Five questions a power strategist in Southeast Asia has to answer

A coal plant in Southeast Asia is held open by four agreements: the power purchase agreement with a state buyer, the project debt, the coal supply contract and the system operator's reliance on the plant's output. Retiring it before those agreements end means renegotiating all four together, usually while arranging replacement capacity at the same connection point. I led that process for our Johor station between 2022 and 2024. My contribution was to model what each counterparty lost and gained from an earlier date, so that our proposals offered each of them something real: lower capacity payments for the buyer, a refinancing on concessional terms for the lenders, continuity at the connection point for the grid and a written commitment to every permanent employee. I also judge when early retirement is not yet feasible. Our East Java plant, with a contract to 2042 and a buyer that depends on government support, needs a different route, and I would rather say so than announce a date we cannot keep.

Gas will run beside renewables in much of the region for at least two decades, but imported LNG brings risks that domestic gas did not. An LNG supply contract usually obliges the buyer to pay for most of its annual volume whether or not it is used, while many power purchase agreements in the region let the state buyer dispatch far less than a plant can produce. Someone must carry that gap. At Tirauna Gas & Power I negotiated an integrated project in Indonesia where the power contract's capacity charges paid for the import vessel's charter, so the gap was closed by design. At Lintasari I recommended leaving a Vietnamese project when the buyer would accept minimum offtake of only 65 per cent against fuel commitments near 90 per cent. I now review every gas proposal with three questions: who carries volume risk, who carries the difference between the LNG price index and the tariff, and in which currency the buyer can actually pay.

Cross-border trade in Southeast Asia has advanced slowly because each link needs two governments, two system operators and often a transit country to agree on price, dispatch and what happens when something fails. The first multilateral trade through existing interconnections began in 2022, carrying up to 100 megawatts from Laos to Singapore through Thailand and Malaysia. Singapore's stated aim of importing around 6 gigawatts of low-carbon electricity by 2035 has since drawn many proposals. I structured our place in the Selat Hijau consortium, which proposes to export 1,000 megawatts from solar and storage in Indonesia's Riau Islands to Singapore by subsea cable. In my experience the binding constraints are political and contractual rather than technical: export permission, manufacturing commitments in the host country, a cable route through crowded shipping lanes and the allocation of curtailment risk. I spend far more of my time on those than on the solar yield.

I introduced Lintasari's shadow carbon price in 2022 for use from 2023: US$40 a tonne of carbon dioxide, rising in equal steps to US$80 by 2030, applied to every new investment and every life extension and reported beside the unpriced return. None of our plants yet pays a carbon tax at that level, but the direction in the region is plain. Singapore's carbon tax rose from S$5 to S$25 a tonne in 2024 and to S$45 in 2026, Indonesia began emissions trading for coal-fired power plants in 2023, and Malaysia has said it will introduce a carbon tax. I am more cautious about carbon credits. We counted no credits in the economics of the Johor closure, because methods for crediting early coal retirement are still being tested and buyers have not shown what they will pay. I also advise against using purchased credits to describe a coal plant as lower-carbon than its chimney says it is.

Almost every relationship that matters to Lintasari involves a state. Our largest shareholder is state-linked, our buyers are state utilities or single buyers, and our permits and export approvals come from ministries in five countries. Each brings legitimate interests that are not purely commercial: employment in Johor, tariffs households can afford, security of supply and the timing of national power plans. I have learnt to build those interests into a strategy rather than treat them as obstacles. In practice that means meeting Kelawari's own planners, with our chairman's knowledge, to understand its employment and dividend expectations before a paper is written; showing a buyer's planners what our proposal does to their reserve margin; and accepting minority positions where a host-country owner makes a project more durable. It also means holding a line when a state-linked party's request would disadvantage minority shareholders, as happened over surplus land beside the Johor station in 2023.