Boston, MA -- (SBWIRE) -- 07/21/2012 -- BMI View: Nuclear power generation is not yet in Indonesia's immediate plans but remains a credible long-term option. In the meantime, coal-fired generation and the use of renewables, particularly geothermal power, are expected to be the key growth areas, although the country continues to develop gas-fired plants that undermine its gas export capability. There is huge hydro potential but only a limited development programme. Investment needs to at least meet the government's targets to avoid a steady increase in power import dependency.
Indonesia is moving slowly ahead with controversial plans to build its first nuclear power plant. Several schemes exist at the preliminary planning stage, but there is little evidence to suggest plant start-up during the current decade. The government says it has a total of US$8bn earmarked for four nuclear plants, which are intended to generate 6GW of power by 2025.
Key trends and recent developments in the Indonesian electricity market include:
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- Industry reports suggest that Indonesia holds up to 76GW of hydropower potential, but the country has yet to embark on the large hydro-electric programmes seen elsewhere in the Asia Pacific region. The capital cost involved has most likely deterred investors, who prefer to stick with conventional thermal schemes or embrace the concept of geothermal supply, with Indonesia claiming up to 27GW of additional generating capacity.
- During the period 2012-2021, Indonesia's overall power generation is expected to increase by an average of 7.82% year-on-year (y-o-y), reaching 346TWh. Driving this growth are average annual gains of about 7.97% in coal-fired and 14.12% in non-hydro renewables generation, augmenting average forecast increases of about 6.74% and 7.17% in the use of oil- and gas-fired electricity supply respectively.
- With 2011 real GDP growth expected to have been 6.3%, BMI forecasts average annual growth of 6.4% between 2012 and 2021. The population is expected to increase from 242.3mn to 264.5mn during the period 2012-2021, and net power consumption looks set to increase from an estimated 151.3TWh in 2011 to 319.4TWh in 2021. The average annual growth rate for electricity demand over our forecast period is expected to be 7.76%.
- We forecast a significant rise in net generation that should broadly match the trend in power consumption. However, there is downside risk to capacity expansion forecasts if the government cannot guarantee sufficient investment. We therefore expect Indonesia's power supply shortfall, which is assumed at 5.4TWh in 2011, to rise slowly but steadily. A broadly unchanged percentage of transmission and distribution losses at 10-11.0% will not help balance the market. The theoretical net import requirement by 2021 is put at 8.1TWh.
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