The Indonesian government, the Asian Development Bank (ADB) and independent power producer Cirebon Electric Power (CEP) have entered a nonbinding framework agreement to shut down a 660MW coal-fired power plant almost seven years ahead of schedule.

Signed at the COP28 summit in Dubai, UAE, the agreement forms part of ADB’s Energy Transition Mechanism (ETM) programme.

ADB, the Indonesian state-owned power utility PLN, CEP and the Indonesia Investment Authority (INA) will shorten the life of Cirebon-1 from its original closure date of July 2042 to December 2035.

The companies have also agreed to shorten the power purchase agreement to the new date.

The agreement will be finalised in the first half of 2024.

The average life of a typical coal-fired power plant is 40 years or more. Cirebon-1 was commissioned in 2012 and its early retirement averts more than 15 years of greenhouse gas emissions.

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By GlobalData

A memorandum of understanding to this effect was signed in November 2022 at the G20 Leaders’ Summit held in the Indonesian capital of Bali.

ADB president Masatsugu Asakawa stated: “This framework agreement is a key development for this transaction and Indonesia’s energy transition that will lead to a significant cut in greenhouse emissions.

“We are grateful to the government of Indonesia and Cirebon Electric Power for their perseverance and leadership on the energy transition. ADB will continue to work closely with our partners in Indonesia and across the region to demonstrate that coal and other fossil fuel plants can be retired early in a just and affordable manner — a win for climate and a win for communities.”

PLN president director Darmawan Prasodjo stated: “PLN is committed to being the leader in Indonesia’s energy transition toward net zero emissions in a just and affordable manner. PLN has put great effort into decarbonising by cancelling 13.3GW of planned CFPP, terminating a power purchase agreement of 1.3GW CFPP, and halting new developments of CFPP. 

“Early coal retirement is an extraordinary initiative that requires international support such as ETM. Working through the ETM with CEP signifies PLN’s commitment to clean energy and exemplifies collaborative actions taken by PLN to accelerate energy transition in Indonesia.”

In September 2023, Reuters reported that PLN is planning to build 32GW in renewable energy projects and invest in transmission systems to link to renewable energy.

The move is part of its strategy to reduce dependence on coal and accelerate the adoption of renewables.