Indonesia coal phase-out 2026: JETP implementation, captive coal carve-outs, renewable additions

In 50 words: Indonesia's JETP ($20B+ pledged) implementation accelerated through 2025-2026. Coal capacity remains at 45 GW with planned early retirements of 9 GW. Renewable additions reached 15 GW cumulative — solar growing fastest. The 'captive coal' carve-out for industrial nickel processing remains a contested issue dividing climate advocates and JETP partners.

Where Indonesia stands

Cumulative installed capacity Q1 2026:

• Coal-fired power: 45 GW (still dominant in electricity mix)
• Natural gas: 25 GW
• Hydroelectric: 7 GW
• Geothermal: 2.5 GW (Indonesia is global geothermal leader)
• Solar PV: 4 GW (small but growing fast)
• Wind: 0.5 GW
• Bioenergy: 1 GW
• Total renewable: ~15 GW (with hydro + geothermal)

Coal still accounts for 60%+ of electricity generation. The transition is meaningful but slow.

The JETP partnership

Indonesia's Just Energy Transition Partnership (JETP), announced at COP27 (November 2022):

• $20+ billion in initial international funding pledged
• Coordinated by US, Japan, plus G7 partners
• Indonesian implementing entity: JETP Secretariat

Funding mix:

• Concessional public finance
• Guarantees and risk mitigation
• Commercial finance unlocked by guarantees
• Technical assistance

Coal phase-out commitments

Indonesia's JETP commitments include:

• 2030 peak: ~17% peak power sector emissions by 2030
• Coal capacity peak: limit to ~50 GW
• Coal retirement: accelerate retirement of 9 GW pre-2030 plants
• Renewable share: 34% of generation by 2030

Implementation through 2025-2026:

• 3 GW of accelerated coal retirements identified
• Captive coal (industrial dedicated coal plants for nickel processing) excluded from commitments — controversial
• Project financing arrangements being structured for early retirements

The captive coal controversy

Indonesia's nickel industry (for EV batteries) operates with dedicated coal-fired power plants ("captive coal"). These plants:

• Account for ~5+ GW of coal capacity
• Power nickel processing essential to global EV supply chain
• Excluded from JETP coal phase-out commitments
• Recent industrial accidents drew global attention to working conditions

Climate advocates push for inclusion; nickel industry argues exclusion necessary for transition economics. As of 2026, the carve-out remains.

Renewable energy additions

Indonesian renewable growth accelerating:

• Solar PV: 4 GW cumulative, ~1 GW/year additions
• Geothermal: 2.5 GW, ~200 MW/year additions
• Wind: 0.5 GW, slower pace
• Hydro: 7 GW, large new projects in Sumatra under development

PLN (state utility) tender mechanisms operationalising:

• Direct PPAs for industrial customers
• Solar+BESS tenders emerging
• Geothermal continued exploration

Major developers

• PLN (state utility)
• Geo Dipa Energi (state geothermal)
• Star Energy Geothermal
• Pertamina (state oil + gas, increasingly renewable)
• ENGIE Indonesia
• ACEN Indonesia (Filipino, Ayala-owned)
• Saudi-Indonesian joint ventures

What developers should know

For renewable developers and EPCs targeting Indonesia:

• Pricing remains competitive (utility-scale solar tariffs at $35-50/MWh range)
• PLN counterparty improving
• JETP-backed projects get concessional finance access
• Local content increasingly required
• Strong geothermal opportunities (Indonesia has 40% of global geothermal reserves)

What to watch next

The Indonesia JETP implementation plan refresh (expected H2 2026) will reveal whether the captive coal carve-out is reconsidered, whether early coal retirement targets are met, and whether renewable additions accelerate enough to meet 34% generation share by 2030.

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Researched and drafted with AI assistance; reviewed and edited by the named author within 24 hours of draft.