Indonesia Power Report Q4 2009

This new Indonesia Power Report from BMI forecasts that the country will account for 2.18% of Asia Pacific regional power generation by 2013, with a theoretical surplus of generation that should mean limited reliance on power imports. However, due to chronic system inefficiencies and wastage, the country struggles to provide adequate generation for its needs. BMI’s Asia Pacific power generation assumption for 2008 is 7,116 terawatt hours (TWh), representing an increase of 3.2% over the previous year.

We are forecasting an increase in regional generation to 9,149TWh by 2013, representing a rise of 28.6%. Thermal power generation in 2008 totalled an estimated 5,590TWh, accounting for 78.6% of the total electricity supplied in the Asia Pacific region. Our forecast for 2013 is 7,046TWh, implying 26.0% growth that reduces the market share of thermal generation to 77.0%. This is thanks largely to environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. Indonesia’s thermal generation in 2008 was around 138TWh, or 2.47% of the regional total.

By 2013, the country is expected to account for 2.60% of the region’s thermal generation. For Indonesia, oil is the dominant fuel, in 2008 accounting for 46.1% of primary energy demand (PED), followed by gas at 27.5%, coal at 24.2% and hydro at 2.2%. Regional energy demand is forecast to reach 4,862mn tonnes of oil equivalent (toe) by 2013, representing 25.1% growth from the 2008 level. Indonesia’s 2008 market share of 3.20% is set to fall to 3.04% by 2013.

Indonesia is moving ahead slowly with controversial plans to build its first nuclear power plant, which could be operational by 2017. In BMI’s enlarged and updated Power Business Environment rating, Indonesia is ranked sixth, behind Vietnam. This reflects its low level of energy import dependence and its healthy power consumption growth prospects. However, several country risk factors offset the industry strength, and the country may struggle to catch up with Vietnam over the near term. Both Malaysia and the Philippines, just one point below, pose a threat over the medium term. BMI is now forecasting Indonesian real GDP growth averaging 4.80% per annum between 2008 and 2013, with a 2009 forecast of 4.00%.

Population is expected to expand from 234.5mn to 248.1mn over the period, with GDP per capita and electricity consumption per capita forecast to increase by 110% and 18% respectively. The country’s power consumption is expected to increase from an estimated 124TWh in 2008 to 155TWh by the end of the forecast period, theoretically meaning a surplus in generation which is forecast to rise from an estimated 27TWh in 2008 to 44TWh in 2013, assuming 5.8% annual average growth in electricity generation. Chronic system inefficiencies and wastage mean the country will continue to struggle to provide adequate generation. Between 2008 and 2018, we are forecasting an increase in Indonesian electricity generation of 76.4%, which is among the highest for the Asia Pacific region. This equates to 33.8% in the 2013-2018 period, up from 31.9% in 2008-2013. PED growth is set to rise from 18.9% in 2008-2013 to 24.0%, representing 47.4% for the entire forecast period. An increase of 92.3% in hydro-power use during 2008-2018 is a key element of generation growth. Thermal power generation is forecast to rise by 74.9% between 2008 and 2018. More details of the long-term BMI power forecasts can be found at the end of this report.