JETP Indonesia Proposes Revised Coal Price for Power Sector Transition

The Secretariat of the Just Energy Transition Partnership (JETP) in Indonesia has proposed that the government evaluate the domestic price obligation (DPO) policy for coal in the electricity sector. This policy recommendation is also included in the Comprehensive Investment and Policy Plan (CIPP) of JETP Indonesia. According to a Specialist in Funding and Policy at the JETP Secretariat Elrika Hamdi, a specific coal price of US$70 per ton could impede the energy transition process in the electricity sector.

Elrika said the DPO policy is problematic since it creates an illusion that the price of coal for coal-fired power plants (PLTUs) is low and stable. However, as a commodity, the price of coal fluctuates, leading to instability. Meanwhile, the domestic market obligation (DMO) rules for coal are ineffective as they hinder sanctions against coal producers. "It will hinder the decarbonization process in Indonesia because coal-fired power plants are perceived as cheap," she said on Nov 14.