Early CFPP Retirement and Managed Phase-Out: What are the primary concerns and regulatory hurdles to early retirement of Coal Fired Power Plants (CFPPs) and Managed Phase-Out of CFPPs (the reduction of generation output by operating CFPPs more flexibly)?

To reach the ambitious decarbonization target, Indonesia will need to advance its renewable energy and climate ambitions in a timely manner, one of them by reducing emissions of the existing coal-fired power plants (CFPPs). There are two ways to reduce emissions from CFPPs: one is to retire certain CFPPs and the other is to reduce generation output by encouraging more flexible operation through lowering capacity factor (CF).

Indonesia has laid out the regulatory framework to start to phase-out its coal fleets. In September 2022, the President issued Perpres No. 112/2022 on Accelerated Development of Renewable Energy for Electricity Supply.

However, below are concerns that would need to be immediately addressed through policy reform:

- The existing legal framework on asset disposal, compensation and renewable energy acceleration with regulations specific to early retirement and changed operating patterns of CFPPs is deemed insufficient and therefore would need to be complemented;

- There are state loss concerns for both early retirement and flexible operation of CFPPs that can be alleviated by introducing a legal cover for such early retirement;

- Early retirement currently lacks a legal basis for negotiations with asset owners and third party lenders impacted by the early retirement. Therefore reforming the legal framework becomes crucial.

A more comprehensive elaboration of existing regulations relevant to coal phase-out can be found in Chapter 8, specifically under the Subchapter 8.5 on Early CFPP Retirement and Managed Phased-Out.

the implementation onto a project of which could preclude the availability of concessionary financing.

LCR: What are the policy recommendations suggested in the CIPP for addressing the LCR issue that is aligned with Indonesia's interest to grow a domestic renewable energy industry?

Early CFPP Retirement and Managed Phase-Out: What are the primary concerns and regulatory hurdles to early retirement of Coal Fired Power Plants (CFPPs) and Managed Phase-Out of CFPPs (the reduction of generation output by operating CFPPs more flexibly)?

LCR: What are the policy recommendations suggested in the CIPP for addressing the LCR issue that is aligned with Indonesia's interest to grow a domestic renewable energy industry?

Early CFPP Retirement and Managed Phase-Out: What are the CIPP policy recommendations to enable the early retirement of Coal Fired Power Plants (CFPPs) and Managed Phase-Out of CFPPs (the reduction of generation output by operating CFPPs more flexibly)?