Generation expansion planning with a renewable energy target and interconnection option: A case study of the Sulawesi region, Indonesia

Abstract

Sulawesi is a strategic economic region in eastern Indonesia that is facing high growth in electricity demand. Two challenges need to be addressed to achieve its renewable energy (RE) target. The region comprises two unconnected electricity systems, and its RE resources are scattered geographically. It is therefore harnessing RE resources and interconnecting these two electricity systems can be an optimal scenario for generation expansion planning (GEP). This study aims to develop an open-source GEP model for the Sulawesi region as well as identify the optimal electricity development pathway while considering not only the need to achieve higher penetration of renewables and reduce CO2 emissions but also the option and associated benefits and costs of interconnecting the two distinct electricity systems. The results show that the optimal RE development pathway is the interconnection scenario, which ensures a lower generation cost with reduced emissions. This scenario reduces the cost by USD 258.8 million compared with the total cost of the isolated scenario and ensures the RE target of 31% by 2050. This study recommends that investment in hydro and wind energy should be simultaneously encouraged, and robust policies are required to support investments in RE sources, such as geothermal, biomass, and solar energy.