Transition to Low Carbon Electrical Generation for Indonesia

This paper explores the options for the transition from fossil fuels to renewables for Indonesia’s electricity supply. The stimulus for considering such a transition is the need to reduce carbon emissions whilst meeting the electrical demand. We have modelled a phased replacement strategy in which retiring fossil fuel plants are replaced by renewable plants. The modelling computes carbon emissions, energy output and costs. Such a strategy will take up to 2050 to reduce CO 2 emissions to near zero. The modelling was then applied to test more rapid retirement of the fossil fuel plants to obtain near zero emissions by 2040 and then by 2030. All of these strategies were accompanied by reducing costs, largely because of the low and reducing costs of renewables. The modelling was also used to check the sensitivity of the outcome to the assumed costs of fossil fuels and the projected reduction in renewable energy costs. The results show that Indonesia could achieve low carbon electricity generation without extra cost and probably with considerable financial savings. The paper goes on to project an expansion of electrical capacity using renewables, and to propose standalone renewable mini-grids for remote communities as cost effective compared to extending the grid system.


INTRODUCTION
In a previous article [1] we introduced some of the energy issues facing Indonesia, including the contentious problem of coal. Indonesia has an accessible, low sulphur coal resource, which it uses for electrical generation and for export. This relatively cheap and economically vital resource is under criticism because of its high CO2 emissions when burned to raise steam to generate electricity. Moving away from coal generated electricity is always assumed to be expensive for Indonesia, and as coal importers around the World also start to restrict their own use of coal the economic impact on Indonesia could be severe. See Cornot-Gandolphe [2]. In this paper we explore possible options for Indonesia to phase in renewable energy technology. We will show that this can be done with reducing greenhouse gas emissions and with reducing costs. The primary objectives of this study were to model the gradual replacement of the existing coal, oil and gas fuelled electrical generation in Indonesia with PV and wind renewable technologies, and to do this completely by 2050; to do this more quickly by 2040; and more urgently by 2030. The associated objectives were to use the model to calculate carbon emissions and financial outcomes including an analysis of the sensitivity to the range of fossil fuel costs. The other objectives were to explore the financial implications of expanding the grid capacity and providing remote communities with mini grids; both using renewables.

The Current Use of Conventional Energy
Indonesia has a particularly difficult challenge of providing low carbon energy, especially in the electricity sector, due to its geographical, demographical and socio-economic factors. Reserves of oil and gas, are being rapidly depleted, making Indonesia's energy security weak as she has to import both oil and gas. Because electrical power generation is dominated by coal, gas and oil and takes the substantial portion of the national oil subsidy, a strategy to shift from fossil fuels to renewable energy is necessary. There are currently about 16 oil and gas plants with capacities ranging from 15 to 2255 MW, totalling 8446 MW providing 30% of electricity, and 20 coal plants (60 to 3400 MW, totalling 18,630 MW, with as much as a further 17,264 MW planned or under construction) providing 57.2% of electricity, in Indonesia [3]. With much lower greenhouse gas emissions, renewable energy sources will also help Indonesia to meet its carbon emission reduction target. Hydroelectric and Geothermal plants currently contribute about 12% of electrical generation. There are many obstacles to Indonesia adopting more renewable energy [4], however in this paper we restrict our considerations to those of carbon emissions and cost. In our modelling, we have sought to reduce the use of fossil fuels by retiring coal, oil and gas generating capacity and replacing them with renewables. This will maintain the current grid capacity. However, the Indonesian policy is to increase supply so that the consumption per person rises to match that of neighbouring countries, see Table 1. We will address increasing the capacity in this paper. considerable renewable resources in six sectors, as illustrated in Table 2, we have restricted this work to the two most economic ones in the US list, namely PV and wind.

Economic Considerations
The range of cost of electricity generation from renewable and conventional energy sources can be seen in Table 3   Source: Levelized costs Lazard [6], Operating costs Statkraft [8].
Although PV requires substantial capital costs, resulting in high levelized costs, this source stills looks attractive. Lazard [6], reports that the costs of both PV and wind have fallen by over 68% during the past nine years, and can be expected to continue to drop as maturing technologies become more efficient, and as mass production reduces manufacturing costs. However, the intermittency of both solar and wind J Sustain Res. 2020;2(3):e200024. https://doi.org/10.20900/jsr20200024 resources creates problems with the grid, which could require the continued employment of some fossil fuel power stations to maintain frequency and voltage and to meet the demand in the temporary absence of PV or wind.

Economics of Intermittency
Alternatives to retaining some fossil fuel power stations on the grid to provide for quiet periods of renewable generation are to use smart grids to match supply to demand and/or to include energy storage. In fact, energy storage is essential where PV or wind are the dominant energy providers. At the time of writing Lazard [9] reports that the cost of al. [11] identified 657 potential sites across Bali alone, with a total storage capacity of 2300 GWh, and claim that there is more than enough such sites to support 100% renewable energy in Indonesia.

METHODOLOGY
In this modelling the fossil fuel plants included are; six gas fired, 10 oil fired and 20 coal fired generating stations, each with their appropriate installed capacity. The list of fossil fuel capacities is included in the Appendix.
In this modeling we have used the US cost data from Lazard [6,12].
The capacity factor, greenhouse gas emissions, as CO2e and cost of the energy sources are given in Table 4. Note that the low capacity factors for wind and PV reflect the reliance of these sources on the intermittent availability of wind and sun, whereas the other energy sources are limited only by technical aspects of their operations such as repair and maintenance periods, and so have capacity factors close to 1 (or 100%). In the model we calculate the annual energy produced from each power station, the total annual cost of energy delivered and the annual CO2 emissions. We do this for the year 2020, and repeat for subsequent years up to 2050. This, of course, assumes that all of the power stations continue to operate over that period, or are replaced by the same type of generator. This is Business as Usual (BAU).

Modelling a Strategy for Indonesia
We suggest a complete conversion strategy from fossil fuels to wind and PV renewables over a period of years to reach zero CO2 emissions. It is impossible to generate electricity with zero emissions since both wind and PV technologies still require some contribution from fossil fuels in their life cycle and so have a modest emission of 0.02 t CO2/MWh. We will therefore use the term "near zero" to describe the target for minimising CO2 emissions from electrical generation in Indonesia.
The modelling of strategies is done in several stages:     The total cumulative carbon dioxide emissions for 2020 to 2050 are shown in the legend.

Stage 5. Increasing installed electrical capacity
By more than simply replacing fossil fuel plants with renewable capacity, this scenario shows, in Figure 5, a doubling of annual energy delivered, and the near zero condition is reached by 2030. The total annual cost, which is shown in figure 6, initially drops from the fossil fuel value, but then slowly increases as the installed capacity grows, but the unit cost remains low. It is similarly possible to continue the 7% annual growth rate over the period 2020 to 2050, which means increasing the delivered electrical energy from renewables by seven times to 1400 TWh/a. There is sufficient renewable resource in Indonesia to supply this, and it is predicted, based on Lazard [6], that the unit cost will fall during this period.  A major consideration for the implementation of a carbon reduction policy as suggested by our modelling will be financial. On the basis of the costs from Lazard [6] we would advocate adopting a rapid adoption of renewable energy this minimises both total cost and total CO2 emissions.
The question of fossil fuel costs in Indonesia, though, is uncertain and it may be that we should not accept the US costs.
Indonesia has had a very laudable history of energy subsidies designed to help the poor and less privileged [13]. A meeting of G20 countries, and Indonesia's self-reflection [14] concluded that such subsidies are largely more help to richer sections of society who have access to energy consuming dwellings and vehicles, and actually encourage consumption of energy since the price is held artificially low.
In the modelling reported above we have used US costs for all forms of energy, which we believe to reflect the relative costs of the technologies.
However, in order to test the importance of real costs in the Indonesian electricity grid we have conducted a sensitivity analysis to test our conclusions. We have therefore run our model with the cost of fossil fuels taken to be 50%, 25% and 10% of the US costs. This will accommodate the possibility that some of the source fossil fuels are indigenous (Indonesia has coal, but largely imports oil, LNG and gas) and so are cheaper for the electrical generators. This also accommodates the subsidy arrangements, which perhaps have made electricity cheaper, but masking the true cost, and allows for the fossil fuel costs to be operational costs only since the plants already exist.

Remote Communities
Many of Indonesia's population live away from the National Grid, and so any strategy should include consideration of providing electricity to remote communities, many of which occupy some of the 17,000 islands.
The option of extending the national grid using submarine cables to service remote islands would have been considered in the past, but a cheaper option may be to install micro and mini grids in the vicinity of the communities. Submarine cables can cost of the order of 0.6 $M/km. [15], and 59 Scottish Islands are connected to the UK mainland via submarine cables. However, given the recent costs reported by Lazard [6], wind and utility PV represent good economical choices to provide electricity to remote and isolated communities, especially where the length of cable required is large. Demand on small grids will be relatively more variable than would be the case on large, national grids where the smoothing effect of many consumers and the ability of burn fossil fuel on demand means that supply and demand can be readily matched. Add to this the variability of the energy sources of wind and PV and the problem of matching supply and demand is more complex. We have modelled this by considering a typical community to have 100 houses. Apart from anticipating that renewable costs will continue to fall for some years, we can also consider that energy efficiency and conservation will effectively reduce costs. Light emitting diodes (LED) for example are much more efficient than both conventional light bulbs and compact fluorescent bulbs, (84, 12 and 60 lm/W respectively). The slightly higher capital cost of LED is quickly repaid in much reduced running costs.

DISCUSSION
The modelling shows that the low cost of wind and PV technologies, which are now competitive with fossil fuels and nuclear energy, could be deployed in a phased manner to replace Indonesian fossil fuel plants as they reach their end of life. This is in agreement with the general strategy proposed by Statkraft [8]. The other objectives, on increasing capacity by adding more PV and wind arrays, and introducing micro-grids to remote communities, suggest that renewable energy, accompanied by energy management and energy