ADB and its Indonesian partners sign an MOU under the Energy Transition Mechanism

The Asian Development Bank (ADB) has joined key partners in Indonesia today to sign a memorandum of understanding to jointly study the early retirement of the first coal-fired power plant owned by an Independent Power Producer (IPP) under the Energy Transition Mechanism (ETM) of the ADB.

The signing, which took place on the sidelines of the G20 Leaders Summit in Bali, was attended by ADB Chairman Masatsugu Asakawa, Cirebon Electric Power (CEP) Chairman Director Hisahiro Takeuchi, PT PLN Chairman Director (Persero), Darmawan Prasodjo, and the Director General of the Indonesian Investment Authority (INA), Ridha DM Wirakusumah.

The Memorandum of Understanding agrees to enter into detailed talks to expedite the withdrawal of Cirebon-1, a 660-megawatt plant owned by CEP in West Java.

The anticipated transaction is intended to achieve a significant reduction in carbon dioxide emissions through a reproducible model that can be applied to other IPP plants in Indonesia, other parts of Asia-Pacific, and beyond.

Once the parties reach a final agreement, the ADB is expected to provide an advance credit facility in the form of senior debt, on the condition that the term of the power purchase agreement between CEP and PLN is shortened.

“This Memorandum of Understanding with our trusted partners in Indonesia is a landmark moment for the ADB Energy Transition Mechanism and the clean energy transition it will drive,” Asakawa said.

“As the Asia-Pacific climate bank, ADB is proud to show the feasibility of this approach, supported by Indonesia’s outstanding leadership. We encourage other financial players to participate in the just and affordable energy transition here and across Asia and the Pacific.”

ADB extends support to Vietnamese SMEs through VPB

“ETM offers an innovative approach for companies like CEP to transition from coal to clean energy, while providing reliable and affordable power for Indonesia’s energy infrastructure,” Takeuchi added.

“This MoU is a big step forward for Indonesia and we are proud to be working with the Asian Development Bank and the Indonesian Investment Authority.”

“PLN is committed to being a leader in Indonesia’s energy transition to net-zero emissions in a fair and affordable way,” Prasodjo said. “PLN’s commitment to clean energy and working through the ETM with IPPs, such as the CEP, can significantly accelerate the energy transition.”

“INA’s role is to help achieve Indonesia’s sustainable development and create wealth for the country’s future generations,” Wirakusumah said. “INA’s ability to complement the other partners with capital can complete the set of financial tools that can help scale up ETM activities in Indonesia.”

The ETM is a regional, transformative, blending program that aims to retire existing coal-fired power plants on an accelerated schedule and replace them with clean energy capacity.

The ETM is one component of a broader set of initiatives, both national and multilateral, aimed at helping Asia and the Pacific mitigate the worst effects of climate change, such as extreme sea level rise and severe weather events. destructive.

The MoU was signed as Indonesia launched its National ETM Platform, a government financing and investment framework that will finance and manage the country’s energy transition activities.

The ADB signed an additional Memorandum of Understanding with PT Sarana Multi Infrastruktur (Persero) (“PT SMI”) to provide support, including staff resources and capacity building for the platform.