Market Intelligence
Electricity Infrastructure Grid Transmission Distribution Industries Indonesia Trade Opportunities

Indonesia Smart Grid Market

Indonesia is an archipelago country located in Southeast Asia; the fourth most populous country in the world with close to 280 million people occupying 17,000 islands spread across 4,000 miles. It is also by far the largest economy amongst the ten Association of Southeast Asian Nations (ASEAN) member countries, dwarfing the economies of Singapore, Thailand and Vietnam.

As a developing, emerging-market economy, Indonesia has been facing significant electricity transmission and distribution issues including intermittent brownouts, power losses and theft. Electricity distribution to Indonesia’s rural communities has been particularly problematic, the country’s complicated geography and unequal distribution of natural resources has led to significant challenges for the country to provide electricity evenly, particularly to Indonesia’s remote communities. Much of Indonesia lies in the South Pacific’s ‘Ring of Fire’ and, as such, is vulnerable to earthquakes and other geologic instability. This is especially true outside the most populous island of Java.

Maintaining grid security and the reliability of electricity supply when natural disasters strike has been a particular challenge for Indonesia. Electricity reliability and price, has prevented Indonesia from becoming one of the best investment destinations in the region and has hindered economic growth.

PT Perusahaan Listrik Negara, typically referred to as PLN, is the state-owned electricity company controlling all distribution and transmission in Indonesia. Indonesia’s Constitutional Law, established at the founding of the country in 1945, states that all the country’s natural resources can only be controlled by the country on behalf of the people of Indonesia. Only very limited and highly regulated investment from the private sector is allowed in natural resources development and utilization. ICON+, is one of PLN’s subsidiary companies that focuses on managing technology as it applies to the power distribution and transmission sectors. Due to aging infrastructure and lack of incentive through market competition, PLN is now in a position where it needs to modernize its grid to be more efficient, secure, and reliable. This will lead to opportunities for U.S. companies in the following sub-sectors:

  • Automated Metering Infrastructure (AMI), Smart Metering, Advanced Distribution Management Systems (ADMS), and Advanced Network Automation
  • Distribution Automation: Fault Location Isolation and Restoration (FLIR)
  • SCADA systems: Market Operation systems, Asset Management Systems
  • Micro Energy Management System
  • Demand Response platforms
  • Electric Vehicle:battery and charging stations

Projects opportunities related to smart grid developments, include:

  • 100 smart cities program for cities and districts in Indonesia
  • The key project of moving the nation’s capital from Jakarta to Kalimantan.

Accessing The Market:
Indonesia’s demand for Smart Grid technologies likely will grow as the country is aiming to reduce dependency on imported diesel used for power generation in many rural communities; the hope is that much of this power production can switch to renewable energy. The Indonesian government has set a target for the renewable sector to contribute 23% of total power production by the year 2025.

There is significant competition to provide smart grid technology to Indonesia. German, Japanese, Taiwan, Korean and Chinese companies are all present in the market. U.S. firms that are able to offer solutions to PLN, including financing support, will see abundant opportunities. Indonesia’s state-owned utility PLN has recently undergone a restructuring and brought on new management in the hopes that the company will be able to provide better electricity management and service. This likely will lead to a point where quality technology solutions will be prioritized over the lowest price offering. It can be expected that U.S. firms will have more reliable opportunities to participate in providing smart grid solutions to Indonesia than has been the case in the past. As always, U.S. firms should seek a local partner based in Indonesia to most effectively compete PLN projects.

For More Information:
Mario Simanjuntak
Commercial Specialist
U.S. Embassy, Jakarta
Mario.Simanjuntak@trade.gov

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