Hydropower Investment Opportunity in Indonesia

For over the years, Indonesia’s economy continues to thrive. With many infrastructure project and development on the go, Indonesia is on its mission to become the leading economy in South East Asia. Despite infrastructure development and continuously show stable economy growth, however, based on the data by investment Coordinator Board (BKPM), there are still 27% of Indonesian population who still don’t have access to electricity.

The government is committed to increase the accessibility of electricity across Indonesia. Earlier this year, State Electricity Company (PLN) stated that the government is targeting the electricity access rate of 100 % throughout all area in Indonesia by this year. As a part of effort to reach this target, the government plan to develop infrastructure for hydropower production of 16.8 GW by 2025.

Indonesia has set an ambitious plan to build 26 hydropower across the country. To achieve this plan, the role of foreign investment will play an important role. Hence, the Government is committed to support the investment for hydropower energy by easing the regulations and granting tax allowance and tax holiday to investors with minimum investment value worth IDR 500 billion ( US $34.5 million).

Several projects for hydropower located across Indonesia is also under construction. The projects include Peusangan (85 MW) and Meurebo (59 MW) Hydropower in Aceh; Batang toru (550 MW) and Hansang (39 MW) in North Sumatera; Malea (90 MW), Bonto Batu (100 MW) and Karam (450 MW) in South and West Sulawesi; and Raja Mandala (40 MW) in West java. There are also several other Hydropower projects, which are currently in the middle of PPA Negotiation, spread in Java and Sumatera.

Several countries has showed interest in Earlier this year, China has invested in The Kayan River Hydropower Project, which is located in the province of North Kalimantan in Indonesia, with a total installed capacity of 9,000 MW and a total investment value of US $ 17.8 billion.

Indonesia has indeed a lot of potential in developing Hydropower plants. According to BKPM, Indonesia’s potential capacity for Hydropower reach to 74 GW.  It is estimated that the value of investment in Hydropower Plant in Indonesia will reach more than US $ 68 billion. Around 80% of the investment opportunities comes from Java and Sumatra, while Sulawesi and Kalimantan contribute around 13 % percent. Other province like Nusa Tenggara, Papua and Maluku also offer investment opportunities for the investors.

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