Ea Energy Analyses

Indonesian 2050 scenarios

27.66

1 0.09

0.47

- Supply side scenarios for CO2 emission 5.42

11.2

5.6 2.7
0.01
0.03 1.84

2.24
0 8.52

reduction in the power sector

0.01

2.7
16.66 4.8

0.51
1.68

January 2017
1.05
1.53

1.86 11.43
0.98

Ea Energy Analyses ● Frederiksholms Kanal 4, 3. th. ● 1220 Copenhagen K

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 The world is facing a climate crisis.
At the Paris climate conference (COP21) in December 2015 195 countries,
including Indonesia, committed a long-term goal of keeping the increase in
global average temperature well below 2°C above pre-industrial levels.
Complying with the 2°C target requires extensive transformation of the
Introduction energy system.
• Global CO2 emissions must be reduced by almost 60% by 2050
• the power sector needs to be almost decarbonised by 2050.

This report explores how the Indonesian power sector may be

transformed in the long-term and contribute towards compliance with
the global climate target.

800
Specific CO2 emission (g/kWh)

700
600
500 We look at two pathways based on specific CO2-emission
400 (g/kWh) trajectories for ASEAN countries presented in the
figure.
300
200 • Due to reliance on coal power, the Indonesian starting
100 point is higher than the average ASEAN specific
emissions
0
• assume gradual convergence between the target
2015 2020 2025 2030 2035 2040 2045 2050
numbers for 2030
2°C scenario ASEAN 4°C scenario ASEAN
2°C scenario Indonesia 4°C scenario Indonesia

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 The 2°C scenario and 4°C scenario are compared with the current targets in
the Indonesian National Energy Policy (KEN).

• The National Energy Policy specifies the fuel mix very explicitly
(leaving only 3%-points undetermined a priori)
Scenarios and • In the 2°C scenario and 4°C scenario the fuel and technology mix is
determined on a least cost basis subject to compliance with the CO 2
assumptions reduction objectives.

Renewable energy Fossil fuel targets Specific CO₂ emission

Scenario
targets in 2050 in 2050 in 2050
National Energy Policy 40% Coal 36%/Gas 21% -
4°C scenario - - 482 g/kWh
2°C scenario - - 111 g/kWh

The model used is the well-established power sector model, Balmorel. It

finds the least cost solution of a future power system considering among
other fuel cost, investments of generation capacity, dispatch of units and
transmission between regions (www.balmorel.com).

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 12

Levelized Cost of Electricity

Electricity In recent years, renewables have seen a
sharp drop in costs. In most locations wind
10

(US cent/kWh)
8
and solar power are now competitive with
generation conventional power generation technologies
6
4

costs Storage and especially batteries have dropped

2

in prices as well over the last five year and in 0

Coal Gas Solar Wind
the next couple of years they are expected to USC CCGT PV Turb.
get to a level of 200 USD/kWh (see figure right Direct cost Externality cost
below). LCOE calculations for 2035. Assumed full
load hours are 6000 (coal), 4000 (gas),
1500 (solar), and 1900 (wind)

Recent announced long-term remuneration contract prices for renewable power by date of Lithium-ion battery pack prices: Historical and forecasted (Rocky
announcement and to be commissioned over 2016-2021 (IEA midterm market report 2016) Mountain Institute, The Economics of Load Defection, 2015)

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 There are two main ways of reducing CO2
• Substituting the use of fossil fuels with renewables,
• Substituting coal with gas.

CO2 emissions The 2°C scenario shows that it is possible to maintain a stable level
CO2 emissions from the Indonesian power sector while facilitating a
and fuel mix nine fold increase in the demand for electricity (see figure to the right).

Achieving the CO2 reduction requirement in the 2°C scenario requires a

very ambitious integration of renewables and almost complete
phase out of coal. By 2050 there is almost 700 GW of solar PV
installed in Indonesia, and 130 GW (520 GWh) of storage to help
integrate fluctuating production. This high penetration of fluctuating
solar energy gives some integration challenges.

900
2,000
National Energy Policy
1,800 800
4°C scenario
1,600
700 2°C scenario
Generaion (TWh)

1,400

CO2 emission (Mton)

1,200 600
1,000
500
800
600 400
400 300
200
0 200
2015 2030 2050 2015 2030 2050 2015 2030 2050 100
National Energy Policy 4°C scenario 2°C scenario 0
Coal Gas Diesel Geothermal Biomass Hydro Solar Wind 2015 2020 2025 2030 2035 2040 2045 2050

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 Integrating renewable sources require thermal power plants flexibility
• run on part load
• ramp up and down swiftly to counteract the fluctuations in RE output.

Integration of This flexibility in thermal power plant operation is current practice in other
countries. In Denmark, some power plant can ramp down to 20% of their full
load. It is therefore realistic to assume that the newer power plants in
renewables Indonesia in 20-30 years could achieve the comparable flexibility.

In the 2°C scenario the dispatch also reliant on the use of electric storage.
The solar output in daytime, which exceeds the demand, is stored and
unloaded during the evening and night.

Aver a ge p o wer gen er a ti o n (GW )

Avera ge p ower gen era ti o n (G W )

250 250

200 200

150 150

100 100

50 50

0 0

Hour Hour
Geothermal Biomass Hydro Geothermal Biomass Hydro
Coal Gas Solar Coal Gas Solar
Wind Storage Electricity demand
Wind Storage Electricity demand
A v e r a g e p o w e r g e n e r a ti o n ( G W )
A v e r a g e p o w e r g e n e r a ti o n ( G W )

4°C scenario in 2050 for Java-Bali system 2°C scenario in 2050 for Java-Bali system
250 25 0

200 20 0

150 15 0

100 10 0

50 50

0 0

Hour Hour
Ge ot her ma l Bi om as s Hyd ro Ge ot her ma l Biom as s Hydr o
Coa l Ga s Sola r Coa l Ga s Sola r
Wind St ora ge E lec tr i city de m and
Wind S tor age E lec tr ic ity de m and

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 100% 27.66

100%
1 0.09
94%

100% 0.47
100% 100%
60% 99 94%
5.42 0.03 1.84
100%
100% 11.2

100% 73%
100% 100%
5.6 0.01 2.24
2.7 69% 0 8.52
0.01
100% 100% 100%
100% 89%
2.7 99% 100%
16.66 4.8

Renewable
99%
83%
0.51 57%

Renewables share of generation

1.68
1.05
81% 1.53
2°C scenario ingeneration
2050 from RE (%)
resources
66% 65% Power
1.86 11.43
0.98 61%
80% 100%
63% 79% 96%
90%
70%
60%

Resource data applied in the scenario analysis are derived from Director General of
Renewable Energy and Energy Conservation (EBTKE).

The map above shows that in most other places than the Java-Bali system it is
possible to integrate 100% generation from renewable energy in the power
sector in the 2°C scenario. The Java-Bali system utilizes all its renewable energy
resources except solar as shown in the table below. The solar source is assumed
limitless. The solar PV panels installed in the Java system will cover an area
corresponding to roughly 2% of the surface area of Java.

2°C scenario Java-Bali Sumatera East Indonesia

2050
Potential Commisioned Utilization Potential Commisioned Utilization Potential Commisioned Utilization
(GW) (GW) (%) (GW) (GW) (%) (GW) (GW) (%)
Geothermal 6.8 6.8 100% 7.4 7.4 100% 3.4 2.2 63%
Hydro 7.6 7.6 100% 21.3 21.3 100% 66.1 23.1 35%
Biomass 2.7 2.7 100% 3.1 3.1 100% 1.8 1.8 100%
Wind 24.0 24.0 100% 4.7 4.7 100% 31.9 9.3 29%
Solar 593.7 55.7 30.3

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 When externalities are not considered, the 4°C scenario exhibits the lowest
electricity cost. The cost of the National Energy Policy is only slightly higher.

The pictures changes completely when externalities, related to the local

pollution from NOx and SO2 emissions, are added to the equation. In this
System cost case, the 2°C scenario becomes the lowest cost alternative!
Local pollution of NOx and SO2 has a huge impact on health, causing society
of electricity cost related to early death, hospital cost and early retirement.

This is not considering eventual cost of CO2 emissions

12
Cos t of electrici ty (US cent/kW h)

10 Scenarios with externalitiy costs

6
Scenarios without externalitiy costs
National Energy Plan
4
4°C scenario
2°C scenario
2 National Energy Plan+Externalities
4°C scenario+Externalities
2°C scenario+Externalities
0
2015 2020 2025 2030 2035 2040 2045 2050
Electricity costs are determined as total system cost, including capital costs for power plants and storages, fuel costs,
and operation and maintenance costs, divided by total electricity demand

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 • This study explores how the Indonesian power sector may be transformed in
the long-term and contribute towards compliance with the global climate
target.

• The 2°C scenario shows that it is possible to maintain a stable level CO2
Summary and emissions from the Indonesian power sector while facilitating a nine fold
increase in the demand for electricity.
key findings • Renewable energy – particularly solar PV in combination with short term
electric storages – is key to achieving the CO2 reduction requirement in the
2°C scenario requires a very ambitious integration of renewables and almost
complete phase out of coal.
• When the cost of externalities are considered, the 2°C scenario may provide
a cheaper solution in the long-term than the 4°C scenario and the National
Energy Policy.
• Integration of wind power and in particular solar PV will become a challenge
that requires attention and further analyses in all three scenario.

Perspectives
• These analyses focus exclusively on the supply side of the power system.
The general experience is that promoting energy efficiency is often
cheaper – and measures on the demand side could be a lower cost
alternative.
• The robustness of the analyses can be improved with refined data and
particularly a country specific and transparent technology catalogue would
improve quality as well as establishing consensus among stakeholders.

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 • Balmorel website. www.balmorel.com
References • di Valdalbero, (2006), External costs and their integration in energy costs. European
Sustainable Energy Policy Seminar INFORSE-Europe.
• Director General of Renewable Energy and Energy Conservation (EBTKE), Note potential
of renewable energy sources used in RUEN.
• International Energy Agency, Energy Technology Perspectives 2016.
www.iea.org/etp2016
• International Energy Agency, Renewable Energy Midterm Market Report 2016.
• Rocky Mountain Institute, The Economics of Load Defection, 2015.
• Wang et al., 2015, Monetization of External Costs Using Lifecycle Analysis—A
Comparative Case Study of Coal-Fired and Biomass Power Plants in Northeast China.
Energies.

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