Study and model development of renewable energy investment feasibility under willingness and ability to pay approach

Abstract

Solar PV power plant investment in Indonesia is one amongst the alternative for electricity supply to maintain electrical reliability supply and to maximize local energy potential for remote areas. An objective approach in terms of ability and willingness to pay of the community at study location becomes the basis for revenue potential calculation of on this study. Assessment of investment feasibility including economic incentive calculation becomes more important if incentive is required in order to improve return of investment and at the time to provide good quality of energy supply at the lowest possible cost. Community characteristics data on study location is processed using statistical methods and micropower optimization simulation to generate PV system specification and all component needed to invest. To increase the return of investment the economic incentive scenarios are generated to provide alternatives to optimize the economic feasibility while maintaining the technical feasibility based on the ability and willingness to pay of the community, and not inflicting financial loss to the incentive giver. The results of investment feasibility calculation, with various scenarios built for investment alternatives, PV investment is economically feasible based on common investment analysis criteria such as expected NPV (net present value), IRR (internal rate of return), and PBP (payback period).