推进清洁金属

Decarbonizing captive power in Indonesia’s nickel and aluminum industries Authors and Acknowledgments Authors Rizky FauziantoAndika Akbar HermawanBrian O’HanlonWini RizkiningayuRachmat Setiadi,Energy Transition Mechanism Advisor Authors listed alphabetically. All authors are from RMI unless otherwise noted. Contacts Andika Akbar Hermawan,andikaakbar.hermawan@rmi.orgRizky Fauzianto,rfauzianto@rmi.orgWini Rizkiningayu,wini.rizkiningayu@rmi.org Copyrights and Citation Rizky Fauzianto, Andika Akbar Hermawan, Brian O’Hanlon, Wini Rizkiningayu, and Rachmat Setiadi,Advancing Clean Metal: Decarbonizing Captive Power in Indonesia’s Nickel and Aluminum Industries, RMI,2025,https:.//rmi.org/insight/advancing-clean-metals-decarbonizing-captive-power-in-indonesias-nickel-and-aluminum-industries. RMI values collaboration and aims to accelerate the energy transition through sharing knowledge andinsights. We therefore allow interested parties to reference, share, and cite our work through the CreativeCommons CC BY-SA 4.0 license.https:// creativecommons.org/licenses/by-sa/4.0/. Acknowledgments The authors would like to thank our RMI colleagues Lachlan Wright, Hao Wu, Wei Li, and Xin Yue, whoprovided thorough review and substantial input for critical mineral decarbonization practice in the globalmarket. About RMI Rocky Mountain Institute (RMI) is an independent, nonpartisan nonprofit founded in 1982 that transformsglobal energy systems through market-driven solutions to secure a prosperous, resilient, clean energyfuture for all. In collaboration with businesses, policymakers, funders, communities, and other partners,RMI drives investment to scale clean energy solutions, reduce energy waste, and boost access to affordableclean energy in ways that enhance security, strengthen the economy, and improve people’s livelihoods. RMIis active in over 60 countries. Table of Contents The strategic imperatives of decarbonizing power supply in nickel and aluminum industries5 Decarbonizing Indonesia’s Power Sectorfor Nickel and Aluminum Is a Must6 Nickel and aluminum processing are rapidly expanding6Rapid nickel and aluminum expansion is driving energy emissions8The decarbonization imperative for nickel and aluminum energy supply8 Emissions in Aluminum and Nickel Processing:Sources, Technologies, and Reduction10 Understanding the emissions distribution across nickel and aluminum value chains10Emissions intensity comparison across nickel and aluminum processing technologies12 Power Behind Processing: Captive Power Growthin Nickel and Aluminum Sector14 Captive power capacity, especially coal, has increased significantlyin the past decade, driven by the nickel industry14Captive power outlook in supplying energyfor the nickel and aluminum processing facilities by 203016 Weighing the Trade-offs: Captive Coal Default,Renewable Energy, Grid Connections and Their Constraints17 The constraints of gas and renewable energy17Comparative economics: key takeaways from LCOE18Toward grid integration: reducing captive power dependence20 Toward Pathways for a Competitive, Decarbonized Powerfor the Nickel and Aluminum Industries22 Captive coal: a growing contradiction in Indonesia’s decarbonization policy22The challenge of transitioning industrial power systems22Enabling intentional market incentives and mechanisms for clean industrial growth will be key24Ensuring a just transition and leveraging market opportunities for low-carbon products25 Endnotes27 Executive Summary Indonesia’s rapid expansion of nickel and aluminum processing is the centerpiece of the country’s criticalminerals “downstreaming” strategy. This strategy plays a central role in Indonesia’s broader developmentagenda, aiming to increase the added value of domestic resources by promoting in-country processing andrefining. In this context, nickel and aluminum have experienced significant growth over the past decade,making these critical minerals a flagship for the country. However, this expansion is being powered by asurge in off-grid coal-fired power plants, which now poses a significant threat to Indonesia’s climate goalsand its competitiveness in low-carbon markets. Based on an RMI-developed database, which compiles captive power capacity data from governmentand public sources, Indonesia’s captive power capacity has more than doubled, rising from 9.6 gigawatts(GW) in 2019 to 22.9 GW in 2024. Over 81% of this capacity, or approximately 18.6 GW, is coal fired andoperates entirely outside of oversight by PLN, Indonesia’s state-owned national utility. Most of the growthis concentrated in the nickel sector — particularly from energy-intensive rotary kiln-electric furnace (RKEF)smelters, a type of pyrometallurgical processing technology, which accounts for 61%, or nearly 14 GW,of captive capacity. Aluminum processing, while smaller in scale, adds about 1 GW, with a greater sharecoming from hydropower. This trajectory is expected to continue. If current projects proc