By Antonio delos Reyes

April 5, 2021 - Coal is expected to remain the dominant power source in Indonesia's energy mix this decade, according to a report by state-controlled utility PLN, which expects 14-16GW of generation capacity to come on line by 2030.

This will account for up to 36.6pc of proposed total capacity additions of 40.9GW, which also includes power plants being developed under the country's 35GW power generation project. The additional coal-fired capacity will be broken down into an expected 3.5GW of mine-mouth capacity and 12.5GW of non-mine-mouth capacity.

The country is still dependent on coal for its baseload needs because of its availability and lower cost compared with other baseload fuel sources, PLN said. The company said coal-fired plants accounted for 181GWh or 65pc of the country's total generation output in 2020. There are currently 237 coal-fired plants in the country with an installed boilerplate capacity of 34.61GW.

Coal demand for power generation will increase significantly if power plant construction follows the targets set out in the PLN report. If all projects come on line on their targeted commercial operation dates, the power sector will need 140mn-170mn t of coal by 2030, a 33-62pc increase from last year's consumption of 105mn t. The consumption volume will depend on demand growth in the coming years, PLN said.

An increase in coal demand in Indonesia will make the domestic market an attractive alternative to the export market for local coal mining firms because of lower transportation costs, especially if coal prices decline as a result of oversupply, the country's energy and mineral resources ministry (ESDM) said. While coal prices are high this year, a move towards greener energy in some countries may result in lower coal demand in the international market in the near future, the ministry said. A larger domestic market will help absorb output from coal mining companies and support coal prices, the ESDM added.