Indonesia Power Report Q2 2016
BMI View: We forecast robust and sustained growth in Indonesia's power sector. Demand on the nationalpower network is growing rapidly - a result of both economic and population growth. The government isunder significant pressure to ensure that supply catches up to demand, and further to create a surplus forenergy exports. Pressure is also growing to develop greater renewable energy capacity, particularlyfollowing the effects of the pollution under the Southeast Asian haze crisis in late-2015. The investmentenvironment continues to improve and we are seeing a growing number of power plant projects entering thepipeline, primarily focused on coal-fired power but with a significant number of hydropower andgeothermal projects planned or underway. We do note, however, that despite ambitious plans, manyprojects have been subject to delays and while we expect generation and capacity to grow throughout theforecast period, we do not expect current government targets to be achievable.
Latest Updates And Structural Trends
Some progress is being made in the governments 35,000MW programme. State-owned utilityPerusahaan Listrik Negara (PLN) announced it expects to complete a 100MW gas-fired power plant inthe country's province of Gorontalo in February 2016, the first to be commissioned under the expansionprogramme.
Geothermal is another substantial growth area. In December 2015 the government launched the tenderprocesses for development contracts of three geothermal power plants in Way Ratai, Lampung; Maranain Central Sulawesi; and Gunung Talang- Bukit Kili, West Sumatra. Exploration is expected to takearound five years. The projects, worth a total of around USD380mn, are expected to start electricitygeneration in 2022.
On December 8 2015, President Joko Widodo launched the first of the five new floating power stationscommissioned to address the country's growing demand for electricity. Widodo stated that the other fourvessels will be delivered over the next six months. The vessels will primarily serve eastern Indonesia,including the islands of Sulawesi, Halmaherah, Maluku and Papua.
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