Indonesia's 35 GW power programme: turning obstacles into opportunities Report

Insight 26 January 2016

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Report summary

In January 2015, the Indonesian government launched the '35 GW Programme' to build a new wave of power plants across the country. The programme has a critical strategic significance given looming power shortages. However, 12 months into this programme and progress has been slow. Indeed, the experience of previous fast-track programmes shows the programme will face numerous challenges. Obstacles such as land acquisition can tie up developments for years. The government is hoping to encourage success and has initiated some streamlining measures in addition to market reforms. Significant opportunities exist for various players throughout the value chain - LNG and coal suppliers, EPC companies, power plant operators, and financial institutions. The programme sees a much greater role for independent power producers. But participants will need to understand which projects offer the best chance of being realised and how to mitigate the obstacles in their way.

Executive summary
Background
Multiple opportunities across the value chain
How does the 35 GW programme differ from early schemes?
- An increasing role for gas...
- and lower expectations for renewables
- The role of PLN
What is the process for building a power plant under the 35 GW programme?
What are the key challenges facing IPPs?
- 1. Land identification and acquisition
- 2. Financing and government guarantees
- 3. Fuel supply and infrastructure bottleneck
- 4. Bureaucracy and permit requirements
Navigating the opportunities
- Likely outcomes
Conclusion
APPENDIX

Tables and charts

This report includes 13 images and tables including:

The 35 GW programme: geographical distribution, fuel mix and PLN/IPP split
Typical Indonesian IPP project structure & key players (non exhaustive)
International interest in the Java-1 CCGT & Java Bali-3 peaker projects*

Indonesia's 35 GW power programme: turning obstacles into opportunities: Image 5
Reference ceiling prices under MEMR regulation no. 3/2015
Power project list - 35 GW programme
Coal-fired power plant projects
Gas-fired power plant projects
Renewable power projects
Capacity mix comparison
PLN vs IPP
Impact on coal demand
Impact on LNG demand