Coal power industry in Indonesia - statistics & facts

Coal as Indonesia’s primary energy source

Indonesia targeted its electricity generation capacity in Indonesia to reach about 76.3 gigawatts in 2022. For a dynamic, emerging country, this capacity would not be sufficient for long and additional capacities must be created quickly. As coal are available in great quantities, dispatchable, and the corresponding power plants can be built cheaply, coal mining has therefore been a cornerstone of politics and a likely target for government interventions.

Coal has been also used to promote Indonesia's export business and support remote areas in their economic development. Since 2020, coal mines have been obliged to sell 25 percent of the production volume on the domestic market and the state-owned electricity supplier PLN received a maximum price of 70 U.S. dollars per ton of coal purchased. PLN estimates that it will take 115 million to 125 million metric tons of coal for power generation in 2022. This number increased compared to coal consumption in 2021 of around 111 million metric tons.

Coal production outlook

Not surprisingly, coal producers expected a thriving market in Indonesia. The coal industry also had only been slightly affected by the COVID-19 pandemic. Indonesia's coal output in 2020 only decreased by two million metric tons in comparison to its pre-pandemic output in 2019. After recovering in 2021, the demand for Indonesian coal is expected to rise again due to the Russia-Ukraine conflict and the ban on Russian fossil fuels.

A flourishing export market is important as around 70 to 75 percent of Indonesia’s coal production is exported abroad. The main export countries include China, India, Japan and South Korea. In 2019, about one third of the global coal exports was exported from Indonesia, making it the largest coal exporting country in world. However, the Indonesian energy program could turn the industry into an internal market. For that reason, and to achieve independence from the global market, several large Indonesian mining companies have expanded directly into the energy sector in order to become an integrated energy company that uses its own coal.

Coal's impact on the environment

On the other hand, the production of coal and especially electricity generation from coal does have an impact on the environment. Back in 2016, it was estimated that the emissions of carbon dioxide amounted to 4.6 billion metric tons in Southeast Asia. Taking current developments in Indonesia and other countries into account, not less, but more is to be expected. Indonesia's energy policies still favor coal, yet the country's climate goals, as well as environmental and public health concerns, are all at odds with the development of coal use.

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