Recently released market study: Indonesia Power Report Q4 2013

Fast Market Research recommends "Indonesia Power Report Q4 2013" from Business Monitor International, now available

[UKPRwire, Fri Nov 01 2013] We have revised down our 2013 growth forecast for electricity generation in Indonesia, due to a poor near-term economic outlook. This has also led us to moderate our long-term forecasts. The government's plan to increase electricity prices in 2013 could result in significant changes to the industry, but we are unsure if the last increment planned for October will be executed.

We have revised down our 2013 growth forecast for electricity generation in Indonesia to 7.2%, down from a previous forecast of 7.7%. This downward revision was prompted by our view that the country's near-term economic outlook will take a turn for the worse. However, we have maintained our capacity forecasts as around half of the capacity from the country's first 10,000-megawatt (MW) fast-track power programme is expected to come online over the course of the year.

We have also slightly moderated our long-term forecasts for the Indonesian power sector in light of poorer economic prospects in 2013 and are now forecasting generation growth to average 7.1% per annum between 2013 and 2022 (down from a previous forecast of 7.2%). Long term, we continue to expect the share of coal in total energy generation to rise and the shares of gas and oil to fall. This is in spite of the policy reversal on banning low-grade coal exports in 2014.

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Key trends and developments in the Indonesian electricity market:

* In September 2012, an Indonesian parliamentary commission approved a government plan to raise the price of electricity by 15% by the end of 2013. Three increments of 4.3% each have been implemented successfully in January, April, and July so far.
* Perusahaan Listrik Negara (PLN) has announced its intention to acquire coal mines, due to the strong historical and forecasted growth in coal consumption. Its subsidiary, PLN Batubara, will perform acquisitions with an expected budget of INR10trn (US$1.05bn) to finance acquisitions of entire mines or strategic stakes.
* The feed-in tariff for geothermal energy was raised for a second time in June 2013. As a result, we believe that private producers will be more interested in the sector, but that there is still room for further tariff increases.

Industry reports suggest that Indonesia holds up to 76 gigawatts of hydropower potential, but the country has yet to embark on the large hydroelectric programmes seen elsewhere in the Asia Pacific region. The capital costs involved have most likely deterred investors that prefer to stick with conventional thermal schemes or embrace geothermal supply.

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