Power Java-Bali and Sumatra with Renewable Energy!

March 2019

What is the impact of adding considerable shares of wind and solar capacity to system cost, and how will the system ensure security of supply?

On the 21st of February this year, Assoc. Prof. Ariel Liebman attended an Institute for Essential Services Reform (IESR) seminar in Jakarta, Indonesia, launch the publication of ‘A Roadmap for Indonesia’s Power Sector’, a joint study from IESR, the Australia Indonesia Centre, Agora Energiewende, and the Monash Grid Innovation Hub. The seminar, ‘A Roadmap for Indonesia’s Power Sector: How Renewable Energy Can Power Java-Bali and Sumatra’, investigated the benefits of renewable energy in Indonesia. Fabby Tumiwa, Executive Director of IESR, who commissioned the report, opened the event with the key findings. Assoc. Prof Ariel Liebman, lead author of the report, highlighted objectives, method, scenarios and results behind the study. It was followed by a Panel Discussion with key experts from government, industry, academia and independent practitioners.

Indonesia is the world’s 4th most populous country. There are several possible pathways that Indonesia can take to meet its energy and climate targets with a growing population. The study underlying the Roadmap modelled several scenarios, focusing on locations where most of the population lives and where about 90% of the electricity is produced and consumed in Java-Bali (15 provinces) and Sumatra (8 provinces). Every year, Perusahaan Listrik Negara (PLN), state-owned electricity utility, publishes an Electricity General Plan (Rencana Umum Penyediaan Tenaga Listrik or RUPTL), mapping the development of electricity demand and supply for the next decade. The models build on Indonesia’s state-owed electricity utlilities annual Electricity General Plan (the RUPTL), incorporating assessed investment trajectories and the supply-demand balance in the power system using the Energy Exemplar’s PLEXOS energy market platform. Assoc. Prof. Liebman explained: “After over a year of work and pushing the limits of data gathering, we have released the study in Indonesia. Our PLEXOS Indonesian model found the “least cost” solutions. The base data from the PNL RUPTL used was from 2018-2027. A lot of critical data was not publicly available, so we used proxy data from other systems."

The report found there is a risk of building in too much capacity if demand forecasts are overstated. Previous forecast by the Ministry of Energy and Mineral Resources (MEMR) and utility PNL, which is locked into long-term power purchase agreements with independent power producers, have historically overestimated increases in electricity demand in Java-Bali and Sumatra. If PLN, continues with its current plans, there will be 12.5 GW of unneeded coal, gas and diesel generation, resulting in approximately US$12.7 billion in wasted investment.

Fig. 1. Historical demand and demand projection in Java Bali and Sumatra: a tendency to overestimate the future demand growth. (click to enlarge) Fig.2. Moderate growth scenario annual maximum demand forecasts. (click to enlarge)
Fig.3. Total operating and investment cost for Java-Bali-Sumatra 2018-2027. (click to enlarge) Fig.4. Installed capacity and generation per technology in each scenario. Renewable percentage in bracket. (click to enlarge)

Renewable Energy can be a cost-effective system, coupled with energy efficiency and savings from reducing thermal power generation in line with accurate demand forecasts. In the next decade, Java-Bali and Sumatra could meet their electricity demand by doubling their share in wind and solar energies, which are driven by significant technology cost reduction. Liebman says that a high renewables scenario would bring many benefits. “Such investment is solar and wind power would be comparable to the current high fossil-fuel pathway costs, but cleaner as it would result in a reduction of greenhouse gas emissions by 36%. With 43% share of wind and solar, the security of supply of the power system will be maintained, it would also create positive health, environmental and economic impacts”. Moreover, a high renewables scenario coupled with realistic energy savings would result in a cost saving of US$10 billion over ten years as compared with the current RUPTL plan.

Planning and policy are keys to realize these economic and technological opportunities. We have the tools and the solutions to make this happen. The report provides recommendations for reliable, cost-effective, and environmentally friendly energy system. Ministry of Energy and Mineral Resources (MEMR) and PLN should:

  1. review best practice approaches in demand forecasting and implement it in Indonesia,
  2. integrate the potential of energy efficiency for forecasting future electricity demand.
  3. review current proposals for new coal-fired power stations in the Java-Bali and Sumatra systems and apply current prevailing costs for renewable technology in future planning to asses cost-effective and low carbon pathways.
  4. develop and assess alternative scenarios and low carbon electricity pathways in the National Electricity Plan (RUKN) which integrate medium and higher renewable energy penetration in various electricity systems; and
  5. adopt an ambitious long-term strategic plan with clear intermediate targets for renewable energy expansion, supporting policies and streamlined implementation at national, provincial and local levels.

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