Power Industry Opportunities in Indonesia

Author photo: Bob Gill
ByBob Gill
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ARC Report Abstract

The electrical power situation in Indonesia could be expressed in a single sentence: "There simply is not enough of it." Increasing economic growth, industrialization and urbanization all serve to boost the demand for electricity across the vast archipelago. However, while the level of supply has improved in the last decade, the industry still struggles to keep up with demand.

This situation will only improve through continued and accelerated construction of power industry infrastructure over the next 15 years.

The considerable capital expenditure on power projects that this will entail, tens of billions of dollars, spells opportunities for automation suppliers that can deliver the technology and expertise required by Indonesia's power sector.

Industry Structure
The main player in the Indonesian power industry is the state utility, Perusahaan Listrik Negara, (PLN). For a long time it had complete control of power generation, transmission, and distribution in the country. However, in recent years, recognizing that PLN cannot effectively supply all of Indonesia's power needs on its own, the market has been liberalized somewhat, particularly with regard to generation.

Liberalization has spawned the growth of so-called Independent Power Producers (IPPs) from the private sector. Through Power Purchasing Agreements (PPAs) with PLN, the IPPs can sell generated power to the state utility. Energy Law No. 30, passed in 2009, also gives IPPs the authority to sell power directly to end users.

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Keywords: Power Generation, Transmission & Distribution, Indonesia, Electrification, ARC Advisory Group.

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