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Indonesia Power Report Q4 2011
Business Monitor International, Oct 2011, Pages: 56
BMI View:
Nuclear power generation is not yet in Indonesia's immediate plans but remains a long-term option. In the meantime, coal-fired generation and the use of renewables are expected to be the key growth areas, although the country continues to develop gas-fired plants that undermine its gas export capability. There is huge hydro potential but only a limited development programme.
Investment needs to at least meet the government's targets to avoid a steady increase in power import dependency.
Indonesia is moving ahead only slowly with controversial plans to build its first nuclear power plant, which could be operational by 2017/18 but seems certain to slip beyond the end of the decade. The government says it has a total of US$8bn earmarked for four nuclear plants, which are intended to generate 6GW of power by 2025.
Industry reports suggest that Indonesia holds up to 76GW of hydropower potential, but the country has yet to embark on the large hydro-electric programmes seen elsewhere in the Asia Pacific region. The capital cost involved has most likely deterred investors, who prefer to stick with conventional thermal schemes or embrace the concept of geothermal supply, with Indonesia claiming up to 27GW of additional generating capacity.
During the period 2011-2015, Indonesia's overall power generation is expected to increase by an average of 7.2% year-on-year (y-o-y), reaching 232TWh. Driving this growth are average annual gains of about 8% in coal-fired and renewables generation, augmenting average forecast increases of about 6% and 7% in the use of oil- and gas-fired electricity supply respectively.
With 2011 real GDP growth expected to come in at 5.9%, BMI forecasts average annual growth of 6.5% between 2011 and 2020. The population is expected to increase from 235.7mn to 247.5mn during the period 2011-2015, and net power consumption looks set to increase from 159.6TWh in 2011 to 217.2TWh in 2015.
The average annual growth rate for electricity demand over BMI forecasts period is expected to come in at 7.95%, but it is expected accelerate somewhat later in the decade to an average 8.14% over 2016-2020.
BMI forecasts a rise in net generation; however, growth will lag the underlying demand trend. BMI therefore expects Indonesia's power supply shortfall, which is forecast at 3.3TWh in 2011, to rise steadily. A broadly unchanged percentage of transmission and distribution losses at just under 11.0% will not help balance the market.
The theoretical net import requirement by 2015 is put at 9.9TWh, which could nearly double by 2020 unless supply growth exceeds BMI's expectations.
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