ADB, Indonesia to work on the early retirement of a coal power plant

The Asian Development Bank (ADB) on November 14 said it has signed a memorandum of understanding (MOU) with Indonesia entities to work on the early retirement of a coal-fired power plant in the nation under its Energy Transition Mechanism (ETM).

The MoU agrees to open detailed discussions to accelerate the retirement of Cirebon-1, a 660 MW plant owned by Cirebon Electric Power (CEP) in West Java.

The planned transaction aims to achieve significant carbon dioxide emission reductions through a replicable model that can be applied to other independent power producers (IPPs) in Indonesia, other parts of Asia and the Pacific, and beyond, ADB said.

Once a definitive agreement is reached among the parties, it is anticipated that ADB would provide an early retirement facility in the form of senior debt, on the condition that the tenor of the power purchase agreement between CEP and state-owned power distributor PLN will be shortened.

ETM is a regional, blended-finance programme that seeks to retire existing coal-fired power plants on an accelerated schedule and replace them with clean power capacity. The MoU was signed at an event in which Indonesia launched its ETM Country Platform, a government financing and investment framework that will fund and manage the country’s energy transition activities. 

ADB signed an additional MoU with government-owned special mission vehicle Sarana Multi Infrastruktur to provide support, including staff resources and capacity building for the platform.