Policy Impact on Economic Viability of Biomass Gasification Systems in Indonesia

Pranpreya Sriwannawit,Ashack Miah Rony,Prashanti A Anisa

doi:10.13044/j.sdewes.2016.04.0006

Abstract

Indonesia is facing challenges on the lack of electricity access in rural areas and the management of agricultural waste. The utilization of waste-to-energy technology can help in mitigating these ...

Highlights

The United Nations’ report, Our Common Future, indicated the need towards more sustainable development in which development and environment aspects have been collapsed into one single concern and both need to go hand-in-hand [1]
For scenario 6, all three types of potential income are applied to show the total combined effect. Based on these six scenarios, Net Present Value (NPV) and Internal Rate of Return (IRR) of a biomass gasification power plant are calculated in the financial modelling
The results reveal NPV and IRR yield positive values only when financial support at national and international levels exists, i.e., the reallocation of subsidies from fossil fuels to biomass, and Clean Development Mechanism (CDM)

Summary

Introduction

The United Nations’ report, Our Common Future, indicated the need towards more sustainable development in which development and environment aspects have been collapsed into one single concern and both need to go hand-in-hand [1]. This paper focuses on electricity access in Indonesia. Access to electricity is one of the most important means to support the country’s economic development and sustain its continued economic growth [4, 5]. The need for large-scale electricity provision in rural Indonesia is evident but the power sector is facing several challenges [7]. Indonesia’s current electricity supply is dominated by subsidized fossil fuels [8]. The average cost of electricity supply (EUR 0.16/kWh) is twice of the grid tariff (EUR 0.06-0.08/kWh). This large gap is subsidized by the government [7]. According to the International Energy Agency [8], almost 90% of electricity in Indonesia is generated by fossil fuels. There are considerable environmental issues; Indonesian government is committed to reduce 26% of greenhouse gas emissions within 2020 in order to mitigate the climate change impact [9]

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Results

Conclusion