Coal-fired power gains share in Indonesia’s energy mix

Argus Media has reported that the share of coal-fired power in Indonesia’s energy mix increased on the year to 38% in 2020 from 37.1% a year earlier, despite the country aiming for a steep reduction by 2025.

The world’s top coal exporter is targeting to reduce the share of coal-fired power in its energy mix to 30% by 2025 while expanding new and renewable energy resources.

Indonesia, the most populous southeast Asian country, is aiming to more than double the share of new and renewable energy in its energy mix to 23% by 2025 from just 11.2% last year, the ministry of energy and mineral resources (EDSM) said at a recent energy forum. The share of natural gas-based power in the mix is forecast at 22% in 2025, up from approximately 19% in 2020. But the share of oil-based power is forecast at 25% by 2025 compared with 31.6% last year.

While coal’s share in the country’s fuel mix is expected to decline in the future, the actual consumption volume is expected to increase, the ESDM said. This is because of an expected increase in future demand from higher electrification and economic growth.

Under the country’s national energy strategy that the government is drafting, coal consumption for power generation is expected to reach 205.3 million t and account for 30% of the country’s total fuel mix by 2025, the ESDM said. This share is projected to decline to 25.3% in 2050, although the actual volume of coal consumed for power generation is expected to increase to 438.8 million t by then. Utilities consumed 105 million t of coal in 2020 when the share in the energy mix was 38%. The ESDM has set aside 113 million t of coal for the power sector this year under the domestic market obligation (DMO) system, which requires producers to sell a percentage of their output to the domestic market.

The higher allocation is to cover an expected increase in power demand in the country as the year progresses and the economy recovers, the ESDM said. New coal-fired power plants are expected to start commercial operations this year, such as the 200 MW Kalteng 1 plant operated by Dian Swastatika Sentosa and the 1000 MW unit 1 of Indonesian coal producer Adaro Energy’s Batang plant.

The ESDM has increased the national coal production target for this year by 75 million t to 625 million t on expectations of continued strong demand. The additional 75 million t will be sold in the export market and will be exempt from producers’ DMO allocations.