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Global Energy Mega Trends and
Renewable Energy Outlook for
Indonesia
Media Briefing
Energy Practice, Frost & Sullivan
Jakarta
30th March 2011
Forecast for various Renewable Technologies in Indonesia
Indonesia in the Global Context
Table of Contents
Contents
Global Energy & Power Mega Trends1
2
3
Best Practices and Action Points4
Beyond BRIC; N15 Next Game Changers
INDONESIA – In the global context
Nearly half of electricity to be generated in emerging regions by 2020
GLOBAL POWER GENERATION 2020 – Shifting Regional Fuel Balance
Coal-Fired GenerationCoal Production and Consumption
Outlook for the Energy & Power Industry: World’s Leading Coal Producers and Consumers (World), 2009
Source: BP Statistical Review of World Energy, 2010
China and the US are by far the biggest coal producers and consumers, but their production capabilities
approximately balance domestic need.
The situation in China is starting to change; coal production has peaked, as China clamps down on illegal and
unsafe mining. As a result, in 2010, China is forecast to became a net importer for the first time ever. Asia will be the
key region for coal demand in the next decade.
Satisfying that demand will be the resource wealthy nations such as Australia, South Africa and Russia. All three
countries have untapped reserves that could be exported.
Besides Asia, the EU will remain a major importer, although the amount will decrease, as the coal installed base
slowly declines.
0
50
100
150
200
250
300
Aust
ralia
India EU
Russ
ia
Indon
esia
South A
fric
a
Poland
Kaz
akhst
an
Colo
mbia
Ger
man
y
Ukr
aine
Japan
South K
orea
Taiw
an
Millio
n T
on
nes O
il E
qu
ivale
nt
(Mto
e)
Production Consumption
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
China US
Millio
n T
on
nes O
il E
qu
ivale
nt
(Mto
e)
Production Consumption
Renewable Energy
Evolution of Renewable Technologies
North America Asia PacificEurope
2009 2015 2009 2015 2009 2015
Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
34127 73
15337
198
2 15 13 80 3 23
9 16 21 10 15
Rest of the World
2009 2015
212
2 10
18 25
Wind
Power, GW
Solar Power
(PV + CSP),
GW
Biomass
Power, GW 11
Note: The graph is illustrative and is not drawn to scale.
*- Islandsbanki estimates based on data by IGA, Bertani, GEA
^- Geothermal Energy Association
**- Frost & Sullivan estimates
171 174 178 190 237 308 299 329
Large
Hydropower,
GW
Outlook for the Energy & Power IndustryEvolution of Renewable Installed Capacity (World), 2009 and 2015
2010 20202015
Power Demand
Growth
Major
Trend
New Age of
Natural Gas
Nuclear
resurgence
Renewable grid
parity
Energy
Efficiency
Smarter
Grids
Demand
Management
Energy Storage
Market
Liberalisation
Clean Coal Commercia-
lisation
1
2
3
4
5
6
7
8
9
10
Low demand in West
offset by boom in Middle East
Commercial CCS viability established
and large-scale development commences
Big expansion of
electric/hybrid vehicles
Global electrification
reaches 80%
Most power generation markets
fully liberalised
Focus on emerging
markets retail liberalisation
Towards a global
emissions trading systemGrowing trans-regional
power trading
Non-OECD countries
Surpass OECD
China becomes
largest consumer
CCGT favourite generation technology
Shale gas boom in USA
Growth in global
pipeline network
Massive boost in
LNG availability
Gas demand peaks in OECD but
keeps growing elsewhere
Massive nuclear expansion in China Nuclear renaissance in
some European countries
Global coverage for energy-
efficient lighting
Smart meters taking off
in US and Europe
Boosting breakthrough for
electric vehicles
Expansion of
virtual power plants
Smart meters reach most
consumers in developed world
Green buildings become norm
in developed world
Ultrasupercritical technology
becomes prevalent globally
Grid investments lead to
reduction in T&D losses
Carbon Capture and Storage
Pilot Plants
Grid-scale energy storage such as
pumped storage and CAES takes off
Improved existing battery technologies such as
Li-ion, Nickel-Zinc, and Molten Salt emerge
Major plant life extensions
56 reactors under
construction globally
480+ reactors
operational
Global penetration of micro-
renewables and micro-CHP
Solar and wind reach grid parity
in some EU markets and Japan
Grid parity reached in
majority of developed world
Renewables share in power generation
25% globally and 30% in EU
Peak shaving through energy efficiency and
promotion of embedded generation
Smart meters optimise consumer
usage patterns and flatten peak demand
Direct load control of smart
appliances via remote management
Top 10 Global Energy Trends in 2020
P45B-14
Supercapacitors and fuel cells
become cost competitive
Outlook for the Energy & Power Industry Top 10 Technologies to Watch For in 2020
Nuclear Power
Waste-to-energy
Advanced Batteries and Storage, Fuel Cells
SMART Grid
Bioenergy
Wind Power
HYDRO POWER
Energy
Management
Solar PV
Carbon Capture
and Storage
Top 10 Technologies of
the Future
Following are key technology
platforms that are poised to
have a profound impact on a
number of sectors across the
globe. These areas present a
potential high ROI
Source: Frost & Sullivan
Outlook for the Energy & Power Industry: Top 10 Technologies to Watch For (World), 2010
Applied R&D
Time
Technology
Development
Stage
Tech./Product
Development
Technology/
Product Decline
Tech.
DemonstrationTech./Product
Maturity
Note: This is an indicative graphical depiction of the various renewable energy technologies and their maturity stage.
Wind Power
Solar Power
Biomass Power
Geothermal Power
Marine Power
Every renewable energy
sector comprises a
range of technologies at
different stages of
development and
commercialisation.
They can be, however,
broadly grouped as
depicted by the chart
alongside.
Wind power along with
biomass and geothermal
technologies are most
mature.
Marine energy
technologies have to
bridge a big gap in order
to catch up with other
renewables.
Ma
rket
Siz
e
Source: Frost & Sullivan
Outlook for the Energy & Power Industry Technological Development of Renewable Technologies
Which of these are Relevant to Indonesia and When?
Country Relevance
Commercial
Viability Time Frame
High Opportunity
Application
Bioenergy VERY HIGH HIGH NOWBiomass, Biogas and
Biofuel
Solar PV HIGH LOW NOWRural offgrid
applications
Energy Management VERY HIGH MODERATE NOW Commercial & Industrial
CCS MEDIUM VERY LOW 5-10 Years Utility
Smart Grids MEDIUM LOW 3-5 yearsMicrogrids in remote
islands
HYDRO POWER VERY HIGH HIGH NOW Large and Mini Hydro
Waste to Energy HIGH MODERATE NOWMunicipal and Industrial
waste to energy
Nuclear Power MODERATE MODERATE 10 YEARS Utility scale power plant
Advanced Battery
Storage, Fuel CellsMEDIUM LOW 3-5 Years
Rural electrification,
Distributed generation
and commercial
Wind Power MEDIUM MEDIUM 2-3 Years
Small capacity wind
farms and potential
offshore
Source: Frost & Sullivan
11
Indonesia Energy Mix
Source: US Department of Commerce obtained from PLN
12
Indonesia Renewable Energy Potential
Despite this huge potential why is the sector not taking off and what is the
outlook for immediate future?
Key Gaps and Challenges
External Factor
Renewable
Energy
Regulatory
Framework
Fiscal
Incentives
Infrastructure Human
Capital
Awareness &
Adoption Innovation
Internal factorsExternal Factor
Trade
BarriersCompetition
Internal factors refer to the factors within
which government or business may have
control over it
External factors refer to external
element that will have an impact to
the growth of renewable energy
Market
Structure
Geothermal Energy Outlook
Imp
act
Ma
rke
t D
rive
rsM
ark
et
Res
train
ts
Imp
act
Reliable Power Supply
Large Potential Reserves
Land Acquisition Issues
Limited Information and Awareness
Project Development Risks
Short Gestation Period
Low
High
Low
High
Geothermal Energy – Drivers & Restraints in Indonesia
Source: Frost & Sullivan.
Need for more expertise Getting access to T&D infrastructure
16
Indonesia and the Philippines are well placed in terms of potential to further grow
their geothermal capacities. This will take time though…
Market Size and Potential for Geothermal Energy
Top Geothermal Countries by Capacity & Pipeline
Source : Emerging Energy Research
17
Indonesia has around 27 GW of geothermal potential overall and it is clearly in its
plans through to 2020…. Only 1,179 MW in operation as of 2008.
Market Size and Potential for Geothermal Energy
Indonesian Power Generation Plan, 2008 through to 2018– Java Bali System
18
Each and every country, including location within it, has it own set of risks that
must be closely identified, and appropriate mitigation strategies put in place
Specific Risks : Indonesia
• Credit worthiness of the buyer – PLN, and contract structures
• Land acquisition
• Clear legislative and fiscal laws applying to geothermal – tax, environmental, etc. –
change in law?
• Local issues where the plant is situated – legal, social, environmental and even
monetary
• Political risk, terrorism, currency risk, changes in law, i.e. nationalization, pricing
structures
Specific Risk Analysis of Indonesian Projects
Market Size and Potential for Geothermal Energy
The government has mandated that geothermal energy provide at least 9,500 MW
(5 percent) of the nation’s electricity by 2025
Biomass Energy Outlook
Imp
act
Ma
rke
t D
rive
rsM
ark
et
Res
train
ts
Imp
act
Reliable Power Supply
Abundant availability of biomass fuel
Financing constraints for
private biomass projects
Lack of infrastructure to gather and deliver biomass
Lack of strong policy support unlike other
Southeast Asian countries
Potential for cogeneration in
agriculture sector
Low
High
Low
High
Biomass Energy – Drivers & Restraints in Indonesia
Source: Frost & Sullivan.
Market Size and Potential for Biomass Energy
Indonesia has targeted 810 MW of biomass power by 2025, which is very modest a target
considering the potential
23
Biomass – Indonesia vs Rest of ASEAN
Indonesia has targeted 810 MW of biomass power by 2025, which is very modest a target
considering the potential
Solar Energy Outlook
Market Drivers & Restraints for Solar Power in Indonesia
Sourc
e: F
rost &
Sulli
van
Rank Driver 1-2 Years 3-4 Years 5-7 Years
1 Declining price to spur growth
3High solar radiation points to market
potential
4Rural and remote area electrification
opportunities stokes demand
Very High Very High
High High
Very High
High
MediumHigh High
Rank Restraint 1-2 Years 3-4 Years 5-7 Years
1Absence of policy framework restricts
growth
2 Lack of feed-in-tariff slowdown adoption
3Subsidized electricity from utilities
constricts market penetration
4
Threat of low cost substitutes for
distributed power generation makes
solar PV unattractive
5Lack of domestic value chain thwarts
market development
High High
High High
Medium Medium
High
High
Medium
Medium Low Low
Low LowMedium
Market Forecasts for Solar Power
Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan
Revenue Forecasts by Country
Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan
Solar PV Systems Market: Revenue Forecasts by Country (Southeast Asia), 2007-2017
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Reve
nu
es
($ M
illi
on
)
Year
Malaysia Indonesia Singapore Thailand The Philippines Vietnam Rest of Asia
Wind Energy Outlook
Imp
act
Ma
rke
t D
rive
rsM
ark
et
Res
train
ts
Imp
act
Rise in cost of fossil fuels
Small Wind Suitable for Urban
applications
High cost of offshore wind
power
Lack of T&D network constraints installation in
eastern islands
Limited Potential because of low wind
speeds
Growing environmental
awareness
Low
High
Low
High
Wind Energy – Drivers & Restraints in Indonesia
Source: Frost & Sullivan.
Market Size and Potential for Wind Energy
Indonesia has targeted 225 MW of wind power by 2025; Potential for offshore is much
higher if the technology becomes commercially competitive
Small Hydro Power Outlook
Imp
act
Ma
rke
t D
rive
rsM
ark
et
Res
train
ts
Imp
act
Technology maturity and local expertise
Potential Availability of sites
Delay in approval process
Economic viability concerns for some projects
Lack of consistent guidelines
Least Expensive Technology for rural
electrification
Low
High
Low
High
Small Hydro Power – Drivers & Restraints in Indonesia
Source: Frost & Sullivan.
Market Size and Potential for Small Hydro Power
Indonesia has a potential of 500 MW of small and mini hydro and the market installed
capacity is expected to reach 150 MW by 2015
Renewable Energy Policy Targets by other Asian countries
Country Policy Target
JapanTarget to reduce GHG emissions by 15.0 percent from its 2005 level by 2020
14 GW of solar PV by 2020
South Korea
11.0 percent of primary energy by 2030
300 MW by 2011 through its solar roof-top program
To invest $35.40 billion in the RE sector over the next five years
Taiwan RE to account for 15.0 percent of the installed capacity by 2025
Australia
South Australia
20.0 percent electricity from RE by 2020
33.0 percent electricity from RE by 2020
Thailand 20.0 percent electricity from RE by 2022 from 6.0 percent in 2009
The Philippines 4.5 GW of new RE capacity between 2003 and 2013
SingaporeTo reduce carbon emissions by 25.0 percent by 2012 compared to 1990 levels. 35.0 percent
energy efficiency goal and recycling rate to 70.0 percent by 2030.
MalaysiaNational Renewable Energy Policy and Action Plan: To increase RE from 1.0 percent to 5.5
percent of electricity supply by 2015.
Vietnam Low-carbon Master Plan: 5.0 percent of electricity generated from RE by 2020
Source: Frost & Sullivan
Best Practices that Indonesia can Adopt
2
3
4
5
6
7
1
Create separate programs targetting urban and rural end users (China)
Promote investmet and setting up of manufacturing and service facilities for renewable
power equipment (Malaysia, China, India)
Promote small and very small renewable program through financial incentives for
indigenous resources (Thailand)
Multiple schemes like generation based incentives, tax holidays, custom duty waivers and
rural electrification all rolled under one mission (e.g. National Solar Mission in India)
Encourage industries and commercial institutions to adopt cogeneration and hybrid
technologies utilizing one or more renewable energy sources
Make local communities stakeholders in the remote off grid projects (India, China)
Develop a consistent policy around feed in tariff and renewable portfolio standards
(Thailand, Japan)
Source: Frost & Sullivan
Areas for Focus
2
3
4
5
6
7
1
Rationalize subsidies for fossil fuels
Develop local industry expertise that would support the renewable energy market
development across value chain (both supply and services)
Government to create mechanisms (e.g soverign guarantee) that would encourage local
banks to finance renewable energy projects
Investor friendly procedures like single window clearance and standardized PPAs would
help accelerate the development
Strengthen data gathering process for technologies like geothermal, small hydro, wind etc
that would help government to set realistic targets
Provide necessary tools and training to local government agencies to implement
government policies and tenders for renewable energy development
Remove size threshold barriers (10 MW) for foreign investment into power projects
Source: Frost & Sullivan
Thank You
Dewi NurainiCorporate Communications
Indonesia
Phone : (021) 571.0838 / 571.3246
Email : [email protected]
For Additional Information
www.frost.com
