This report elaborates Indonesia's power market structure and provides historical and forecast numbers for generation, capacity and consumption up to 2030.
Indonesia has become a crucial player in the world’s energy markets. It is gifted with some of the world’s largest reserves of fossil fuels. The markets with the most opportunity for development in Indonesia are geothermal, biomass, hydropower and solar power.
This report, Indonesia Power Market Outlook to 2030, Update 2014 - Market Trends, Regulations and Competitive Landscape, provides a detailed analysis of the market and focuses on the major players, recent developments and key drivers of the Indonesia power market.
Indonesia is home to 40% of the world’s known geothermal resource and offers opportunities in wind, solar, biomass, and hydropower. By 2025, Indonesia aims to install 6.7 gigawatts (GW) of new renewable energy capacity by increasing the proportion of renewables from 7% to 15% of total energy production. Although Indonesia does not hold strong policy incentives for renewable energy, it provides companies with a stable political system and a growing economy which makes it easier to carry out business. Projects range from large-scale power plants with power purchase agreements (PPAs) negotiated with Perusahaan Listrik Negara (PLN), the state-owned utility company, to development projects coordinated by multilateral development banks or local governments. Studies have shown that electricity generation in Indonesia is also set to grow by 6.3% in 2014.
Existing energy market
Today, renewable energy accounts for a small but growing portion of Indonesia’s electricity portfolio. Most renewable energy comes from the hydropower and geothermal industries, but growth in other sectors is likely. As mentioned above, Indonesia owns 40% of the world’s known geothermal resource (an estimated 27,510 MW), which is more than any other country. As an island nation, Indonesia is well suited for hydropower from conventional hydro and emerging ocean-energy technologies. PLN estimates that Indonesia has 75,670 MW of large hydropower potential. Indonesia also offers significant solar power resources. It has an installed 12.1 MW of solar power.
Rural development and the need for energy security are the key drivers of this market. An electrification target of 90% is set by 2020 which will require an average of 1.3 million new electricity connections each year.
Current and upcoming projects
The Indonesian government’s desire to create investor certainty in this market has led the Ministry of Finance to offer business viability guarantee letters (BVGLs) for power projects under its Fast Track scheme, which is now in Phase II. Alongside Fast Track II, development of the Central Java Power Project, a 2000 MW coal plant is also underway. Several other PPP (Public Private Partnership) projects are currently under tender or in the early stage of development, including the Karama 450 MW hydropower plant, the Jambi 800 MW plant, and Boropalu geothermal.
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