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Indonesia Power Generation Market Needs Significant Investment to Meet Electricification Target of 2020

Transparency Market Research has published a new report "Power Generation Market by Technology - Indonesia Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 - 2022" to its report store.


Albany, NY -- (SBWIRE) -- 06/23/2015 -- The Indonesia power generation market is still lagging behind the electricification target of 2020. At present, the country is experiencing a phase of rapid economic growth and to meet this growth, there needs to be an equivalent growth in the volume of electricity supply, since a country's economic growth is highly dependent on the development of its energy sector. In the year 2003, the government of Indonesia set the target of 90% electricity coverage and decreasing greenhouse emissions by 26% by 2020. Though such targets have served to highlight the need for substantial investment in the Indonesia power generation market along with the vast opportunities for investors, the legal framework in the country is hampering the growth of this market.

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The government in Indonesia has implemented numerous laws and regulations to stimulate power generation capacity. As a result, the government has introduced several policies and financial support systems, which will stimulate renewable power generation in the country. For example, feed-in-tariffs (FITs) for the production of renewable energy will deliver moderate ROI (Return on Investments) for foreign investors and independent power producers (IPPs) are willing to invest in the renewable power generation sector of the country. Nevertheless, this system is still not straightforward enough for private firms to invest and operate in this field.

Coal-fired power generation technology will dominate the Indonesian market. The coal-fired power generation sector held a massive 54.7% share of the Indonesia power generation market in 2013. By 2025, it is expected that the generation capacity of electricity via thermal coal-fired plants in Indonesia will double. Coal is expected to remain the most important fuel in the power generation market of Indonesia throughout the forecasting horizon of 2014-2022. Other technologies in the Indonesia power generation market utilize natural gas, oil, geothermal energy, hydro power, and combined cycle power.

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The large reserves of geothermal energy in Indonesia are not yet fully utilized. The demand for electricity in this nation is increasing by approximately 9.0% each year, and around 6 GW of additional power generation capacity is required to meet this demand. The estimated potential of Indonesia's geothermal power generation sector is around 28 GW. The renewable power generation sector in Indonesia needs to double in capacity in order to meet the renewable energy target of 15% by 2025. The major portion of this power generation is expected to come from the geothermal sector, while significant contributions are also anticipated from hydropower, wind, and solar sector. In 2013, combined cycle power plants held 20.0% of the Indonesia power generation market capacity.

The Indonesia power generation market is expected to reach total capacity of 90.1 GW by 2025, at a CAGR of 8.5% during the forecast period. Revenue-wise, the Indonesia power generation market was estimated at US$14.1 billion in 2013 and is expected to reach a total value of US$63.6 billion in 2022 at an 18.7% CAGR during the forecast horizon. Even though investments will help expand power generation infrastructure in Indonesia, this sector is still relatively underdeveloped and is lagging behind other sectors in the country. To increase power generation capacity, the Indonesian government is planning to further increase the electricity tariff in the country to decrease subsidies.

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Perusahaan Listrik Negara (PLN) accounted for over 80% of the total electricity transmission in the country. On the other hand, IPPs fulfill the remaining demand for energy in the nation. The key companies operating in the Indonesia power generation market are Alstom, PT Arutmin Indonesia, Asia Resource Minerals, Hyundai Engineering, Chevron Indonesia, Mitsubishi Heavy Industries, PT Pertamina Geothermal Energy, PT Pembangkitan, Siemens AG, PT Wartsila Indonesia, PT Cirebon Electric Power, PT Jawa Power, PT Geo Dipa Energi, and PT Harum Energy.

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