Indonesia Power Risk/Reward Index

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Indonesia Power Risk/Reward Index

• 06 May 2022
• Indonesia
• Power

Key View: Indonesia's Power Risk/Reward Index scores have fallen slightly for a second consecutive quarter, although it still outperforms the regional and global averages. Indonesia continues to see attractive Rewards, supported by strong macroeconomic fundamentals driving power demand and opportunities for growth in the power market. Its Risk profile also remains moderate and is expected to improve further over the coming quarters as the market continues to improve its operating and investor environment for the sector.

Risk/Reward Snapshot

Indonesia & Asia Region - Power Risk/Reward Snapshot



Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions

Global And Regional Ranks

• Regional rank (out of 21): 7th
• Global rank (out of 117): 17th

Key Features And Latest Updates

• Indonesia's Industry Rewards score outperforms the regional and global averages. This is underpinned by our expectations for robust growth in Indonesia's power sector over the coming decade, due to strong underlying demand, government commitment to develop the sector, and relatively strong investor interest across most fuel types.
• Indonesia's Country Rewards are also attractive, as strong macroeconomic and demographic fundamentals, and a strong recovery in its manufacturing sector will support rising power demand over the coming years.
• Indonesia's Industry Risks score has fallen notably this quarter, largely from its T&D losses indicator, as distribution losses remain relatively high in the market. That said, we expect this to improve over the coming quarters, amid strong support from the government and PLN, with robust investments to support the expansion and modernisation of the network, including interconnections across Indonesia's Islands and with Malaysia and Singapore.
• We retain Indonesia’s score of 64.2 out of 100 in our Short-Term Political Risk Index, given that we expect the economy to experience a post-pandemic recovery in 2022. Policy continuity appears likely for now, given that President Joko Widodo enjoys still high approval ratings, and the next general elections are not scheduled until February 2024. Factors that could undermine this stability include a sudden rise in inflation amid a significant pick-up in global oil prices.

RRI Matrix Breakdown

Indonesia & Asia Region - Power Risk/Reward Index By Component



Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions

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