Energy in the Power Sector and GHG Emissions: Modeling as an Input to the Formulation of the Next Midterm National Development Plan

Abstract

In 2014, Indonesia is reported as the world’s tenth largest economy in the world. With stable economic growth rate above 5 % per annum in the last 10 years, national energy demand is projected to increase from 712 million barrel of oil equivalent (BOE) in 2010 to 1.3 billion BOE in 2019. Indonesia is highly dependent on fossil fuel. The country has become a net importer of oil with 800,000 barrel oil per day imported that year. In order to reduce the burden of national budget for oil import, the government has established the national energy policy that shifts the main energy source from oil to other sources. It has also set up regulation for developing approximately 20,000 MW of coal-fired power plants (Fast Track Program Phases 1 and 2) at the expense of higher greenhouse gas (GHG) emissions. In order to provide an insight for government in developing a strategy for mitigating GHG emission, alternative scenarios of electricity planning are analyzed using the Indonesia Integrated Energy, Economic, and Environmental Modeling (I2E3M) software. The alternative scenarios include higher utilization of renewable energy and demand-side management program. The results confirm that limiting the GHG emission will increase the share of renewable energy in the primary energy mix for electricity generation. By setting GHG emission at 10 % lower than business as usual (BAU) case, the share of renewable energy will be increased to around 15 % in 2020. Moreover, the demand-side management program is another option in reducing GHG emission from electricity generation activities.