This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 2/4/2019

Overview

                                                                                                                        Unit: USD millions

 2015201620172018 (Estimated)
Total Local Production731826850901
Total Exports574649559592
Total Imports3396383741064352
Imports from the US
 
754511593628
Total Market Size3553401443974661

Data Sources:  Global Trade Stats, Central Bureau of Statistics Indonesia
 
The power industry in Indonesia has experienced around 3.3% annual growth in the last year. However, according to the Ministry of Energy and Mineral Resources (MEMR), by December 2017, the electrification ratio of Indonesia has reached 94.91%. Papua and East Nusa Tenggara are the regions with the lowest electrification ratios, with 60% according to 2017 MEMR data.

At the end of 2017 total installed generation capacity was 60 GW, with 45 GW (75%) generated by state-owned PT Persero, the national electric company (PLN), and the remainder, 12.5 GW and 2.5 GW 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 $4.1 billion of electrical power equipment in 2017, and U.S.-origin products constituted around 15% of the total.  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%. As of the date of this report , Indonesia is not on track to achieve either target. The current Indonesian administration has a general policy of increasingly strong support for national control over both power generation and distribution.  Furthermore, a severe lack of transparency combined with local content restrictions severely limits opportunities for U.S. suppliers.

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. Working group participants include power industry partners and associations who together can share best practices and formulate strategies to address the expansion of Indonesia’s 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, smart grid technology, microgrid equipment, energy saving and efficiency technologies and other products.

Opportunities

The new National Electric Generation Plan (RUPTL) 2018-2027 forecasts that electricity demand in Indonesia will grow 6.86 % annually.    According to RUPTL estimates, by 2027, electricity demand will reach 443 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. 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 some commercial opportunities for U.S. companies.  Areas of potential include the supply of equipment such as turbines, substations, transmission, transformers, smart metering 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 23% by 2027.

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:
http://www.djlpe.esdm.go.id/
 
Directorate General of New & Renewable and Conversation Energy, Ministry of Energy and Mineral Resources: http://www.ebtke.esdm.go.id/
PT Perusahaan Listrik Negara (PT PLN): http://www.pln.co.id/
For questions or more information, please contact Mario Simanjuntak at
Mario.Simanjuntak@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