Indonesia power and renewable markets H2 2017 summary
PLN's electricity sales in 2017 was lower than expected. Sales grew by only 3.1% during 2017 compared to PLN's expectation of 8.3%. The key driver for the slow growth was demand reaction from industrial customers due to the electricity subsidy removal launched in 2015 which has resulted in power tariff hikes. Power tariffs have been increased by up to 25% since the programme was launched. Several industrial customers opted to use their own captive generation, which caused a dent to PLN's sales expectations. In response to the disappointing sales, PLN is looking to reduce its long term demand growth assumption. We understand the state-owned electricity company plans to trim down its sales growth outlook from 8.3% to below 7% per year, which will be reflected in its 2018-2027 power development plan.