Indonesia's coal based power market


Published on

Published in: Business, Technology

Indonesia's coal based power market

  2. 2. PRIVATE CIRCULATION ONLYGlossarySome abbreviations usedAbbreviations Full formIPP Independent Power ProjectGOI Government of IndonesiaEPC Engineering, Procurement andConstructionLaw 30 Electricity Law no. 30 of 2009MEMR Ministry of Energy & Mineral ResourcesMW MegawattGW GigawattTW TerawattTWh Terawatt HourMWh Megawatts HourkWh Kilowatts HourGDP Gross Domestic ProductFTP Fast Track ProgrammeUSD United States DollarAbbreviations Full formBn BillionMn MillionIMF International Monetary FundCAGR Compounded Annual Growth RatePLN PT Perusahaan Listrik Negara (Persero)PPU Private Power UtilitySOE State-owned EnterprisesCFPP Coal Fired Power PlantPPP Public Private PartnershipDMO Domestic ObligationMVA Mega Volt Ampere2
  3. 3. PRIVATE CIRCULATION ONLYIndonesia - Macro economic indicators• Being the most populous country in South Asia ,Indonesia is also fourth populous country in world(after China, India and United States)• Indonesia is also worlds largest exporter of coal byweight and the eighth largest exporter of naturalgas in 2011• According to the International Monetary Fund(IMF), Indonesia was able to sustain relatively verygood GDP growth rate 6 percent per annum inspite of economic slowdown• Currently Indonesia’s GDP in 2012 is around USD899 bn which has almost doubled from USD 432 bnin 2007• The total electricity consumption per capita ofIndonesia is very low at 0.6 MWh as in compared toits counterparts such as China (3 MWh), Japan (8MWh) and Taiwan (10.7 MWh)• Indonesia has power installed capacity of around 43GW in 2012 where Coal alone has share of morethan half in the energy mix• Ministry of Energy and Mineral Resources (MEMR)is apex policy making body which is responsible fordeveloping electricity master plan, laws andregulationsIndonesia’s robust infrastructure and strong governance has led it to achieve GDP growth rate of 6.2 % in year 2012-2013Source:- World Bank, IMF, EIA , Future Outlook PLN’s Coal Fired Power Plant By Helmi Najamuddin432 510 539708846 8991,8592,172 2,2732,9523,495 3,61705001,0001,5002,0002,5003,0003,5004,00002004006008001,0002007 2008 2009 2010 2011 2012EGDP (USD Bn) GDP per capita10.79.78.585.93.732.21 0.6 0.6 0.6 0.5024681012Per capita electricity consumptionWorld wise per capita electricity consumption in MWhIndonesia’s total GDP in USD bn3
  4. 4. PRIVATE CIRCULATION ONLYElectricity consumption and generation• Total electricity production has seen a CAGR of 6% whereas electricity consumption has seen a CAGR of 5.5 %• State owned PLN owns and operates about 85 percent of the countrys generating capacity through its subsidiaries,and maintains an effective monopoly over distribution activities. Although the most recent 2009 Electricity Lawends PLNs distribution monopoly, there is a lack of sufficient regulations to enforce this law• Indonesia has installed capacity of 43.6 GW of which PLN controls about 73% (31,944 MW), IPP 23% (9,856 MW)and PPU 4% (1,729 MW) respectivelyGeneration capacity growth in Indonesia has lagged behind the pace of electricity demand growth, leading to powershortages and a low electrification ratio118 126 134 141153 161170515 5465725976416666950100200300400500600700800-204060801001201401601802006 2007 2008 2009 2010 2011E 2012EElectric power consumption (TWh)Per capita electricity consumption (kWh)133 142 149 156169 176 183579612 636660708740778-100200300400500600700800900-204060801001201401601802002006 2007 2008 2009 2010 2011E 2012EElectricity production (TWh)Per capita electricity production (kWh)Source:- World Bank, Future Outlook PLN’s Coal Fired Power Plant By Helmi NajamuddinTotal electricity production Total electricity consumption4
  5. 5. PRIVATE CIRCULATION ONLYExpected growth in electricity consumption (10 year forecast)• Indonesia’s demand for electricity will see a CAGR of 9% year on year basis. The expected demand would be 389Terawatts Hour (TWh) in 2021 which is almost double of 194 TWh in 2013• Java-Bali itself has been prominent in contributing to huge demand for electricity by maintaining a share of about75% throughout in the past and will behaving same share in future as well. Remaining regions contribute justabout 25% to total electricity demand• In order to lower the demand of electricity consumption, Indonesia’s only state owned power company PLN hasplaned to have 100% solar energy based electricity generation at 100 small islands till 2014• The expected electricity generation would be around 118,616 kW which would be generated at West Indonesia(61,285 kW), East Indonesia (50,507 kW) and Java Bali (6, 284 kW) at 358, 293 and 21 locations respectivelyLike other nations, Indonesia is also looking at renewable sources of energy in futureRegion wise electricity power demand in TWh1251501792132532943844556882951611942342813343890501001502002503003504004500501001502002503003504004502011 2013 2015 2017 2019 2021Outside Java-baliJava-BaliExpected total electricityconsumption (TWh)Source:- Future Outlook PLN’s Coal Fired Power Plant By Helmi Najamuddin5
  6. 6. PRIVATE CIRCULATION ONLYPower demand and supply gap in different regions• Indonesia has achieved its goal of having installed capacity of 43.6 GW in the year 2012. Its peak load has remainedalmost same at an average of 23 GW per year.• In order to find a equilibrium between supply and demand, In 2006 GOI introduced the first phase of the Fast TrackProgramme (FTP) to add 10,000 MW of generating capacity from new coal-fired power plants. The programmeconsists of ten projects, with a total of 7,460 MW, in Java, and another 23 projects with a total of 2,513 MW outsideJava Island. GOI also has started implementation of its second phase of FTP in which addition of 10,000 MW more• Some other projects includes building two gas fired plants in South Sumatra, consisting of plants at Prabumulih (200MW) and Musi Rawas (400 MW), bidding on a USD 1 bn expansion of the Muara Tawar power project in Bekasi,West Java, in the near futureIn order to maintain a equilibrium between supply and demand , many new projects and initiatives have been takenSource: Rukn Indonesia_demand_report 2012-2021, Norton Rose- Indonesian Energy Report31.6 24132.611.990.412.3443.6331.44505101520253035404550Installed base capacity Peak load Additional power On going capacity plan for 2013Java Bali Out of Java BaliPower demand and supply gap in 2012 (Giga Watts - GW)6
  7. 7. PRIVATE CIRCULATION ONLY21,547 22,83431,59242,82051,53061,6904,9865,2847,3109,90811,92314,2741,2501,3251,8332,4842,9903,5791,2091,2811,7732,4032,8923,46233035048465678994529,68831,46243,52959,00071,00085,000010000200003000040000500006000070000800009000001000020000300004000050000600007000080000900002006 2008 2012 2016 2018 2020Jamali Sumatera Kalimantan Sulawesi Maluku Papua Nusa Tenggara TotalInstalled power generation capacity by region - historical and forecastBoth Jamali and Sumatera have been contributing almost 89% to the nation’s overall installed capacity throughout yearsSource:- Rukn Indonesia_demand_report 2012-2021Installed power generation capacity by region – historical and forecast (MW)7
  8. 8. PRIVATE CIRCULATION ONLYShare of coal in energy mix-5 year mix• Indonesia has been the largest exporter of thermal coal, typically used in power plants, for several years. In 2011,it overtook Australia as the worlds largest exporter of coal by weight• Unlike many other countries, Indonesias government encourages increased use of coal in the power sector, dueto relatively abundant domestic supply and as a way to reduce the use of expensive diesel and fuel oil. Althoughcoal consumption has grown significantly in the last decade, the majority of production has gone toward exports• In order to guarantee sufficient domestic supply, the Indonesian government set a 24% domestic marketobligation for producers, which it revised down to 20% in October 2012 due to lower than expected consumptionOver the past years in Indonesia, share of coal in energy mix has reduced, thereby increasing its dependence on otherresourcesSource: World bank, EIA58 63 61 65 68 79 9344% 44% 41%41% 40%45%51%0%10%20%30%40%50%60%-1020304050607080901002006 2007 2008 2009 2010 2011 2012Electricity production from coal sources (TWh)Electricity production from coal sources (% of total)257 2742473213584144552460 55 63 63 7391201214 22025729434137912275 123 76 61 61 530501001502002503003504004505002006 2007 2008 2009 2010 2011 2012ECoal production (Mn Tons) Coal consumption (Mn Tons)Coal exports (Mn tons) Coal imports (thousand tons)Coal’s share in energy production Total coal production and consumption8
  9. 9. PRIVATE CIRCULATION ONLYCompetitors overview and profile - 1PT PLN (PERSERO) is the only 100% state-owned power utility company in IndonesiaSource: Future Outlook PLN’s Coal Fired Power Plant By Helmi Najamuddin, Company WebsitePT PLN (Persero)PT PLN TarakanRegional FullyIntegrated Electric UtilityPT Pembangkitan JawaBaliElectricity GenerationPT PLN BatamRegional FullyIntegrated Electric UtilityPT Indonesia PowerElectricity GenerationPT PLN GeothermalGeothermal EnergyGenerationPT PelayaranBahtera AdhigunaCoal Shipping ActivitiesPT PLN BatubaraCoal Supplier for PLNPT Prima LayananNasional EnjiniringEngineering andConstruction ServicesPT Indonesia ComnetsPlusTelecommunications forthe Electricity SectorMajapahit Holding B.V.Financial InstitutionNote:- Excludes Joint Ventures9
  10. 10. PRIVATE CIRCULATION ONLYCompetitors overview and profile - 2• PT PLN Persero (PLN) is Indonesia’s state-owned electric utility company, wholly-owned by the Government ofIndonesia and is represented by the Ministry of State-Owned Enterprises (SOEs)• —PLN is the major provider of public electricity and electricity infrastructure in Indonesia, including powergeneration, transmission, distribution and retail sales of electricity• Under the New Electricity Law (No. 30/2009), SOEs, which includes PLN, have the first priority to decide whetherto be the electricity supplier for the public needs of a specified area before such right can be awarded to anyoneelseo If PLN declines to undertake a public electricity supply business for a certain area, the Government or regionalgovernments may offer this right to regional-owned companies, private enterprises or cooperativeso If there are no regional-owned companies, private enterprises or cooperatives that elect to supply electricity inthat area, the Government is obligated to instruct SOEs (which includes PLN) to supply electricity to the areaIntroduction and key business segmentsGeneration• Controls approximately 28,308 MWof installed generating capacity,over 85% of Indonesia’s total• Owns and operates 1,261generation plants• Main purchaser of electricity fromIndependent Power Producers(IPPs)Transmission• Sole provider of power transmissionin Indonesia• Approximately 36,741 kmc oftransmission lines• 66,354 MVA of transmissiontransformer capacityDistribution• Sole distributor of electricity to endcustomers in Indonesia• Approximately 685,785 kmc ofdistribution lines and 36,430 MVAof transformer capacity• Serving approximately 44 mncustomersKey business segmentsSource: Future Outlook PLN’s Coal Fired Power Plant By Helmi Najamuddin, Company Website10
  11. 11. PRIVATE CIRCULATION ONLYKey regulations and initiatives by governments• Indonesia has been aggressive in its quest for increasing the penetration of electricity in its region. Currently,Electrification ratio (area having access to electricity to total area of Indonesia) is 75.3%. Due to its continuousefforts in rural electricity programing, Government plans to achieve 99.2% electrification by year 2020• Due to lack of substantial budget, still there are areas which does not have access to electricity particularlyoutside Java-Bali region• Based on PLN’s Electricity Business Plan (RUPTL PLN) 2011 - 2020, the growth rate of demand for electricity wouldbe around 8.5%. GOI also plans to increase its dependence on Coal generation as being largest exporter of it,there by reducing demand for Oil fuels in future• Under the Governments domestic obligation (DMO) program, larger coal companies in Indonesia must sellapproximately 25 percent of their production domestically. Around 70 % of DMO coal goes to power plantsoperated by the countrys state electricity company, PLNIndonesia’s government plans to increase coal’s share in its energy mix in futureSource: EIA, Future Outlook Pln’s Coal Fired Power Plant By Helmi Najamuddin, Rukn Indonesia Demand Report 2012-202175.386.3799.20204060801001202012 2016 2020Electrification ratioElectrification ratio62.80%18.80%0.80% 11.00%6.50%0.10%2021CoalGasOil fuelGeothermalWaterOthers51.08%22.60%15.01%4.75%6.44% 0.12%2012Primary energy mix - current and future forecast11
  12. 12. PRIVATE CIRCULATION ONLYConclusion• Indonesia’s electricity demand is still high thus there is need of huge additional capacity of generation,transmission and distribution• The government encourages participation of private sector to cooperate with PLN through EPC project, IPPproject and PPP (Public Private Partnership) projects• The government is committed to maintain the PLN’s financial viability in order to meet its obligations to otherparties, by providing subsidies• For the next 10 years, the electricity supply in Indonesia is still relying on CFPP (Coal fired power plant), it isbecause the availability of abundant coal as primary energy and cost of production is relatively cheap comparedto other power generation, but still abiding environmental laws• The government passed the 2009 Law on Mineral and Coal Mining No.4 to increase foreign investment into themining sector. The law introduces more transparent and standardized tenders and licenses for mining blocks. Asof 2012, the law is not fully implemented, though there has been some increase in investment levels since 2009• Indonesia passed a new law for the electricity sector in September 2009, Law No. 30 of 2009,(Law 30). Law 30introduces three key reforms:1. PLN will no longer have a monopoly in supply and distribution of electricity to consumers2. Private businesses may provide electricity for public use, but subject to a “right of first priority” granted tostate-owned companies (ie, PLN)3. A greater role for provincial and regional governments in terms of support for future projects, licencegranting and tariff fixing• This will generate avenues for private players to actively involve in PLNs IPP program for the 10 year period as itgives developers and lenders guidance as to what private sector IPP projects will be tendered out by PLN over thecoming yearsThere is immense opportunity for private players to grow along with support of state owned PLN through IPP and PPPprojects etc.Source: EIA, Future Outlook Pln’s Coal Fired Power Plant By Helmi Najamuddin, Rukn Indonesia Demand Report 2012-202112
  13. 13. PRIVATE CIRCULATION ONLYReport prepared byName:- Suparn kumar kuerEmail id:- no:- +91 9869712408Thanks13