Frost & Sullivan Indonesia 2012 Indonesia Power Sector Outlook

2012 Indonesia Power Sector Outlook

Energy & Power Systems Practice

Frost & Sullivan Asia Pacific

Jakarta

25th April 2012

2

Executive Summary—CEO’s Perspective

2 Capital expenditure on T&D expansion

about US$11.1 billion

3 Increasing bilateral cooperation for

renewable energy development (i.e.

Finland and New Zealand)

4

With a 30% renewable energy

objective by 2030, the medium term

opportunity us about US$12.4 billion by

2020

5 Country investment rating upgrades

generating more interest among global

investors

1 Potential investment for power

generation is about US$33.5 billion by

2017

Source: Frost & Sullivan analysis.

3

Indonesia Power Sector – Key Stakeholders

Source: PLN

59824, 41%

27157, 18%

50985, 35%

9330, 6% Energy Sold (GWh) by Type

of Customers (2010)

Residential

Business

Industrial

Others

131710, 78%

38076, 22% Energy Production(GWh)

in 2010

PLN

PLN Purchase from IPP & Captive Power Plant

• The major consumer of energy is

the residential sector. 78% of the

production is by PLN and its

subsidiaries, the rest 22% is by

IPPs and captive power plants.

• The IPP, merchant power and

captive power market has to

develop further for Indonesia to

meet the growing power demand

• Distributed Generation will play a

large role if Indonesia has to

achieve full electrification

• Renewable Energy and Microgrid

will meet some of the future

demand

4

Indonesia Per Capita Electricity Consumption – Way to Go!

The power consumption per capita is the lowest in the region despite the

abundant natural resources present

0

2000

4000

6000

8000

10000

12000

14000

Indonesia Vietnam Philippines Thailand Malaysia Singapore India China USA

kWh per capita

Source: World Bank

5

Source: Frost & Sullivan

Industry Challenges

Inconsistent government policies

2

1

4

5 Low level of awareness hinders new

market opportunities

Limited presence of trained system

integrators curtails growth

Fuel and power subsidy

threatens market reach

Limited local supply

capability makes the

projects expensive

High capital costs limit market expansion

6

7 Lack of credit availability to

technologies not well established in Indonesia

3

8

Improper maintenance of

systems affects end-user

confidence

Renewable Energy Market Development Challenges

6

Geothermal dominates RE sourced power electricity production and will continue doing so

up to 2016.


78% 76%72% 72% 69%

65% 62%

9% 11%12% 12%

13%15% 16%

12%14% 13% 15%

16% 17%

1% 1% 1% 2% 2% 2% 2%1% 1% 1% 2% 2%1% 1%12%

2010

Solar 100%= 1537 1728 1932 2390 2608

2011 2012 2013 2014 2015 2016

Geothermal

2914 3256

Electricity Generation Mix Using Renewable Energy:

Total Installed Capacity (MW)

Biomass

Biogas

Co-

generationl

Wind

• Geothermal usage is

expected to increase and

would become the

Indonesia’s largest

renewable energy electricity

source that connected to

the main grid

• Biomass and cogeneration

is in second and third place

providing significant

electricity renewable energy

source to Indonesian main

grid

• Wind ,Solar and Biogas is

not yet connected to main

grid and each capacity is

below 2 % of total national

RE capacity as it is in early

stage of development.

Market Outlook – Renewable Energy Mix

7

CAPEX

USD Million

Annual Capacity Additions

MW


Capex

0

100

200

300

400

500

600

0

50

100

150

200

250

2008 2009 2010 2011 2012 2013 2014 2015 2016

The sector is expected to record an annual growth rate of 12.8%. Government has plans to invest heavily on the geothermal sector as part of the 10,000 MW fast track program. The IPPs are expected to be encouraged to invest in the geothermal projects.

Market Outlook – Geothermal Power Generation

• The total installed capacity is

expected to be 2.3 GW by

2018. The sector is expected

to grow at a CAGR of 12.8%

during the period 2008-2020.

• About 39% of the capacity

(3,977 MW) in second crash

program will geothermal

• PLN is expected to share the

risks of the projects with the

private players.

• The Sarulla 1 plant in North

Sumatra, with expected total

capacity of 3x110 MW, will be

the biggest geothermal power

plants.

8

The solar power market is expected to demonstrate significant growth beyond 2012

0 0 0

1

5

7

8.5

0

1

2

3

4

5

6

7

8

9

2010 2011 2012 2013 2014 2015 2016

0

10

20

30

40

50

60


MW

CAPEX

USD Million

• Potential Solar power in

Indonesia is very large,

reaching above 1 TW.

• Average radiation intensity

of solar are 4.8

kWh/m2/day,

• Key drivers are

electrification of remote

islands and substitution of

diesel generators

• Projects available are

mostly in pilot stage and

for feasibility purposes.


Market Outlook – Solar PV

9

No commercial scale wind farm has been built in Indonesia as it is in the early stage of

development, most of the projects available are mostly for feasibility study purposes

and prototype projects

0 0 0

10

12

15

18

0

5

10

15

20

25

30

35

40

0

2

4

6

8

10

12

14

16

18

20

2010 2011 2012 2013 2014 2015 2016

Installed Capacity for onshore large

wind power systems

MW

CAPEX

USD Million


• Wind energy in Indonesia

has potential up to 9.3

GW

• Most of wind energy

projects are still at a pilot

project stage and more

studies are needed to

establish the commercial

scale wind projects.

• A private company Viron

Energy has signed a PPA

with PLN to build 10 MW

wind energy electricity

plant in West Java. If

succeeded the capacity

will be increased

gradually up to 100 MW in

5 years time.

• PLN also started several

projects but mostly for

pilot projects purposes.

Market Outlook – Wind Energy

10

The CAPEX for biogas power in Indonesia was valued at $6.3 million in 2010 and is likely to

reach $32.5 million by 2016 at a CAGR of 31.6%.


• Biogas technology has

been developed for quite

sometime but subjected

more to waste control

rather than electricity

generators.

• Electricity projects are

mostly localized small

capacity projects for own

usage and not yet

connected to national main

grid.

• Other projects also

developed by local cattle

cooperatives.

2.5

3.8

5.5

8

10

12

13

0

5

10

15

20

25

30

35

0

2

4

6

8

10

12

14

2010 2011 2012 2013 2014 2015 2016

Installed Capacity

MW

CAPEX

USD Million

Market Outlook – Biogas Power

11

The biomass power market was estimated at $ 53 million in 2010, and is likely to reach $

213 million by 2016, at CAGR of 26.2 percent from 2010 to 2016


24

34

4855

63

85

97

0

50

100

150

200

250

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016


MW

CAPEX

USD Million • Indonesia estimated biomass

energy potential: 49,810 MW

(50 GW)

• Utilization of biomass for

electricity energy is still very

low, not yet connected to

main grid. Mostly used for

private own purposes

• Ministry of Energy and

Mineral Resources of short-

term programs include

promotion of investment,

fiscal and tax incentives,

energy pricing policies,

information dissemination,

and research and

development.

Market Outlook – Biomass Power Generation

12

The CAGR for CAPEX during the period 2010-2016 is expected to be around 17.3% with

gas and coal fired dominates the type of energy used.


33

4347

50

68

77

86

0

20

40

60

80

100

120

140

160

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 2014 2015 2016


MW

CAPEX

USD Million

• Most of cogeneration

installed capacity are

combination of gas and

coal fired plants

• Several of the upcoming

projects will be industrial

cogeneration for captive

purposes

• Opportunity for urban

based cogeneration or

trigenerataion systems

though quite compelling is

still far from development

Market Outlook – Cogeneration

13

10.2%

25.1%

23.4%

37.8%

3.5%

The Philippines Indonesia Thailand Vietnam Lao PDR

•Vietnam is expected to be the highest

contributor to the new additional capacity by

IPPs between 2010 and 2015. It accounts for

15,076 MW.

•Indonesia is the second largest contributor,

owing to the second phase of the 10,000

MW acceleration program.

•Thailand falls a little short of Indonesia with

total of 9,336 MW. Installed by IPP’s

IPP Market: Proportion of New Capacity Addition by IPP (Southeast Asia), 2010-2015


How does Indonesia compare in ASEAN for IPPs

14

Frost & Sullivan sees that Indonesia still country risk for IPP market is higher than Thailand and similar with

Philippine and Vietnam. The most critical risks to an IPP are market risk, land acquisition risk and financing

risk given the current scenario in Southeast Asia.

Risk Evaluation of IPP Market in Indonesia


IPP Market: Risk Assessment Summary (Southeast Asia), 2010

15

The interconnection will drive more efficiency into the system and help to

better manage the discrepancies in demand supply with the anticipated

growth

Java Bali Sumatra

interconnection

Implications for Market Participants

Since it is impossible to extend the grid to all far flung regions of

Indonesia, small scale off grid renewable energy generation should form a

key part of Indonesian policy

Disbursed Renewables

With average project cost at $2.4 to $3.2 per MW, which is lower than the

international costs, Indonesia can attract significant investments with more

favorable government policy support

Geothermal power

development

Other regional markets like Vietnam and now Myanmar are vying for

international financing in power sector. Without more liberalization of the

power sector Indonesia risks loosing out to other countries.

Other Regional Markets

16

Q&A