PLN cancels early retirement of Cirebon coal-fired power Plant

By Bernard Loebs

State-owned utility PT PLN (Persero) has decided not to proceed with the plan to retire the 660 MW Cirebon Coal-Fired Power Plant (PLTU Cirebon) earlier than scheduled. The plant is an Independent Power Producer (IPP) asset owned by PT Cirebon Electric Power (CEP). PLN’s Director of Project Management and New & Renewable Energy, Suroso Iskandar, argued that a coal phase-out, or early retirement of coal plants, would require extremely high costs.

Suroso explained that the final Power Purchase Agreement (PPA) between PLN and IPP is set to end in 2056, which is four years before Indonesia’s national Net Zero Emission (NZE) target in 2060. When shutting down thermal power plants, Indonesia will not use a coal phase-out approach, but instead a coal phase-down approach—retiring coal plants normally when their PPA period ends. The chosen option is natural retirement, not accelerated retirement.

“Currently, early retirement of thermal power plants is not economical. For example, we have calculated and ultimately decided not to continue the early retirement of the privately owned Cirebon PLTU, 600 MW (Petromindo archives note that Cirebon PLTU has a capacity of 660 MW). The PPA contract for the Cirebon PLTU is valid until 2042. From our simulation, if we accelerate its retirement from 2042 to 2037, or 5 years earlier, the contract clause states that loan repayments must still be paid, amounting to around Rp 12 trillion per year. If we make a lump-sum payment in 2037, multiplied by 5 years, the total is around Rp 60 trillion. And that’s just the penalty,” Suroso explained at the Inspirasi Untuk Bangsa event on Monday (December 2).

Read also: PLTU Cirebon Unit 2 to undergo major overhaul

He further explained that 600 MW of coal power cannot be replaced on a one-to-one basis with 600 MW of solar power (PLTS). On average, solar plants only produce electricity for 4 hours per day. Therefore, replacing a 600 MW coal plant would require building solar plants totaling 6 × 600 MW, or 3,600 MW, plus battery storage to supply power at night.

“To build 600 MW of solar capacity, we need an investment of around US$900 million, or nearly US$5 billion for 3,600 MW—which is around Rp 70 trillion. This means that accelerating the retirement of the Cirebon PLTU by 5 years would require paying Rp 60 trillion in penalties, plus Rp 70 trillion for the replacement solar capacity—totaling Rp 130 trillion. That is extremely large,” Suroso emphasized.

He added that this amount does not include the cost of battery storage investment nor the operational costs, which are significantly different from those of coal plants.

“That is why we are taking a coal phase-down approach, not a coal phase-out,” he added.

Editing by Reiner Simanjuntak