Potential of biomass and coal co-firing power plants in Indonesia: a PESTEL analysis

Abstract

Biomass co-firing technology for coal power plants has been widely applied in developed countries. The government of Indonesia is currently encouraging the implementation of biomass co-firing to achieve the target of 23% new and renewable energy (NRE) share in the national energy mix by 2025. Although only a few technical issues are left on the implementation of biomass co-firing in coal power plants, the challenges for the large-scale application and the long-term sustainability of the technology still need to be investigated. To identify and overcome these challenges, this paper applies the Political, Economic, Social, Technological, Environmental, and Legal (PESTEL) framework to analyze the business prospects for biomass co-firing for coal power plants. There is potential for biomass co-firing in 114 units of coal power plants with a total capacity of 18.1 GW spread across various locations in Indonesia. As a consequence, it requires around 9 million tons of biomass per year. This huge potential market of biomass opens opportunities for people to participate in supplying the raw materials. The biomass market as co-firing fuels will push agricultural and industrial waste management to be used more efficiently. The biomass supply chain needs to be well developed so that the biomass supply can be sustainable at an economically feasible price, to ensure that electricity prices generated from utilities are affordable for the public. The technical specifications for biomass need to be standardized. The 10% co-firing acceleration of the total coal power plant capacity, or equivalent to around 1.81 GW, can directly contribute to the achievement of the NRE target for the electricity sector and simultaneously reduce greenhouse gas emissions. The government needs to prepare related supporting instruments such as technical regulations, technological and economic aspects, and policy support.