PLN, ADB, And IPP Collaborating In Prepared For Early Pension Funding Of Private PLTU Through The ETM Scheme

Photo: Doc. PLN

PT PLN (Persero) has received support from the Asian Development Bank (ADB) regarding the early retirement plan for steam power plants through the Energy Transition Mechanism (ETM) scheme. This step was taken to accelerate the energy transition in Indonesia to achieve net zero emissions (NZE) by 2060.

This collaboration was realized through the signing of a memorandum of understanding between PLN and ADB which agreed to explore the early retirement of the first PLTU owned by a private electricity producer (IPP), namely the Cirebon-1 PLTU through the ETM scheme.

The signing was attended by ADB President Masatsugu Asakawa, PLN President Director Darmawan Prasodjo, Cirebon Electric Power (CEP) President President Hisahiro Takeuchi, and Indonesia Investment Authority (INA) CEO Ridha D. M. Wirakusumah. The signing was carried out at the launch of the ETM Country Platform in Nusa Dua, Bali on Monday, November 14.

Finance Minister Sri Mulyani Indrawati said Indonesia has a great commitment to overcoming climate change by making an energy transition. On that basis, a platform called Energy Transition Mechanism (ETM) was launched which is expected to be an example for PLTU IPP and even other countries.

ETM is a cooperation scheme offered by the Indonesian government for various parties to be involved in clean energy projects in Indonesia. ETM was formed to be able to provide transparency space for investors, international donor institutions and the private sector for clean energy projects in Indonesia. ETM was formed so that in terms of financing clean energy projects in Indonesia can be collaborated through mixed financing from all sectors.

"Through this ETM scheme, we will provide a more transparent platform. By providing this ETM platform, all stakeholders, both funding from multilateral development banks (MDbs), bilateral, private sector, will have the same regulatory scheme to achieve this energy transition," said Sri Mulyani.

According to Sri Mulyani, this scheme could be a win-win solution for PLN. Because in addition to providing clean and cheap energy for the community, it will also not burden PLN's finances in the energy transition process.

"This fair and affordable energy transition should not make PLN's financial condition worse. This should make PLN's financial situation healthier, but at the same time it can still encourage more significant carbon reduction, and make energy financing in Indonesia more efficient and competitive," explained Sri Mulyani.

Meanwhile, PLN President Director Darmawan Prasodjo said, as a commitment in the energy transition, PLN has developed a comprehensive roadmap to achieve net zero emissions by 2060.

Even so, collaboration between stakeholders plays an important role in accelerating the energy transition. On that basis, PLN welcomes cooperation with ADB through the ETM scheme to help accelerate the energy transition in Indonesia.

"We want more space for EBT to enter our ecosystem. And how will we retire from coal-powered power plants early. So, under the leadership of the Minister of Finance Sri Mulyani Indrawati, we are building an energy transition mechanism," said Darmawan.

ADB President Masatsugu Asakawa said, in the memorandum of understanding, ADB agreed to open detailed discussions regarding efforts to accelerate the termination of the Cirebon-1 PLTU with a capacity of 660 megawatts (MW) belonging to CEP in West Java. This collaboration aims to achieve a significant reduction in CO2 emissions through models that can be imitated and applied to other IPPs in Indonesia, as well as other areas in Asia Pacific and its surroundings.

"ADB is proud to be working with Indonesia and our partners to change the energy landscape," he said.

Once an agreement is reached between the parties, ADB will provide early retirement facilities in the form of senior debt with the condition that the tenor of the electricity buying and selling agreement between CEP and PLN will be shortened through ETM. This step is ADB's commitment to realizing a prosperous, inclusive, resilient, and sustainable Asia and Pacific region while continuing its efforts to eradicate extreme poverty.

"ETM also provides an example for other countries to forge a path to the zero-emission target. In the future, ADB is committed to supporting this effort throughout Asia and the Pacific," he explained.

The President Director of CEP, Hisahiro Takeuchi, welcomed this collaboration. He said he was proud to be able to take part in the energy transition initiative in Indonesia to provide clean energy.

"ETM provides an innovative approach for companies such as CEP to make a transition from coal to clean energy as well as provide reliable and affordable power for Indonesia's energy infrastructure. This MoU is a big step forward for Indonesia and we are proud to be working with the ADB and the Indonesia Investment Authority," he concluded.