September 7, 2017 Read More →

On the Blogs: ‘The Financial Case Against Coal Power in Indonesia’

Closing the gap between those who have electricity and those who do not is no easy feat, especially in an island nation like Indonesia. With over 17,000 islands — 6,000 of them inhabited — the country’s scattered Pacific geography defies construction of a national transmission grid. Nonetheless, the country’s economic ambitions and its substantial coal reserves have encouraged developers to rely on big centralized coal-fired power plants.

A solution is at hand. New generating technology and changing energy markets are making it easier and cheaper to supply electricity with smaller power stations more readily distributed across regions. A sweeping global pivot away from centralized power plants and fossil fuels and towards cleaner wind, solar, geothermal, and small hydropower is gaining momentum.

The details of the pivot away from coal are emerging in the research findings of a select group of small non-profit investigative organizations operating around the world. One of them is the Institute for Energy Economics and Financial Analysis (IEEFA), a US-based research group that is pushing Indonesia to join an Asian-led transition away from coal-fired power that is shaking the world. IEEFA’s research, focused on the ever more apparent mismatch between the rising cost of fossil-fueled power and diminishing price of renewable technology, is helping to tilt the views of utilities and government administrators not swayed by environmental or public health concerns.

None of what is happening in Indonesia’s electrical sector surprises the Institute for Energy Economics and Financial Analysis. Headquartered in a tiny office in Cleveland, Ohio, with revenues of close to $2 million, IEEFA has a 12-member staff of energy analysts who have served in government finance departments, investment institutions, and energy market research firms. Working from offices in Boston, London, Manila, New York, Sydney and other cities, IEEFA acts like an auditing firm. It has dug deep into the accounts of the coal mining and electrical sectors in 13 nations, including Australia, Bangladesh, China, India, Japan, Russia, and the United States.

What they’ve found has been influential. IEEFA’s 2014 report on the mounting costs of India’s Ultra Mega Power Program anticipated the country’s decision last year to curtail building any more 4,000-megawatt coal-fired power plants, and to cease reliance on imported coal.

IEEFA’s various studies on the escalating costs of the $16 billion to build two coal mines in Australia’s Galilee basin influenced that nation’s four biggest banks to not fund development of any mining projects in new coal basins.

IEEFA studies also helped convince major financiers, among them the $960 billion Norwegian Sovereign Wealth Fund, one of the world’s largest investors, to divest their portfolios of interests in coal mines, coal-fired power plants, and utilities dominated by coal-fired power.

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