Diesel Consumption for Captive Power in Indonesia

Introduction

Indonesia’s impressive economic performance over the past decade (2000 – 2010) which yielded an average real GDP growth at 5.2% has produced an expanding middle-class that has in turn stimulated a rapid surge in demand for electricity. This has not been matched by a similar increase in supply, and the state-utility PT. Perusahaan Listrik Negara (PLN) has been forced to implement frequent rolling blackouts in Java and Bali.

With the current electrification ratio stands at 71% in 2011 according to PLN, about one third of Indonesia’s population still has no access to electricity which forces the Indonesian government to accelerate capacity expansion plans. The national electricity demand is expected to grow on average around 8.5% per year over the period from 2012 to 2021, indicating an electricity demand at around 358 TWh in 2019. With no available electricity import possibilities, the domestic electricity generation in Indonesia must be increased to increase electrification ratio and meet growing demand.

Indonesia’s generation run at full capacity to cover demand, leaving a limited buffer to cover for demand hikes. Peak-demand therefore forces PLN to implement rolling blackouts in critical areas to avoid the risk of a full blackout of the entire system.

The uncertainty associated with blackouts and the high costs of disrupted supply for the industrial sector in Indonesia are the primary reasons driving industry towards investing in captive generation facilities. Some of process industries like chemical, aluminum, cement etc. the need for uninterrupted quality power is a necessity rather than a requirement.

According to PLN Electricity Statistics 2012, the industrial sector is the second largest electricity buyer in Indonesia. However according to the Ministry of Energy and Mineral Resources (MEMR) data, they are the largest energy consumer in Indonesia where it accounts for 43% of the total final energy consumption in 2011 or 316 million barrel of oil equivalent (BOE). This discrepancy indicates the widespread use of captive power generation in the industrial sector to make up PLN’s inability to supply electricity.

The Government of Indonesia (GOI) has a target to reduce oil fuel consumption by replacing it with other form of energy (diversification) and improving efficiency (conservation) of energy utilization from upstream and downstream. Through Presidential Regulation 05/2006, GOI aims to reduce oil use by 20% and increase renewable energy utilization from the present 17% to 25% by 2025 while achieving its target of greenhouse gas (GHG) emissions reduction of 26% by 2020.

Study objective

The main objectives of the report LCORE Final Report -Overview of Diesel Captive Power in Indonesia (GIZ Indonesia November 2013)are to:

• Provide an overview of diesel consumption for captive power in Indonesia, particularly in the industrial sector; and
  
• Identify specific industrial sectors and regions of potential replacement with renewable energy sources such as biomass, photovoltaic, or others.

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LCORE Final Report -Overview of Diesel Captive Power in Indonesia (GIZ Indonesia November 2013)