ADB and Indonesian Partners Ink MoU for Coal Power Plant Early Retirement

The Asian Development Bank (ADB) has joined with key partners in Indonesia to sign a memorandum of understanding (MOU) to jointly explore the early retirement of the first coal-fired power plant owned by an independent power producer (IPP) under ADB’s Energy Transition Mechanism (ETM).

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

The MOU agrees to open detailed discussions to accelerate the retirement of Cirebon-1, a 660-megawatt plant owned by 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 IPPs in Indonesia, other parts of Asia and the Pacific, and beyond.

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 PLN will be shortened.

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

“This MOU with our trusted partners in Indonesia is a landmark moment for ADB’s Energy Transition Mechanism and the clean energy transition it will advance,” said Asakawa.

“As Asia and the Pacific’s climate bank, ADB is proud to be showing the viability of this approach, supported by the outstanding leadership of Indonesia. We encourage other financial stakeholders to engage in the just and affordable energy transition here and across Asia and the Pacific.”

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