indonesia

sector and in the early 1990s when gas was first used in the fuel mix. 18 Yet since 1999, coal has been
the dominant fuel in the power sector, and in recent years the country has generated more than
half of its electricity from coal.
Indonesia’s power supply is controlled by PLN, a state-owned, vertically integrated company
tasked with running the country’s power distribution and transmission. PLN is also in charge
of power generation, though the market is open to independent power producers that must sell
power to the company. In 2014, PLN purchased 23% of its total power supply from independent
power producers, up from 8% in 2000. 19 Despite the huge call for infrastructure development
across the value chain, development has been hindered by PLN’s limited capacity and poor
financial health, caused by rising generation costs and subsidies (stemming from controls over
retail prices for electricity).
The challenges facing the Indonesian electricity sector are immense and often similar to those
confronting the gas sector. Three challenges stand out: access, reliability, and affordability. In
2014, electrification reached 84%, up from 28% in 1990 and 64% in 2009. 20 The government targets
97% by 2022. Electrification, however, does not mean equal or full access to electricity. In Jakarta,
households consumed 2,451 kilowatt hours (kWh) per capita in 2014, roughly two and a half
times the average in Java as a whole (1,010 kWh) and five times the rate outside Java (493 kWh),
where more than 100 million Indonesians live. Over 10 million people still live in areas where the
electrification rate is below 60%. 21 Many areas rely on diesel generators for power, 22 and Indonesia
relies more on oil for generating electricity than other regional countries do: in 2013, 12% of its
electricity was generated from oil versus 5% in Singapore, 4% in Malaysia, 2% in Vietnam, and 1%
in Thailand. 23 Indonesia’s electricity consumption is similarly at odds with that of its neighbors:
on average, an Indonesian consumed 0.8 megawatt hours (MWh) of electricity in 2013 versus
1.3 MWh in Vietnam, 2.5 MWh in Thailand, 4.5 MWh in Malaysia, and 8.8 MWh in Singapore. 24
In other words, the average Indonesian would need to consume five times as much electricity to
catch up with Malaysia and eleven times as much electricity to be on par with Singapore. 25
Power supply has also been unreliable. Those connected to the grid can experience supply
interruptions, especially during peak hours, and for those waiting to connect to the grid,
infrastructure development is often delayed. Nowhere is this more telling than in the captive power
market. Captive power includes electricity generated off-grid by independent parties—mainly,
industrial and commercial users—for their own use. Captive power generators are designated
either for a user’s main use (by choice or out of necessity) or as a reserve for when grid power
is not available or too expensive (e.g., during peak times). Captive power is hard to measure but
is estimated at over 16 gigawatts (GW), including main and reserve units; roughly half of this
capacity is in Java.
18 “Statistics: Statistics Search,” International Energy Agency (IEA), http://www.iea.org/statistics/statisticssearch.
19 PLN, “Annual Report 2014,” 16.
20 For electric coverage statistics from 2009–14, see the yearly PLN statistics reports, available at http://www.pln.co.id/eng/?p=2773; and for
2014 data, see PLN, “Annual Report 2014.”
21 PLN, Statistik PLN 2014 [PLN Statistics 2014] (Jakarta: PLN, 2014), 20, http://www.pln.co.id/wp-content/uploads/2012/01/Statistik-
PLN-2014_for-website-10-Juni-2015.pdf.
22 For more on diesel generation, see the PLN statistics reports from various years at http://www.pln.co.id/eng/?p=2773. In 2014, PLN
reported having over 4,400 diesel generators outside the main Java area.
23 “Statistics: Statistics Search,” IEA.
24 Ibid.
40
NBR
25 To be fair, Singapore’s numbers are skewed by heavy industry.
SPECIAL REPORT u DECEMBER 2015