Coal Fuels Indonesia's Search for 7,000 Megawatts of Additional Power

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--From 2000 to 2010, Indonesia's primary energy consumption grew more than 50%. Coal consumption tripled, having surpassed natural gas in 2004 to become the second-ranked fuel, after petroleum.

In 2011, Indonesia became the world's largest exporter of thermal coal by weight, taking the first spot from Australia. The Environmental Investigation Agency's (EIA) estimates put the country's coal reserves at 6.1 billion tons; other estimates, covering all grades of coal, indicate 28 billion tons.

Power generation accounts for about 66% of total coal sales, and power sector demand is expected to double in the short term as the government targets major projects to provide additional power to the national grid. Total installed generating capacity is about 45,000 megawatts (MW), with state-owned power utility Perusahaan Listrik Negara (PLN) providing about 75% and independent power producers (IPPS) 23%. Access to electrical power is available to about 75% (245 million) of the population.

The government's policy is to use more coal in power generation due to its abundant domestic availability and low cost. It has directed PLN to undertake a power build schedule totaling 7,000 MW of coal-fed power, out of 15,000 MW from all sources, including renewable energy. In particular, this will reduce dependency on costly fuels, such as diesel.

PLN Coal Director Helmi Najamuddin said that every 1,000 MW of power consumes 4 million tons of coal per year. Currently, almost 60% of the country's power generation capacity is fuelled by coal.

PLN is now waiting for the government to promulgate regulations to allow the utility to acquire an additional 28 million tons of coal annually to provide a feed for the generation target. First deliveries of the anticipated new coal quotas are expected in 2018.

For related information, see March 9, 2012, article - New Indonesian Mining Regulation Demands 51% Local Project Stake in 10 Years.

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