2014-03-30 14:04:21 - New Energy research report from Business Monitor International is now available from Fast Market Research
We are forecasting electricity generation in Indonesia to grow by 6.3% in 2014. This is lower than the 5-year historical average growth rate, which we attribute to slower economic growth and higher electricity prices. Our long-term growth forecasts for total electricity generation in Indonesia remain relatively unchanged, but we have significantly revised our long-term outlook for each of the different sources of electricity, based on a comprehensive review of the country's existing feedstock position and progress on the country's two Fast Track Programmes.
We are forecasting electricity generation in Indonesia to grow by 6.3% in 2014. This is lower than the 5- year historical average growth rate of 7.0%, which we attribute to slower economic growth and higher electricity prices. The
slowing economy had prompted us to revise down our 2013 electricity generation growth estimate from 7.2% to 7.1% in the previous quarter.
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Our long-term growth forecasts for total electricity generation in Indonesia remain relatively unchanged, with generation expected to grow an average of 6.5% per annum between 2014 and 2023. However, we have significantly revised our long-term outlook for each of the different sources of electricity, based on a comprehensive review of the country's existing feedstock position and progress on the country's two Fast Track Programmes (FTPs). We expect the share of oil-fired generation to decrease significantly over our long-term forecast period (from 2014 to 2023), and see coal-fired generation and non-hydropower renewables replacing it.
Key trends and developments in the Indonesian electricity market:
* The Indonesian government has raised the price of electricity by 15% since the start of 2013. All four increments of 4.3% were implemented successfully in January, April, July, and October.
* 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 76GW 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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