites
• 112.5 MW of utility scale solar on PLN’s
existing site
• Small hybrid solar power in micro-grids on
isolated islands
• 1000 MW of rooftop solar – a program
endorsed by MEMR and Indonesian solar
energy associations
Source: 2019 RUPTL, MEMR Press Release 4 June 2021, 2021 DRUPTL 15
So, What is New?
Diesel Conversion plan
6
Converting 2 GW of diesel power
Diesel Units Locations Spread Around Indonesia
plants into renewables in isolated
places.
5200 units of diesel gensets in 2130
locations
To be replaced by renewables + storage
First phase 200 locations for 265 MW
Source: MEMR Press Release 4 June 2021, 2019 RUPTL 16
Bringing the Ambition into Reality – PLN Annual Report Says it All
1
PLN Fuel Expenditure (in IDR Million)
Fuel Expenses 2020 2019 Cost Reduction (IDR) %
Fuel oils
High speed diesel 13,831,217 20,637,756 (6,806,539) -33%
PLN’s increased operating profit in Fuel marine oil 797,241 2,378,592 (1,581,351) -66%
FY2020 was mainly a result of a huge Industrial diesel 584 2,313 (1,729) -75%
Others 1,168,555 1,710,712 (542,157) -32%
drop in fuel expenses, mostly from oil Subtotal 15,797,597 24,729,373 (8,931,776) -36%
and gas . Non-oil fuels
PLN saved IDR 30 trillion from fuel cost alone Coal 46,158,057 49,397,601 (3,239,544) -7%
Due to : Natural gas 40,040,431 58,054,184 (18,013,753) -31%
• Sharp drop in oil prices Geothermal 3,540,237 3,406,242 133,995 4%
Water 346,831 222,372 124,459 56%
• New gov support to cap gas price Subtotal 90,085,556 111,080,399 (20,994,843) -19%
• Reduction in fuel volume as demand
declined in 2020 Lubricants 121,132 274,710 (153,578) -56%
TOTAL 106,004,285 136,084,482 (30,080,197) -22%
Volume 2020 2019 Vol Reduction %
Fuel oils (kilo liter) 2,669,946 3,118,762 (448,816) -14%
Coal (tonnes) 66,683,392 67,008,829 (325,437) -0.5%
Natural gas (MMSCF) 378,246 479,776 (101,531) -21%
TOTAL
Source: PLN Annual Reports 17
Bringing the Ambition into Reality – PLN Annual Report Says it All
2
PLN Consolidated Profit and Loss Statement
Year 2019 2020 2020 with SFAS 73
Currency IDR IDR IDR
Implementing changes in the accounting standard of Revenues
Sale of electricity 276,061,925 274,898,464 274,898,464
SFAS 73, would have created a different financial Customer connection fees
Others
6,934,597
2,644,067
312,725
4,311,826
312,725
4,311,826
result.
Total Revenues 285,640,589 279,523,015 279,523,015
Operating Expenses
Fuel and lubricants 136,084,482 106,014,285 135,363,422
But PLN is exempted from implementing SFAS 73 on its PPAs and ESCs Purchased electricity 83,563,991 98,651,604 8,320,866
Exemption by issuance of OJK Regulation no 6/2017 Lease 3,617,376 3,101,334 3,299,327
Maintenance 22,328,178 21,940,509 29,487,013
What this means: Personnel 25,908,771 24,965,707 24,965,707
• If PPAs and ESCs were treated as finance leases, PLN’s lease liabilities Depreciation 35,318,071 36,662,917 44,856,604
Rights-of-use assets depreciation 2,479,663 2,479,663
would increase by an estimate of 1,314% from IDR 18.5 trillion to IDR Others 8,620,069 7,192,146 7,192,146
261.4 trillion. Simultaneously, PLN’s assets will increase by 12% and its Total Operating Expenses 315,440,938 301,008,165 255,964,748
equities will be much lower as unappropriated retained earnings drop Operating Loss Before Subsidy (29,800,349) (21,485,150) 23,558,267
by IDR 54.1 trillion. Government's electricity subsidy 51,711,774 47,988,114 47,988,114
Compensation Income 22,253,517 17,904,508 17,904,508
• The changes in accounting treatment would have lowered PLN’s net
profit significantly from IDR 5.9 trillion to IDR 990 billion in 2020. Operating Income After Subsidy 44,164,942 44,407,472 89,450,889
• If PPAs and ESCs are treated as finance leases, PLN’s purchased Other income -net (3,667,666) 1,916,966 1,916,815
electricity expense would have declined by 91.6%, but at the same Gain (loss) on foreign exchange - net
Financial income
9,486,326
755,103
(7,742,152)
1,125,519
(9,842,324)
1,125,519
time, PLN’s finance cost (interest expense) would have increased by Financial cost (24,619,495) (27,415,886) (74,231,203)
170.8%, bringing the finance cost from IDR 27.4 trillion to IDR 74.2 Income (Loss) Before Tax 26,119,210 12,291,919 8,419,696
trillion.
Tax Benefit (Expenses) (21,797,080) (6,298,491) (7,429,185)
Income for The Year 4,322,130 5,993,428 990,511
Source: PLN Annual Reports, POJK 18
PLN Consolidated Balance Sheet
Implementing changes in the accounting standard
of SFAS 73, would have created a different financial
result.
What this means:
This means that there is approximately IDR 242.9 trillion of PLN’s
long-term liabilities that are currently not recorded on its books
(off-balance sheet).
The changes in treatment for leases would have created a much
higher debt to equity ratio for PLN from 0.69 to 0.99, a level that
might ring an alert to some lenders depending on its existing bank
covenants.
Source: PLN Annual Reports 19
PLN Consolidated Balance Sheet
Implementing changes in the accounting standard
of SFAS 73, would have created a different financial
result.
Once this exemption expires, key stakeholders need to realize there
will be a sudden change in PLN’s financial position that could
potentially affect financial metrics and PLN’s leverage to accessing
debt
Credit Rating Agencies (CRAs) such as Moody’s are well-aware of the
conditions . They have long been adjusting PLN’s financial metrics.
PLN’s stand-alone BCA is non-investment grade (Ba2 – Ba3 in the past 4
years), but its final rating receives a 3-4 notch upgrade due to very high
support from the gov.
Source: PLN Annual Reports 20
Source: PLN Annual Reports 21
Bringing the Ambition into Reality – PLN Annual Report Says it All
A Screenshot of PLN’s Annual Report 2020
3 Repositioning of subsidy and compensation
income - from previously accounted below the
operating margin to now considered at par with
PLN’s revenue.
Subsidy and compensation payment from the
government is viewed as recurring instead of one-off
items
Any chance for full-cost recovery without subsidy?
Source: PLN Annual Reports 22
What to Look For?
Coherent and realistic targets – between MEMR and PLN
Coal demand and pricing trends in the run-up 2030. Watch out on the export quota!
Has the renewable energy (RE) potential been explored to the fullest? Wind (both onshore and offshore)
and ocean energy VS ICGG + CCS?
Focus attention on the un-needed coal plants which remain in the plan but could potentially be
scrapped – especially those that have NOT REACHED financial close.
• Request clarity on deadlines – Is the deadline for initiating construction, reaching financial close, or putting
the unit into operation?
• Ask for transparency on the current status for each unit in the pipeline - bear in mind that ‘under
construction’ can have a very liquid meaning.
• Critically examine the drawbacks for adding more plants in already-congested grids – be mindful of increasing
subsidy and compensation payment – these are taxpayers’ monies.
23
A Snapshot of IEEFA
24
Media contact: Paige Nguyen (pnguyen@ieefa.org) Ph: +61 433 048 877
Author contact:
Elrika Hamdi, Energy Finance Analyst (ehamdi@ieefa.org)
Putra Adhiguna, Energy Finance Analyst (padhiguna@ieefa.org)
Authors are available for interviews and/or background briefings.
