Coal Plants Need to Stop Outcompeting Renewables – Watts Up With That?

Essay by Eric Worrall

“… market forces are stacked against renewables as long as there is excess supply of power, mostly from coal, in the Java-Bali power grid. …”

Talking clean energy into existence

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Editorial board (The Jakarta Post) Jakarta Sat, August 23, 2025 

One of the more surprising parts of President Prabowo Subianto ’s state budget address on Aug. 15 was a bold statement on clean energy: “We must achieve 100 percent power generation from new and renewable energy within 10 years or sooner. I believe this is achievable.”

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Perhaps the President veered off script in the budget speech, delivered annually ahead of Independence Day, and then misspoke or conflated related issues, something that is not uncommon even for the most experienced speakers.

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Investment is often hampered by more general business regulations, such as local content requirements. This has become an issue in the domestic production of solar photovoltaic panels, which relies on imports of certain components.

Aside from regulations, market forces are stacked against renewables as long as there is excess supply of power, mostly from coal, in the Java-Bali power grid.

The door for clean power will open as soon as the one for dirty power is shut. Coal power is often artificially cheap thanks to the domestic market obligation, which requires coal mining firms to sell a quarter of their output on the domestic market at a capped price.

In addition to oversupply, the coal price cap further distorts the market, leaving little room for independent renewable power producers, even though the costs of solar power have come down impressively over the past few years.

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Read more: https://www.thejakartapost.com/opinion/2025/08/23/talking-clean-energy-into-existence.html

I have to give the author top marks for honesty. Clearly there is no point trying to kickstart the Indonesian renewable energy revolution until forced coal plant closures create some gaps in the market.

Most Indonesian coal is brown coal, which is essentially a zero cost fuel. Nobody wants to buy brown coal, because brown coal is difficult to ship and sell, due to the cost and marginal profitability of shipping such low quality coal any kind of distance. Brown coal’s tendency to spontaneously combust when stored for any length of time adds to the fun of handling such low grade material in any way other than digging it up and immediately feeding it into the boiler of the adjacent power station.

Such brown coal adjacent power plants can provide rock steady reliable electricity for less than 10c / kWh, and since there are no interested buyers offering competing uses for that coal, brown coal power stations are a potential path to building a grid which is virtually immune to the ups and downs of international commodity prices. Even heavily subsidised renewables struggle to compete with that kind of rock bottom cost and stability.

While Indonesian coal reserves are substantial, the USA is the real king of coal, with the largest proven coal reserves of any nation – enough to supply at least a hundred years of US energy needs, likely a lot longer. Despite this abundance, only 16% of US energy currently comes from coal.

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