New study confirms: Green energy development pays off

Moving from 0 to 58 percent renewable energy over the coming decade will make sound socioeconomic sense without jeopardizing energy supply security, shows a joint Danish-Indonesian study of energy sustainability on island communities. 
Photo: ritzau/Finn Frandsen
Photo: ritzau/Finn Frandsen

The shift from black to green energy need not generate extra expense. For example, Denmark benefits from powerful resources and well-established connections to Norwegian hydroelectric facilities. And it could also apply to the Indonesian island of Lombok.

A collaborative, Danish-Indonesian pilot study has drawn conclusions about Lombok's energy studies: 

"Basically, it is possible for Lombok to achieve a very high penetration of renewable energy – up to almost 60 percent – without high added costs and without jeopardizing energy supply security," writes Lombok Energy Outlook 2030.

Far more solar than wind

Both in terms of size and population, Lombok is similar to its neighbor, Bali. The two islands share the same problem concerning an expected growth in energy consumption that far exceeds the power volume that existing coal-fired plant and diesel generators can deliver – an issue encountered across the Indonesian archipelago. In the case of Lombok, the actual projected peak load requirement will double to more than 500 MW in 2027.

This requirement was run through the Danish Energy Agency's Balmorel simulator based on four discrete model conditions in order to see which energy mix composition would make the best fiscal sense. Of these four scenarios, the most far-reaching is a socioeconomic calculation entailing a renewable energy proportion of 58 percent in 2030. This implies a required expansion of 422 MW in solar capacity, 100 MW geothermal, 60 percent biomass, 30 MW wind, 48 MW energy storage capacity – yet still 100 MW of coal-fired generation.


However, such a development would necessitate changes that achieve better balance on an Excel spreadsheet than in within the disequilibrium of realpolitik.

This is in part due to the fact that pollution consisting of NOx, SO2 and PM2.5 [respectively: nitrogen oxide, sulfur dioxide, particle matter with a diameter of less than 2.5 micrometers, -ed.] are attributed values. This practice is, though, not very commonplace, not in the global south nor elsewhere. For instance, in Denmark, where biomass such as wood chips, pellets, firewood etc., used in private stoves is designated as renewable energy and is exempted from energy fees despite health care costs for an estimated annual sum of DKK 4 billion (EUR 540 million).

Another factor is that the study has eliminated subsidies for fossil fuels from its model. Indonesia currently caps the price of coal at USD 70 per ton, while the price of gas is fixed at USD 8.1 per mmbtu [mmbtu abbreviates 1 million British Thermal Units, -ed.], which in both cases is around 50 percent under market value. Whereas making upward adjustments on fuels prices in France hardly provokes docile reactions, as has been shown by recent protests in Paris as well as in and Zimbabwe – also incited by price increases on gasoline.

Best economy from biomass

These cases are as such perhaps more punitive toward the private economy of individual persons than altering state subsidies for fuel. In any case, Lombok has no local coal industry which requires consideration – and indeed has no conventional energy sources whatsoever on the island. On the other hand, the island does grow rice, where the byproduct in the form of rice husks constitutes, according to the study, the most cost-efficient source of energy as biomass. 

All scenarios other than the one based on the actual energy mix – dubbed Business as Usual (BaU) – indicate the prudence implementing 60 MW of biomass. After that, the study considers geothermal energy to be the suitable source, whereas photovoltaic solar make fiscal sense only if fossil subsidies are removed.

The Danish wind energy should not get its hopes up about Lombok becoming the next big export avenue. With wind speeds that often blow at only a few meters per second, the most optimistic scenario leaves room for a few wind turbines – even through the study, funded by Denmark, pleads the case of Vestas' new V150-4.2MW wind turbine operates with high efficiency under low speeds.

Waste ends up in the ocean or forests

Naturally, there are also conditions other than pure economy needing to be considered in regard to the development of an energy system. Aside from the Balmorel calculations, Netherlands-based accountancy federation KPMG completed a preliminary study of RE projects on the island, which points to possibilities such as building a waste incinerator facility on the island.

As such facilities have a price tag of around USD 150-225 million per 25 MW, this would certainly not be the cheapest solution – add to that the maintenance costs are higher than the other renewable energy sources. However, there is a latent environmental threat lurking on the island, where its landfills are only able to accommodate less than 25 percent of the 900,000 tons of waste generated per year. The rest is, in the best of cases, simply burned, while an unknown volume ends up in the island's forests or in the ocean surrounding Lombok.

Waste is not the only thing the island has difficulty finding space for. The same applies to implementing variable renewable energy sources such as solar and wind in a system without external interconnectors. Furthermore, the island's grid infrastructure is relatively brittle, and there are concerns about the stability of power demand has until this point prompted local authorities to limit the expansion of renewable to three solar projects rating at 5 MW.

This is not the only limitation hindering green energy development. For instance, the study also mentions that the preference of not turning down baseload generation as well the indicative cap on solar and wind at 20 percent of hourly consumption are both barriers for Lombok and other regional Indonesian energy systems.

Although, making room for more renewable energy will primarily require a change in mentality, the study posits. Even with energy storage, there is still room for 230 MW of solar energy in the system, the study concludes. While four-hour batteries with a capacity of 48 MW would be adequate to allow for 422 MW of solar power, in which case gas-fired generation in particular would be pushed out into the dark, energy-intensive evening hours.

On the other hand, this green energy transition would require many investments to get things running. This would particularly apply to the type of renewable energy that can deliver baseload capacity such as waste incineration, biomass and geothermal facilities. Investments should also be made in established infrastructure that can accommodate larger volumes of variable energy – for example, an interconnector to Bali, pumped hydroelectric and large lithium-ion batteries.

If the question is instead approached by looking the aggregate system expenses, price discrepancies practically vanish from the Balmorel simulations, irrespective of conditional assumptions. In this case, there is less than a 10 percent difference between the cheapest and the priciest solution in a scenario in which all other factors are held constant. Even so, the greenest solutions to an increasing show the best cost efficiency as soon as fossil subsidies are removed, values are placed on particle pollution, and, for that matter a price floor on CO2 emissions, which is not a conditional factor in some of the scenarios.

No matter what, however, the least cost-efficient solution for the Indonesian island would be to continue as hitherto with an energy system based almost exclusively on coal, gas and diesel generators.

English Edit: Daniel Frank Christensen

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