Independent Power Producers Research Articles

Biomass power plant prospects in Indonesia’s energy transition: IPP and PLN perspectives

In an attempt to accelerate the energy transition, the government of Indonesia released a new regulation regarding renewable energy tariffs, including for biomass power plants (BPPs). However, a gap persists in the academic literature focusing on biomass power plants under these new tariffs. This study examines the role of biomass power plants (BPP) in meeting Indonesia's renewable energy targets, with a specific focus on recently introduced renewable energy tariffs. Three scenarios were developed to comprehensively understand Indonesia's state-owned electricity company (PLN) perspective and Independent Power Producers (IPPs) perspective, with a case study in Kundur Island, Riau Province. The financial analysis for IPPs shows in an NPV of $1.8 million under the initial tariff, while the expansion tariff results in an NPV of -$0.3 million. Sensitivity analysis reveals that a capacity factor exceeding 94.5 % is required to yield a positive NPV under the expansion tariff. From PLN's perspective, BPPs under the initial tariff correspond to an NPV of $8.48 million, and a B-C ratio of 2.31, resulting in a financially viable project, due to substantial cost savings from de-dieselization. Furthermore, the emission analysis highlights an 83.7 % decrease in emissions emitted with the utilization of BPPs compared to diesel power plants. These findings underscore the need to incorporate average generation cost in formulating renewable energy tariffs. Ensuring renewable energy projects are economically sustainable for both PLN and IPPs, stimulates widespread adoption and sustains cost-savings, all while advancing energy transition and making energy more accessible for everyone.

Project management tools in renewable energy integration: A review of U.S. perspectives

The integration of renewable energy into the U.S. electricity grid is a multifaceted challenge that demands innovative project management approaches. This review article explores the current landscape of renewable energy integration in the United States, emphasizing the diversity of renewable sources such as solar, wind, hydropower, geothermal, and biomass. It examines the state of integration, highlighting significant progress and persistent challenges, particularly in grid stability, regional variations, and regulatory frameworks. Key stakeholders, including federal and state agencies, utilities, independent power producers, and advocacy organizations, play pivotal roles in shaping the renewable energy sector. The article delves into the critical importance of project management, outlining how effective coordination, risk mitigation, and performance optimization are essential for successful project execution. Various tools and techniques, including advanced analytics, agile methodologies, and stakeholder engagement strategies, are analyzed for their effectiveness in navigating the complexities of renewable energy projects. The review also addresses the emerging trends and innovations in project management, such as the adoption of artificial intelligence, machine learning, and sustainability-focused frameworks, which are poised to revolutionize the sector. It concludes with practical recommendations for project managers, emphasizing the need for flexibility, technological awareness, stakeholder collaboration, and data-driven decision-making to overcome challenges and drive the transition to a sustainable energy future. By providing a comprehensive overview and actionable insights, this article aims to equip project managers and stakeholders with the knowledge needed to successfully integrate renewable energy into the U.S. grid, thereby contributing to the nation's goal of a resilient and sustainable energy system. Keywords: Renewable Energy, Project Management, Grid Integration, Stakeholder Engagement, Sustainability, Technological Advancements, Energy Transition, Review.

Techno-Economic Assessment of Electricity Generation From a Medium-Scale CSP-PV Hybrid Plant Using Long-Duration Storage

The South African electricity sector is transitioning from a single utility buyer model to an open market model due to increasing utility tariffs, the energy crisis, sustainability goals, and enabling legislation. As a result, the private sector is seeking to procure private power generation technologies, with solar photovoltaics (PV) and onshore wind being the primary choices. However, the integration of these technologies is limited due to their variability and lack of dispatchability. Concentrating solar power (CSP) tower technology combined with long-duration storage is gaining traction in high solar resource regions due to efficiency improvements and cost reductions. This paper evaluates a medium-scale CSP-PV hybrid plant’s technical and economic feasibility in South Africa, focusing on cost savings, energy security, and sustainability. The study identifies a hybrid plant suitable for large power users, with independent power producers (IPPs) developing such a plant using non-recourse project finance and energy sold to large users through long-term power purchase agreements (PPA). The first-year PPA tariffs are determined using a typical project finance model developed for local market conditions. Depending on the plant design and the off-taker’s utility tariff structure, the plant offers cost savings (and average tariffs) ranging from 9.25% (at 78 USD/MWh) to 17.58% (at 81 USD/MWh). Hybrid plants are expected to become more feasible and “bankable” with improving technology and decreasing costs in South Africa.

The effect of PV generation's hourly variations on Israel's solar investment

Limited by sunniness and conversion efficiency, one installed MW of photovoltaic (PV) capacity can only produce ωt MWh of electricity in daytime hour t, where ωt = positive fraction that we call PV's hourly effective capacity (HEC). Based on a sample of commercially operating PV plants in Israel, HEC rises throughout the 08:00–11:00 period, peaks in the 11:00–14:00 period and then declines in the 14:00–18:00 period. Further, HEC values in spring and summer exceed those in autumn and winter, thus motivating our research question: do HEC variations by hour and season adversely affect the plans for and assessment of PV investment in Israel? An affirmative answer would cause concerns regarding Israel's announced policy of relying on increasing market penetration of PV generation transitionally supported by merchant natural-gas-fired generation (NG) to achieve a low-carbon electricity future. Hence, we propose a two-stage model of Israel's forthcoming Cournot wholesale electricity market with independent power producers (IPPs) operating PV and NG power plants. By comparing the model's solutions under alternative HEC scenarios, we find that the level of detail in modelling the HEC variations by hour and season does not materially affect the optimal PV and NG investments, thus lending support to the use of relatively simple models with only two daily non-seasonal HEC values to assess Israel's announced policy of deep decarbonization. Our methodology is general and real-world relevant because it can be readily adapted for applications in other regions with ample sunshine and wholesale electricity market competition (e.g., California, Texas and Australia).

Feasibility analysis of virtual clean hydrogen plant platform: A case study on energy policy in S. Korea using stochastic programming

In S. Korea, high-density renewable and high-density load areas are separate. This separation has led to increased transmission constraints. As both Renewable Energy Source (RES) penetration and power demand simultaneously increase, RES saturation occurs. This phenomenon reduces both the benefits of power transactions and the acceptance of RES. Addressing this issue requires actions from Independent Power Producers (IPP) and policymakers. This paper suggests a Virtual Clean Hydrogen Plant (VCHP) platform design that consolidates the Photovoltaic (PV) energy from high-density renewable areas into a single power plant. The platform converts excess energy, generated by PV due to transmission constraints, into hydrogen and supplies it to the high-density load areas. The South Korean government plans to introduce a Clean Hydrogen Portfolio Standard (CHPS), which offers a fixed premium (FP) to private power generators that provide power through clean hydrogen. Consequently, the proposed benefit structure of the VCHP platform includes an FP, settled through CHPS. This paper's design and operation algorithm for the VCHP platform incorporates stochastic programming to analyze PV operation and deterministic optimization for the optimal scheduling of Fuel Cells (FC) that provide power and heat to high-density load areas. The simulation results demonstrate that the minimum subsidy required for CHPS benefits varies depending on how PV-coupled P2G technology is utilized. Specifically, engaging in net metering with VCHP over the course of one month can establish a cost-effective benefit structure, verified to require a subsidy ranging from a minimum of 0.2036 $/kWh to a maximum of 0.2416 $/kWh.

Local Government Empowerment and Collaborative Approaches in the Electricity Sector: A Constitutional Analysis

This article explores the constitutional provisions and legislative aspects governing the role of local governments in generating and distributing electricity in South Africa. It encompasses the constitutional framework, which grants municipalities specific powers and responsibilities, highlighting the significance of these "original powers" derived directly from the Constitution. The article emphasises the need for intergovernmental cooperation at national, provincial, and local government levels to effectively address the complexities of electricity provision, taking into account related services such as water, sanitation, and environmental rights. The article further assesses recent amendments to the Electricity Regulation Act 4 of 2006, which grant municipalities greater involvement in electricity generation and procurement from independent power producers. While these amendments are seen as positive, the article highlights the need for financial resources and technical capacity building to empower municipalities to undertake these new responsibilities effectively. Ultimately, it emphasises the critical role of local governments in ensuring a sustainable and reliable supply of electricity for their communities while calling for comprehensive support from higher government levels to realise this goal.

Techno-economic feasibility study of solar photovoltaic power plant using RETScreen to achieve Indonesia energy transition

Indonesia, a key player in the global energy transition, faces surging electricity demand and ambitious renewable energy goals. In response, the government introduced a new regulation about renewable energy tariffs, including tariffs for photovoltaic (PV). However, there remains a gap in the academic literature regarding PV power plant feasibility studies under these tariffs. To address this gap, this study investigates the feasibility of a utility-scale solar photovoltaic (PV) power plant in Indonesia, focusing on the newly implemented renewable energy tariffs based on Independent Power Producers (IPPs) and Indonesia's state-owned electricity company (PLN) perspectives. Five scenarios were developed based on the proposed 26 MW solar power plant on Nias Island utilizing RETScreen software. The results showed that based on the IPP perspective, the newly implemented renewable energy tariff was inadequate to make the project feasible, however, an introduction of a 10 USD/t CO2 emission incentive would make the project financially viable for IPPs. Therefore, it is recommended to introduce emission incentives as a strategic approach to attract investors and stimulate investment in Indonesia's PV power plants market, to accelerate Indonesia's energy transition. Conversely, the results also showed that the project is very profitable for PLN due to the significant cost-savings from the de-dieselization, leading to a reduction in the average generation cost for Nias.

A Linked Swing Contract Market Design With High Renewable Penetration and Battery Firming

As renewable generation and energy storage systems become increasingly cost-effective, modern power systems are increasingly reliant on variable energy resources (VERs) to meet demand. However, the variability and uncertainty of VERs' generation require additional flexibility to mitigate their impacts. Unfortunately, the current power market designs rigidly define different power and reserve products, making it difficult to fully recognize and compensate for this flexibility. Furthermore, since the marginal operating costs of the system quickly approach zero, current marginal cost-based market mechanisms struggle to provide price signals that allow independent power producers to make informed decisions about constructing, operating, and retiring plants. To address these issues, this paper proposes a new linked electricity market design based on swing contracts for operating power systems with high penetration of VERs and energy storage resources. The feasibility of the proposed approach is demonstrated through study results on the modified IEEE 118-bus test system.

A framework for developing and implementing FIT policies for renewable energy based on local economic conditions

Energy policymakers of developing countries are striving to provide adorable, reliable, and cleaner energy for all the sectors of their economies. Feed-In Tariff (FIT) policies have played an important role in attracting independent power producers to invest in energy generation from renewable sources in developed and some developing countries. However, the development and application of the FIT policy framework are not autonomous of national and local fiscal and socio-economic policies. Financial modeling of FIT which considers local economic conditions and the state of the energy sector at the national level can contribute to the development of FIT policies that are relevant, realistic, and sustainable to investment in energy generation from renewable energy sources at the local level. This paper outlines the financial modeling of the FIT rates using a solar farm in Malawi as a case study. The results show that a shift from a fixed price model to a fixed price model with full or partial inflation adjustment considering the volatile inflation rate and macroeconomic risks in a fragile economy can effectively attract and increases private investments in the energy sector. Consequently, the financial modeling of FIT can enhance the generation of strategic information that can be used for the development of FIT policies that are relevant, realistic, and sustainable in the context of local economic conditions.

A Computational Contribution to Analyse the Connection of an Independent Power Producer to the Grid

The main objective of this paper is to present the modelling and performance of a synchronous generator connected to a distribution system to study the impacts of the expansion of distributed generation. Computer models for synchronous machine and its speed governor and voltage regulator were developed in the Alternative Transients Program (ATP) in its interface called ATPDraw. The implementation of such modelling has been developed in order to meet the requirements of companies in the energy sector, as well as to make a visual interface of easy understanding. To validate these modelling, some performance studies are realized for the synchronous generator of an Independent Power Producer (IPP) connected to the distribution system. The roles played by the speed governor and voltage regulator are highlighted when a severe contingency such as a three phase short-circuit occurs in the system.

Enhancing target benefits of power system stakeholders: A columns and constraint generation-based power-to-gas linked economic dispatch

Economic dispatch (ED) plays a crucial role in optimizing power plant output to minimize the cost of electricity production and ensure economic efficiency in complex power systems. However, with the growing emphasis on carbon neutrality policies and the increased use of renewable energy sources (RES), traditional ED models may lead to economic losses for independent power producers (IPP) and renewable energy providers (REP). To address this challenge, a new ED model is proposed in this study, which integrates power-to-gas (P2G) technology and takes into account the perspectives of all stakeholders, including independent system operator (ISO) IPP, and REP. The proposed approach is tested in the context of the cost based pool (CBP) market structure in S. Korea, where a mixed integer linear programming (MILP) problem is solved for each target benefit using columns and constraint generations (C&CG). By ensuring the target benefits of each stakeholder group, this improved ED model aims to encourage their participation in the power system and support economic efficiency. The simulation results of the P2G-linked ED proposed in this paper verify that as the capacity of the integrated P2G increases, there is an increase in the improvement rate of each target benefit for ISO, IPP, and REP.

A Financial & Economic Analysis of an Independent Power Producer Project: The KivuWatt Power Plant Project

A Financial & Economic Analysis of an Independent Power Producer Project: The KivuWatt Power Plant Project

Role of Domestic Banking and Financial Institutions in Project Finance: Insights from Hydropower Sector in Nepal

Hydropower is a low carbon renewable energy alternative for replacing carbon emission energy sources. In Nepal, this infrastructure sector is being developed for fulfilling the internal demand of electricity. Previous studies emphasized public-private partnership (PPP) utilizing project finance (PF) model in infrastructure sector. Recognizing the importance of domestic banking and financial institutions (BFIs) in project finance this study delves into factors significantly affecting the role of BFIs in project finance. Cross-sectional survey utilizing questionnaires was conducted among respondents representing the independent power producers (IPPs) and BFIs in Nepal. Regression analysis showed predictor variables like economic environment, guidelines of the central bank and low default rate have significant impact on project finance. issues related to adequate legal provision for non-recourse financingrole of BFIs for project finance arrangement. Credibility of hydropower project sponsors is an important determinant in financing hydropower project. The availability of comparatively more bankable projects in other investment sectors against the investible fund constraints resulted in limited complete project finance arrangement of hydropower projects. Detail investigation on guarantees to the lenders against the project loan and improvements needed in legal frameworks to accommodate the non-recourse finance and making economic and legal environment friendlier to private sector is the limitation of this study left for future researches.

Institutional development as a tool to facilitate economic access for South Africa’s SMEs: the case of the Development Bank of Southern Africa

The lack of economic access is one of the main challenges facing small and medium enterprises (SMEs). It contributes to the elevated levels of unemployment and slows the resolution of high inequality and poverty in South Africa. Economic access is the ability of historically disadvantaged individuals and entities to participate in the economy. This study aimed to explore how institutional development can support economic access for SMEs. The study explored how setting up new or improving existing socio-economic structures or legal entities could support economic access for SMEs. The support received by SMEs in South Africa from three institutions, the Independent Power Producer Office (IPPO), the Infrastructure Delivery Division (IDD) and the Development Laboratories (DLabs), set up by the Development Bank of Southern Africa (DBSA) was assessed. Quantitative data from the DBSA and IPPO, as well as qualitative views from informants, were used to assess the economic access of SMEs. The study shows that the IPPO, IDD and DLabs added value by achieving the objectives for which they were created. Furthermore, the results show that institutional development supports economic access for SMEs, and that this support is scalable. The study showed that institutional development could be a tool to support SMEs to participate in the economy. This study contributes to the body of knowledge on ways to support SMEs to grow and contribute to reducing unemployment, inequality and poverty.

Weathering the Storm: Planning and Building Smarter

The importance and challenge of utility distribution system strategy and planning cannot be overstated in light of climate change and the increasing frequency of extreme storms. Independent power producers, distributed energy resource (DER) providers, and retail energy providers similarly face the same challenges. The United States witnessed a record‐breaking hurricane season in 2020, resulting in staggering damages of approximately $95 billion. The most recent report from the Intergovernmental Panel on Climate Change (IPCC) highlights the urgency of reducing greenhouse gas (GHG) emissions to limit global warming to mitigate the disastrous and costly effects of climate change. The report indicated that these events are likely to become the norm and will worsen if mitigation and adaptation measures aren't established. These events are becoming more frequent and severe, making it imperative to establish effective mitigation and adaptation measures.

Photovoltaic Power Plant Feasibility Study Based on Indonesia’s Renewable Energy Tariffs: A Study of Nusa Penida Solar Power Plant

This study conducts feasibility study on 3.5 MW photovoltaic (PV) power plant in Nusa Penida based on Indonesia’s existing renewable energy tariffs. Three scenarios were developed utilizing RETScreen software, according to the power plant specification. Base case scenario was developed to determine the feasibility of the PV power plant based on independent power producer perspective. PLN scenario was developed to determine the feasibility of the PV power plant based on Indonesia’s state-owned electricity company. Clean-energy scenario was developed to determine the feasibility of the PV power plant if there was a $20/tCO2 emission reduction incentive in Indonesia. The base case scenario results showed that the existing PV tariffs for PV power plant project was not sufficient to make the project financially viable based on the IPPs perspective. The PLN scenario results showed that the PV power plant project is very profitable based on PLN perspective due to high cost-savings. The clean-energy scenario results showed that $20/tCO2 emission reduction incentive was sufficient to make the PV power plant project financially viable based on the IPPs perspective. Based on those results, this study recommends emission-reduction incentives as a mean of attracting more investors. This study also recommends PLN to utilize more PV power plant, especially if the region have high generation cost as a means to lower Indonesia’s energy cost thus making energy more accessible for everyone.

A Fuzzy Logic Approach to Health Index Determination for a Gas-Insulated Switchgear

This paper presents a fuzzy logic approach, a simplified and adaptable method, to determine the health index of gas-insulated switchgear (GIS) bay and their compartments. Since the traditional weighting and scoring method (WSM) is a subjective method, the fuzzy logic approach has been applied to enhance the accuracy of the health index (HI) determination by evaluating the detectable degradation and the incorporated conditional factor (CF) considering actual operating conditions and invisible ageing. The input data are first obtained from routine inspection and time-based testing and then converted to numerical values as the fuzzy logic model input to compute the component HI. The bay HI values are further calculated by applying the WSM using the obtained component of the HI. Then, the accuracy of the obtained HI of the bay has been improved by multiplying with the CF to obtain the overall bay HI values. The proposed methodology was implemented in an independent power producer in a large industrial estate in Thailand to evaluate 175 GIS bays with actual data. The results were compared against other HI evaluation techniques with a satisfactory outcome. Finally, the overall bay HI is used to prioritize maintenance activity, to effectively allocate human resources, to prevent unplanned outages, and to achieve cost-effective, condition-based maintenance.

Marginal fixed premium for clean hydrogen portfolio standard (CHPS) considering techno-economic analysis of clean hydrogen production based on hydropower plants

As the hydrogen economy recently gains momentum, the Korean government is actively encouraging Independent Power Producers (IPPs) to leverage hydrogen energy. The surging uncertainties in the power market, precipitated by the rapid increase in renewable energy sources (RES), necessitates IPPs to formulate a new benefit structure that utilizes green hydrogen. However, the current economic challenges associated with the operation of RES linked to water electrolysis result in diminished participation from IPPs. In response, the Korean government is planning to implement the Clean Hydrogen Portfolio Standard (CHPS), which requires clean hydrogen power generation and offers corresponding Fixed Premium (FP) subsidies. In this paper, we incrementally increase the FP for RES linked to electrolyzers (ELZ) and derive a marginal fixed premium (FPmar). This method initiates a shift towards higher economic feasibility compared to the traditional benefit structure of power trading-based RES. We suggest a green hydrogen-based business model (BM) that synergizes hydropower with water electrolysis and calculate a suitable CHPS subsidy to ensure the economic feasibility of this BM. In conclusion, this paper equips IPPs operating hydropower with the capability to evaluate the adequacy of the government-provided FP for the economical operation of a hydropower plant linked to water electrolysis. Furthermore, it provides policymakers with the framework to make informed decisions regarding the necessary FPmar to stimulate IPPs’ participation.

Over a century of small hydropower projects in Indonesia: a historical review

BackgroundHydropower is a mature energy technology and one that could play a more important role in providing clean and reliable energy. In small-scale contexts, hydropower is useful for providing electricity access, balancing intermittent resources, and as a potential source of energy storage. This paper provides a comprehensive exploration of the development of the small hydropower (SHP) sector in Indonesia, the world’s fourth most populous country.MethodsTwo research methods were employed: secondary data analysis through a desk review of relevant literature and primary data collection through site visits and expert and stakeholder interviews. Two case studies of micro-hydro applications in community-based rural electrification were analyzed. The paper explores how SHP projects were initiated, lessons learned, and policy recommendations of relevance to further development of distributed small-scale renewable energy in Indonesia.ResultsThe sector commenced during the Dutch Era and now centers on both community-based rural electrification projects and commercial schemes under the independent power producer (IPP) approach. Since the late 1980s, initiatives to implement SHP for rural electrification have flourished through various programs. Key regulatory, economic, and technical barriers include inconsistent and unclear supporting regulations, especially regarding electricity prices; artificially low retail electricity prices; capital and borrowing constraints; advantages provided to fossil fuels; limited technical experience and capabilities of project developers and project sponsors; risks from floods, earthquakes, and landslides; constraints on supporting infrastructure; and limited grid links. The most successful and sustainable SHP projects are ones that provide local economic benefits and for which local communities are empowered with ownership and have responsibility for maintenance.ConclusionsSHP will remain small from a macro perspective but could still play a key role in further improving energy access and equity in remote areas. Key initiatives to facilitate this development could include local-level capacity building and project participation and the adequate pricing of negative externalities from fossil fuel projects. Indonesia’s long experience with SHP carries lessons for other developing countries.

From concessions to competition: A journey through the evolution of the Philippine electric grid system, 1892–2021

This article traces the development of energy generation in the Philippines, tracing its origins back to 1892 and spanning through the significant reforms ushered in by the Electric Power Industry Reform Act (EPIRA) in 2001, and the subsequent two decades. The early chapters of this history witnessed the establishment of pivotal companies like Compania La Electricista and Manila Railway & Light Company (Meralco), which hinged on foreign investment and expertise. Meralco’s expansion encompassed the establishment of diverse power plants, including hydroelectric facilities, to cater to the escalating electricity demand. However, concerns surrounding foreign dominance and reliance on imported resources led to the creation of the National Power Corporation (NPC) in 1936 tasked with harnessing hydraulic power and increasing state participation in the energy sector. The post-war era witnessed the NPC’s significant role in bolstering the nation’s growing economy, especially through its expansive power development program and the nationalization of the electric power landscape. Despite progress in rural electrification, the NPC encountered challenges like financial constraints, political complexities, and the contentious Bataan Nuclear Power Plant project, which impeded its operational efficiency. The 1990 s unveiled a severe power crisis due to financial constraints and inadequate infrastructure. In response, the government sought to invigorate the sector by incorporating private sector engagement through independent power producers. To rectify inefficiencies and stimulate competition, the EPIRA was enacted in 2001 to steer the energy sector toward a comprehensive overhaul by restructuring the power industry and divesting NPC’s generation and transmission assets. This article provides insights into the historical trajectory of the Philippine energy sector, culminating in a series of reforms aimed at cultivating a more streamlined and competitive power sector, positioned to meet the nation’s ever-evolving energy needs.