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Global energy mega trends & renewable energy outlook for indonesia

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Frost & Sullivan analysis of the Global Energy Mega Trends and Renewable Energy Outlook for Indonesia.

Frost & Sullivan analysis of the Global Energy Mega Trends and Renewable Energy Outlook for Indonesia.

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  • 1. Global Energy Mega Trends andRenewable Energy Outlook for Indonesia Media Briefing Energy Practice, Frost & Sullivan Jakarta 30th March 2011
  • 2. Table of Contents 1 Global Energy & Power Mega Trends 2 Indonesia in the Global Context 3 Forecast for various Renewable Technologies in IndonesiaContents 4 Best Practices and Action Points
  • 3. INDONESIA – In the global contextBeyond BRIC; N15 Next Game Changers
  • 4. GLOBAL POWER GENERATION 2020 – Shifting Regional Fuel BalanceNearly half of electricity to be generated in emerging regions by 2020
  • 5. Coal-Fired Generation Coal Production and Consumption Outlook for the Energy & Power Industry: World’s Leading Coal Producers and Consumers (World), 2009 1,800 300 Production Consum ption Production Consum ption 1,600Million Tonnes Oil Equivalent (Mtoe) Million Tonnes Oil Equivalent (Mtoe) 250 1,400 1,200 200 1,000 150 800 600 100 400 50 200 0 0 China US EU ia n nd an n a a ne ia y a ea ia pa si bi ic an ta d al es or iw la ai us In om fr hs tr Ja m kr Po on A K Ta us R ak er ol U h h d A G ut ut az C In So So K  China and the US are by far the biggest coal producers and consumers, but their production capabilities approximately balance domestic need.  The situation in China is starting to change; coal production has peaked, as China clamps down on illegal and unsafe mining. As a result, in 2010, China is forecast to became a net importer for the first time ever. Asia will be the key region for coal demand in the next decade.  Satisfying that demand will be the resource wealthy nations such as Australia, South Africa and Russia. All three countries have untapped reserves that could be exported.  Besides Asia, the EU will remain a major importer, although the amount will decrease, as the coal installed base slowly declines. Source: BP Statistical Review of World Energy, 2010
  • 6. Renewable Energy Evolution of Renewable TechnologiesIndustry Outlook for the Energy & Power Evolution of Renewable Installed Capacity (World), 2009 and 2015 North America Europe Asia Pacific Rest of the World 2009 2015 2009 2015 2009 2015 2009 2015Wind 127 153 198 34 73 37 12Power, GW 2Solar Power(PV + CSP), 2 15 13 80 3 23 2 10GWBiomassPower, GW 9 11 16 21 10 15 18 25LargeHydropower, 171 174 178 190 237 308 299 329GWNote: The graph is illustrative and is not drawn to scale.*- Islandsbanki estimates based on data by IGA, Bertani, GEA^- Geothermal Energy Association**- Frost & Sullivan estimates Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
  • 7. Top 10 Global Energy Trends in 2020 Major Trend 2010 2015 2020 Power Demand Low demand in West Non-OECD countries China becomes Global electrification Big expansion of1 Growth offset by boom in Middle East Surpass OECD largest consumer reaches 80% electric/hybrid vehicles New Age of Massive boost in CCGT favourite generation technology Growth in global Gas demand peaks in OECD but2 Natural Gas LNG availability Shale gas boom in USA pipeline network keeps growing elsewhere Clean Coal Ultrasupercritical technology Commercial CCS viability established Carbon Capture and Storage3 Commercia- lisation Pilot Plants becomes prevalent globally and large-scale development commences Nuclear 56 reactors under Massive nuclear expansion in China Nuclear renaissance in 480+ reactors4 resurgence construction globally Major plant life extensions some European countries operational Renewable grid Solar and wind reach grid parity Grid parity reached in Renewables share in power generation5 parity in some EU markets and Japan majority of developed world 25% globally and 30% in EU Smarter Smart meters taking off Boosting breakthrough for Expansion of Smart meters reach most6 Grids in US and Europe electric vehicles virtual power plants consumers in developed world Energy Green buildings become norm Grid investments lead to Global coverage for energy- Global penetration of micro-7 Efficiency in developed world reduction in T&D losses efficient lighting renewables and micro-CHP Improved existing battery technologies such as Supercapacitors and fuel cells Grid-scale energy storage such as8 Energy Storage Li-ion, Nickel-Zinc, and Molten Salt emerge become cost competitive pumped storage and CAES takes off Peak shaving through energy efficiency and Smart meters optimise consumer Direct load control of smart9 Demand Management promotion of embedded generation usage patterns and flatten peak demand appliances via remote management Most power generation markets Focus on emerging Growing trans-regional Towards a global10 Market Liberalisation fully liberalised markets retail liberalisation power trading emissions trading system P45B-14
  • 8. Outlook for the Energy & Power Industry Top 10 Technologies to Watch For in 2020Outlook for the Energy & Power Industry: Top 10 Technologies to Watch For (World), 2010 Advanced Batteries and Storage, Fuel Cells SMART Grid Waste-to-energy Nuclear Power Top 10 Technologies of the Future Bioenergy Following are key technology platforms that are poised to have a profound impact on a Wind Power number of sectors across the HYDRO POWER globe. These areas present a potential high ROI Carbon Capture and Storage Energy Management Solar PV Source: Frost & Sullivan
  • 9. Outlook for the Energy & Power IndustryTechnological Development of Renewable Technologies  Every renewable energy sector comprises aTechnology Tech. range of technologies at Applied R&D Tech./Product Tech./Product Technology/Development Demonstration different stages of Development Maturity Product Decline Stage development and commercialisation.  They can be, however, broadly grouped as Biomass Power depicted by the chart alongside. Geothermal Power  Wind power along with Market Size biomass and geothermal technologies are most Wind Power mature.  Marine energy technologies have to bridge a big gap in order Solar Power to catch up with other renewables. Marine Power TimeNote: This is an indicative graphical depiction of the various renewable energy technologies and their maturity stage. Source: Frost & Sullivan
  • 10. Which of these are Relevant to Indonesia and When? Commercial High Opportunity Country Relevance Viability Time Frame Application Biomass, Biogas and Bioenergy VERY HIGH HIGH NOW Biofuel Rural offgrid Solar PV HIGH LOW NOW applications Energy Management VERY HIGH MODERATE NOW Commercial & Industrial CCS MEDIUM VERY LOW 5-10 Years Utility Microgrids in remote Smart Grids MEDIUM LOW 3-5 years islands HYDRO POWER VERY HIGH HIGH NOW Large and Mini Hydro Municipal and Industrial Waste to Energy HIGH MODERATE NOW waste to energy Nuclear Power MODERATE MODERATE 10 YEARS Utility scale power plant Rural electrification, Advanced Battery MEDIUM LOW 3-5 Years Distributed generation Storage, Fuel Cells and commercial Small capacity wind Wind Power MEDIUM MEDIUM 2-3 Years farms and potential offshore Source: Frost & Sullivan
  • 11. Indonesia Energy Mix Source: US Department of Commerce obtained from PLN 11
  • 12. Indonesia Renewable Energy PotentialDespite this huge potential why is the sector not taking off and what is theoutlook for immediate future? 12
  • 13. Key Gaps and Challenges External factors refer to external element that will have an impact to the growth of renewable energy External Factor External Factor Internal factors Market Structure Fiscal Regulatory Incentives Framework Trade Competition Barriers Infrastructure Renewable Human Energy Capital Awareness & Adoption Innovation Internal factors refer to the factors within which government or business may have control over it
  • 14. Geothermal Energy Outlook
  • 15. Geothermal Energy – Drivers & Restraints in Indonesia Large Potential High Reserves Short Gestation Period Reliable PowerMarket Drivers Supply Impact Low LowMarket Restraints Impact Need for more expertise Getting access to T&D infrastructure Limited Information and Awareness Land Acquisition Project Development Issues High Risks Source: Frost & Sullivan.
  • 16. Market Size and Potential for Geothermal EnergyIndonesia and the Philippines are well placed in terms of potential to further growtheir geothermal capacities. This will take time though… Top Geothermal Countries by Capacity & Pipeline Source : Emerging Energy Research 16
  • 17. Market Size and Potential for Geothermal EnergyIndonesia has around 27 GW of geothermal potential overall and it is clearly in itsplans through to 2020…. Only 1,179 MW in operation as of 2008. Indonesian Power Generation Plan, 2008 through to 2018– Java Bali System 17
  • 18. Specific Risk Analysis of Indonesian ProjectsEach and every country, including location within it, has it own set of risks thatmust be closely identified, and appropriate mitigation strategies put in placeSpecific Risks : Indonesia• Credit worthiness of the buyer – PLN, and contract structures• Land acquisition• Clear legislative and fiscal laws applying to geothermal – tax, environmental, etc. – change in law?• Local issues where the plant is situated – legal, social, environmental and even monetary• Political risk, terrorism, currency risk, changes in law, i.e. nationalization, pricing structures 18
  • 19. Market Size and Potential for Geothermal Energy The government has mandated that geothermal energy provide at least 9,500 MW (5 percent) of the nation’s electricity by 2025
  • 20. Biomass Energy Outlook
  • 21. Biomass Energy – Drivers & Restraints in Indonesia Abundant availability High of biomass fuel Potential for cogeneration in agriculture sector Reliable PowerMarket Drivers Supply Impact Low LowMarket Restraints Impact Lack of infrastructure to gather and deliver biomass Financing constraints for Lack of strong policy private biomass High support unlike other projects Southeast Asian Source: Frost & Sullivan. countries
  • 22. Market Size and Potential for Biomass Energy Indonesia has targeted 810 MW of biomass power by 2025, which is very modest a target considering the potential
  • 23. Biomass – Indonesia vs Rest of ASEAN Indonesia has targeted 810 MW of biomass power by 2025, which is very modest a target considering the potential 23
  • 24. Solar Energy Outlook
  • 25. Market Drivers & Restraints for Solar Power in Indonesia Rank Driver 1-2 Years 3-4 Years 5-7 Years 1 Declining price to spur growth Very High Very High Very High High solar radiation points to market 3 High High High potential Rural and remote area electrification 4 High High Medium opportunities stokes demand Source: Frost & Sullivan Rank Restraint 1-2 Years 3-4 Years 5-7 Years Absence of policy framework restricts 1 High High High growth 2 Lack of feed-in-tariff slowdown adoption High High High Subsidized electricity from utilities 3 Medium Medium Medium constricts market penetration Threat of low cost substitutes for 4 distributed power generation makes Medium Low Low solar PV unattractive Lack of domestic value chain thwarts Medium Low Low 5 market development
  • 26. Market Forecasts for Solar Power Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan
  • 27. Revenue Forecasts by Country Solar PV Systems Market: Revenue Forecasts by Country (Southeast Asia), 2007-2017 3,000.0 2,500.0 Revenues ($ Million) 2,000.0 1,500.0 1,000.0 500.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Malaysia Indonesia Singapore Thailand The Philippines Vietnam Rest of Asia Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan
  • 28. Wind Energy Outlook
  • 29. Wind Energy – Drivers & Restraints in Indonesia High Small Wind Suitable for Urban applications Growing environmental awareness Rise in cost of fossilMarket Drivers fuels Impact Low LowMarket Restraints Impact Lack of T&D network constraints installation in eastern islands High cost of offshore wind Limited Potential power High because of low wind speeds Source: Frost & Sullivan.
  • 30. Market Size and Potential for Wind Energy Indonesia has targeted 225 MW of wind power by 2025; Potential for offshore is much higher if the technology becomes commercially competitive
  • 31. Small Hydro Power Outlook
  • 32. Small Hydro Power – Drivers & Restraints in Indonesia High Potential Availability of sites Least Expensive Technology for rural electrification Technology maturityMarket Drivers and local expertise Impact Low LowMarket Restraints Impact Economic viability concerns for some projects Delay in approval Lack of consistent process High guidelines Source: Frost & Sullivan.
  • 33. Market Size and Potential for Small Hydro Power Indonesia has a potential of 500 MW of small and mini hydro and the market installed capacity is expected to reach 150 MW by 2015
  • 34. Renewable Energy Policy Targets by other Asian countriesCountry Policy Target Target to reduce GHG emissions by 15.0 percent from its 2005 level by 2020Japan 14 GW of solar PV by 2020 11.0 percent of primary energy by 2030South Korea 300 MW by 2011 through its solar roof-top program To invest $35.40 billion in the RE sector over the next five yearsTaiwan RE to account for 15.0 percent of the installed capacity by 2025Australia 20.0 percent electricity from RE by 2020South Australia 33.0 percent electricity from RE by 2020Thailand 20.0 percent electricity from RE by 2022 from 6.0 percent in 2009The Philippines 4.5 GW of new RE capacity between 2003 and 2013 To reduce carbon emissions by 25.0 percent by 2012 compared to 1990 levels. 35.0 percentSingapore energy efficiency goal and recycling rate to 70.0 percent by 2030. National Renewable Energy Policy and Action Plan: To increase RE from 1.0 percent to 5.5Malaysia percent of electricity supply by 2015.Vietnam Low-carbon Master Plan: 5.0 percent of electricity generated from RE by 2020 Source: Frost & Sullivan
  • 35. Best Practices that Indonesia can Adopt 1 Develop a consistent policy around feed in tariff and renewable portfolio standards (Thailand, Japan) 2 Create separate programs targetting urban and rural end users (China) 3 Promote investmet and setting up of manufacturing and service facilities for renewable power equipment (Malaysia, China, India) 4 Promote small and very small renewable program through financial incentives for indigenous resources (Thailand) 5 Multiple schemes like generation based incentives, tax holidays, custom duty waivers and rural electrification all rolled under one mission (e.g. National Solar Mission in India) 6 Encourage industries and commercial institutions to adopt cogeneration and hybrid technologies utilizing one or more renewable energy sources 7 Make local communities stakeholders in the remote off grid projects (India, China) Source: Frost & Sullivan
  • 36. Areas for Focus 1 Remove size threshold barriers (10 MW) for foreign investment into power projects 2 Rationalize subsidies for fossil fuels 3 Develop local industry expertise that would support the renewable energy market development across value chain (both supply and services) 4 Government to create mechanisms (e.g soverign guarantee) that would encourage local banks to finance renewable energy projects 5 Investor friendly procedures like single window clearance and standardized PPAs would help accelerate the development 6 Strengthen data gathering process for technologies like geothermal, small hydro, wind etc that would help government to set realistic targets 7 Provide necessary tools and training to local government agencies to implement government policies and tenders for renewable energy development Source: Frost & Sullivan
  • 37. Thank You
  • 38. For Additional Information Dewi Nuraini Corporate Communications Indonesia Phone : (021) 571.0838 / 571.3246 Email : dewi.nuraini@frost.com www.frost.com