This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/1/2017

Overview
Unit: USD millions

 

2014

2015

2016

2017(est.)

Total Market Size

2,917

3553

4014

4296

Total Local Production

680

731

826

884

Total Exports

524

574

649

694

Total Imports

2,761

3396

3837
 

4106

Imports from the U.S.

244

301

340

364

Data Sources:  Central Bureau of Statistics Indonesia, Trade Stats Express
          
The power industry in Indonesia has experienced 7–9 percent annual growth in the last five years. According to the Ministry of Energy and  Mineral  Resources (MEMR),  by  December 2016,  the  electrification  ratio  of Indonesia reached 91.16%. Papua and East Nusa Tenggara are the regions with the lowest electrification ratios, at 47.78% and 58.93%, respectively, according to 2016 MEMR data.

In end 2016, the installed generation capacity was 58,541 MW, with 40,461 MW (75%) generated by state-owned National Electric Company (PLN) and the remainders, 13,254 MW and 2,434 MW are produced by independent power producers (IPPs) and private power utility (PPUs) respectively. The national transmission system has approximately 49,799 km of lines and 77,514 MVA of transmission transformer capacity.  The distribution system includes approximately 946,101 km of lines and 41,987 MVA of distribution transformer capacity.

Indonesia imported $3.8 billion of electrical power equipment in 2016, and U.S. products constituted 26% of that market.  The other major suppliers include China, Singapore, Japan, Korea, Malaysia, France and Germany.  Indonesian companies typically import U.S. products directly or through an agent/distributor in Singapore.

In 2014, as part of his focus on developing infrastructure to boost economic growth, President  Jokowi  announced  a target of adding  35  GW  power generation capacity by 2019, to achieve the national electrification ratio target of 97.7%. Current market estimates predict that between 7 to 9 GW of power are likely to be actually completed during this period.

In September 2009, the Indonesian government enacted Electricity Law No. 30, 2009.  Under the new law, PLN no longer will hold the monopoly on supplying and distributing electricity to end customers. A license to provide electricity for public use may be granted to private business entities subject to a “right of first refusal” provided to state-owned companies. In addition, the government issued an implementing regulation, Government Regulation (PP) No. 12/2012, which allows private companies to participate in transmission and distribution. Under this regulation private companies are allowed to provide electricity from their generation plants for 30 years. Although these two regulations do provide a potential path for ex-PLN power supply it should be noted that in practice the government is hesitant to grant such licenses.

Power Working Group
U.S. Embassy Jakarta has established the U.S. Power Working Group (USPWG) as a platform to support and showcase U.S. firms interested in the 35 GW Project and other commercial opportunities. The working group provides a forum for U.S. firms to engage with the Indonesian government to promote their products and services in light of Indonesias power infrastructure goals. Working group participants include power industry partners and associations who together can share best practices and formulate strategies to address the expansion of Indonesias energy infrastructure.

To apply, contact Meiyi Tjugito at Meiyi.Tjugito@trade.gov.

Leading Sub-Sectors
U.S. companies are strong competitors for turbines and turbine parts, transmission and distribution equipment, microgrid equipment, energy saving and efficiency technologies and other products.

Opportunities                 
The new National Electric Generation Plan (RUPTL) 2017-2026 forecasts that electricity demand in Indonesia will grow 8.3 % annually. According to RUPTL estimates, by 2026, electricity demand will reach 480.2 terawatt hours (TWh) from 78.4 million customers and the electrification ratio will reach 99.4%.

Achieving a total of 35 GW would require investment of an estimated US$ 72.9 billion. According to current plans, 5 GW will be procured by PLN and 30 GW will be developed by the private sector or IPPs. By the Ministry of Energy’s 2016 estimation, the full 35 GW Project would require the development of 291 power plants, 732 transmission lines (75,000 set tower), and 1375 unit substations.

 

Even if the 35 GW plan is not fully achieved the construction of power plants, transmission and distribution lines in Indonesia should bring significant commercial opportunities for U.S. companies. Areasof strong potential include the supply of engineering services and equipment such as turbines, substations, transmission, transformers and distribution equipment. In addition, electrification projects will create increased opportunities for renewables and gas, including clean and lower emissions coal technologies.


Following the 2016 change in energy minister from Sudirman Said to Ignatius Jonan the Indonesian government has implemented significant changes to renewable energy (RE) policy. Under the previous policy regime the Indonesian Ministry of Energy and Mineral Resources (MEMR), incentivized RE through high fixed feed-in-tariffs (FIT) through Minister Regulation (Permen) ESDM No. 19/2016 However, government fiscal constraints resulted in the acceptance of almost no power purchase agreements (PPA) by the national utility.  Consequently, MEMR has initiated a new policy regime under which RE projects have to compete on a strictly economic basis.  The new regulation establishes a benchmark cost for power generation within each region. So long as a project proposal is below 85% of the regional cost then PLN is authorized to accept the project through direct negotiation between the project developer and the off-taker. Currently RE contributes 11.9% to the Indonesia’s energy mix.  However, the national energy plan provides an ambitious RE target of 22.4% by 2026.

In 2016 the Indonesian government issued a new framework policy to incentivize the electrification of remote areas.   Minister Regulation (Permen) ESDM No. 38/2016 provides a regulatory framework for private companies to develop independent microgrid utilities in remote and underserved locations.  Under 38/2016 a developer can theoretically combine a group of villages and communities into a bundled packet and apply for the issuance of a license to own and operate an independent utility concession. It should be noted that Indonesian political dynamics mean that the actual issuance of such a license is likely to be quite challenging.

Web Resources
Directorate General of Electricity, Ministry of Energy and Mineral Resources
Directorate General of New & Renewable and Conversation Energy, Ministry of Energy and Mineral Resources 
PT Perusahaan Listrik Negara (PT PLN)

For questions or more information, please contact Mario Simanjuntak at Mario.Simanjuntak@trade.gov and Yanuar Wibisana at Yanuar.Wibisana@trade.gov

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Indonesia Energy Trade Development and Promotion