NEWS RELEASE June 2018
Indonesia is a Growing and Robust Market for Coal Fired Power
Indonesia has the domestic coal, the need for much more electrical capacity and a relatively high GDP growth which combine to make it an ideal location for coal fired power. The plan is to add 80 GW of coal fired power by 2050. Other generating technologies will grow faster. In 2050 coal is projected to deliver 24 percent of the total power generation.
Thermal coal forms the single largest share of the fuel mix today. In 2017, coal accounted for 55.6 percent of the energy share, but is expected to reduce to a slightly lower share of 50.4 percent in 2026. Economic and logistical considerations (as well as significant available reserves) have led to coal’s ongoing dominance, as it is a low-cost fuel that is easy to extract and transport using existing infrastructure.
Indeed, few economical alternatives exist for the development of low-rank coal, other than mine-mouth coal power generation. Indonesia sits in ninth place in terms of proven coal reserves in the world with 2.3 percent of global coal reserves and is a major coal exporter.
Natural Gas: Natural gas power generation is expected to double by 2026 (in TWh terms) from 25.8 percent of the overall mix in 2017 to 26.7 percent in 2026. Given the risks of not reaching the renewable energy target and the fact that gas has been determined to be the best substitute in the event of a shortfall, it is possible that the share of gas in the energy mix could be even higher. Being relatively low-carbon compared to coal, as well as being medium-cost, gas is likely to remain a favored fuel for at least the next decade, especially given Indonesia’s extensive gas reserves.
A continuing glut of global and Asian (including Indonesian) Liquefied Natural Gas (“LNG”) is likely to stimulate further consumption, although the fact that Indonesia is moving closer to being a net energy importer despite its abundant reserves may check this trend. Certainty regarding the upstream oil and gas investment climate and improved physical infrastructure, including pipelines and Floating Storage Regasification Units (“FSRUs”), as well as certainty on the price of gas-for-power, are crucial to enabling a strong long-term role for gas in the Indonesian power generation market.
Coal use will expand from 148 TWH in 2027 to 283 TWH in 2026.
|Indonesian Power Generation - TWH|
|Gas includes LNG||Source: 2017 RUPTL|
By 2050 coal fired capacity will exceed 100 GW. This will require more than 80 GW of new coal fired plants. Consider that this compares to U.S. capacity which is presently 225 GW but could be below 180 GW by 2050.
There is a complete profile on the Indonesian power market as well as PLN, the government utility in the McIlvaine Utility Tracking System. Details on this service are found at: Utility Tracking System