decreas ing cos ts for re-technologies and … · 2020. 10. 22. · 2012 2014 2016 2018 2020 2022...
TRANSCRIPT
© Fraunhofer ISI
Johannes Eckstein, Jose A. OrdonezMarch 2, 2020 – Wyndham Casablanca Hotel, Jakarta
D E C R E A S I N G C OS TS F OR R E -TE C HN OL OG I E S A N D I M P L I C A TI ON S F OR L ON G TE R M P L A N N I N G OF I N D ON E S I A
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A g e n d a
15:00 - 15:20 Registration
15:20 – 15:30 Welcoming words and Introduction
15:30 - 16:00 Input presentation
Falling Costs for Renewables and their implications
16:00 - 16:30 Insights from a survey
Financing and barriers to the development of RE
16:30 - 16:45 Time for discussions - Coffee Break
16:45 – 18:15 Discussion
Reflecting key ins ights from discuss ions with Indonesian stakeholders of energy and climate policy
18:15 - 18:30 Wrap-up and Conclusion
18:30 - 20:00 Networking Dinner
March 2, 2020 – Wyndham Casablanca Hotel, Jakarta
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I M P L I C A T I O N S F O R L O N G T E R M P L A N N I N G O F I N D O N E S I A
F R A UN HOF E R S OC I E TY A N D F R A UN HOF E R I S I
W O R K S H O P , M A R C H 2 , 2 0 2 0 – W Y N D H A M H O T E L J A K A R T A
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F R A U N H O F E R I S II n s t i t u t e f o r S y s t e m s a n d I n n o v a t i o n s R e s e a r c h
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F R A U N H O F E R I S I
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Support to the development to the 4th and 5th ASEAN Energy Outlook (ASEAN Centre for Energy)
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I M P L I C A T I O N S F O R L O N G T E R M P L A N N I N G O F I N D O N E S I A
I N P UT P R E S E N TA TI ON : F A L L I N G C OS TS F OR R E N E WA B L E S A N D THE I R I M P L I C A TI ON S
W O R K S H O P , M A R C H 2 , 2 0 2 0 – W Y N D H A M H O T E L J A K A R T A
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
Solar PV and wind energy as well as battery technologies for EVs are substantially cheaper now than projected previously, e.g. in 2015, previous to the Paris Agreement.
Technologies are expected to have faster cost reductions up to 2030 than assumed before.
Research question: How could these cost reductions be reflected in planning processes of Indonesia?
in energy planning
in informing climate mitigation plans
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
Global auction prices for RE technologies have seen a massive reduction
Evolution of solar PV auction prices between 2010 and 2017
https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Jun/IRENA_Renewable_Energy_Auctions_2017.pdf
fossil fuel LCOE
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
Global auction prices for RE technologies have seen a massive reduction
Evolution of wind auction prices between 2010 and 2017
https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Jun/IRENA_Renewable_Energy_Auctions_2017.pdf
fossil fuel LCOE
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
The LCOE (levelized costs of electricity) reflect all investment costs, the operational costs and their discount over
LCOE is a measure to reflect the costs of a profitable project
The LCOE for solar PV and wind energy over the last 10 years , now reaching values of foss il fuel power
fossil fuel LCOE0
50
100
150
200
250
300
350
400
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
LCO
E [U
SD/M
Wh
]
Year
Levelized cost of electricity (global average)
solar PV
Windonshore
IRENA, 2019: Renewable Energy Generation Costs in 2018
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
The LCOE for solar PV and wind energy over the last 10 years , now reaching values of foss il fuel power
2014 values
- 20% to -50%
projections from 2014
for 2025 and 2030
recent projections
for 2025 and 2030
https://www.umweltbundesamt.de/publikationen/bringing-climate-policy-up-to-date-decreasing-cost
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0
500
1000
1500
2000
planned 2015 planned 2020
Inve
stm
ent
RE
cap
acit
y
Generic country plan
RE installed investment
D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
Assuming the same investment as in 2015
Considering that costs have fallen by 50%
The same investment now could lead to double the uptake of RE
same investment
What aboutIndonesia?
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
RE targets in Indonesia
23% target RE in all sectors: set down in presidential regulation
RUEN is the national energy plan set down by DEN
for the energy system
includes electricity, transport, industry
23% target in TPES
RUPTL is the plan of PLN
for the electricity system
23% target in generation
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
DEN: RUEN, 2014
Type - [MW] 2025 2050
Geothermal 7,239 17,546
Hydro 20,960 45,379
Bionergy 5,532 26,123
Solar 6,379 45,000
Wind 1,807 28,607
Other RE 3,128 6,383
DEN, RUEN, 2014
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60
70
80
90
100
110
120
130
140
150
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
LCO
E [U
SD/M
Wh
]
Year
LCOE, wind onshore
ASEAN, previous
ASEAN, recent
D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
In Indonesia, past LCOE projections are difficult to obtain, but data from the ASEAN region can be informative of the trend
For wind, projected LCOEs have dropped between 7% and 30%
fossil fuel LCOE
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
For solar PV, LCOEs have dropped between 30% and 50% in the ASEAN region; similar values for Indonesia where available
most recent projects are undercutting the LCOE of projections for 2030 already, now at 5.8 cents /kWh
fossil fuel LCOE58 USD/MWh Bali, Java project
0
50
100
150
200
250
300
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
LCO
E [U
SD/M
Wh
]
Year
LCOE, solar PV
ASEAN,previousASEAN, recent
Indonesia,recentcurrent costs
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
RUEN development of solar PV and wind onshore for Indonesia
6500
14200
1800
7040
0
5000
10000
15000
20000
25000
2012 2017 2022 2027 2032
Cap
acit
y [M
W] RUEN Solar
RUEN Wind
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
Using updated cost projections, the same investments could inform a higher ambition in taking up solar PV and wind
6500
14200
1800
7040
10390
22186
2102
7875
0
5000
10000
15000
20000
25000
2012 2017 2022 2027 2032
Cap
acit
y [M
W] RUEN Solar
RUEN Wind
With cost degr.Solar
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
The drop in costs of solar PV and wind energy could inform an increase of the target from 45MW to 49MW
45
70
49
78
0
10
20
30
40
50
60
70
80
90
2012 2017 2022 2027 2032
Cap
acit
y [G
W]
Year
RUEN TotalWith cost degr.…
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
An increase in solar PV and wind could alter the energy mix to reach the target of 23%
Could this make the implementation more cost optimal?
11.4%
16.8%
6.6%
12.2%
37.4%
8.6%
6.9%
Using cost degression for cost optimization
Geothermal
Water
Minihydro andMicrohydro
Bioenergy
Solar
Wind onshore
Other RE
16.0%
39.8%
6.6%
12.2%
14.4%
4.0%6.9%
Planned RE Capacity Shares (2025)
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
An increase of generation would follow from increasing capacity
Could inform an update of the RUPTL
Could this make the implementation more cost optimal for PLN and end consumers?
0
10000
20000
30000
40000
50000
60000
2015 2017 2019 2021 2023 2025 2027
Gen
erat
ion
[G
Wh
/a]
Year
RUPTL Generation
RUPTL Hydro
RUPTL Geothermal
RUPTL Other RE
RUEN solar, recent costs
RUEN wind, recent costs
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
The NDC is currently being updated, the main share of emission reductions currently is with forestry. 314 MtCO2 emission reduction is foreseen for energy.
Considering cost reductions, could the energy sector take a higher share of mitigation?
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
3500.0
2010 2030 - BAU 2030 - CM1 2030 - CM2
GH
G e
mis
sio
ns
[MtC
O2
e]NDC - Projected emissions
Forestry**
Agriculture
IPPU
Waste
Energy*
Indonesia, 2015: The Nationally Determined Contribution
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
Costs for solar PV and wind energy have seen mass ive cost reductions over the last years
reflected in auction outcomes worldwide
reflected in falling LCOEs globally
These cost reductions could inform an update of energy planning
For Indonesia:
costs have also fallen dramatically, esp. considering recent projects
This could inform an update of RUEN, RUPTL
Could this make the planning more cost optimized?
Could this inform an increase in ambition?
In turn, could this increase the share of mitigation taken by the energy sector?
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I M P L I C A T I O N S F O R L O N G T E R M P L A N N I N G O F I N D O N E S I A
I N P UT P R E S E N TA TI ON : B A R R I E R S TO R E D E V E L OP M E N T I N I N D ON E S I A ’ S P OWE R S E C TOR – A D OUB L E E D G E D K N I F E.
W O R K S H O P , M A R C H 2 , 2 0 2 0 – W Y N D H A M H O T E L J A K A R T A
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B A R R I E R S T O T H E D E V E L O P M E N T O F R E – A D O U B L E E D G E D K N I F E
Worldwide trend show a massive cost reduction for key RE technologies in the power sector.
Indonesia, while having experienced reductions, is still at relative high cost when compared with global context.
Lead question:
Why are costs for key RE technologies still at relatively high level in Indonesia?
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
Global auction prices for RE technologies have seen a massive reduction
Evolution of solar PV auction prices between 2010 and 2017
Source: IRENA (2017)
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C O M P O N E N T S O F L C O E
LCOE can be understood as life-cycle costs of an energy project, e.g. costs by the project’s electricity generation over its lifetime (USD cents per kWh).
LCOE can be divided in technology and financing costs .
Technology costs are made up of investment costs and O&M
Financing costs are made up of the cost of equity and debt.
Financing Costs
Technology Costs
LCOE
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C O S T S T R U C T U R E O V E R L I F T I M E O F W I N D A N D G A S P R O J E C T
The cost structure of a wind onshore over its lifetime compared to a natural gas power plant
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C O M P O N E N T S O F L E V E L I Z E D C O S T O F E L E C T R I C I T Y
LCOE as a metric allows comparing the generation costs of conventional plants with RE, despite their different cost structures
The capital intens ity of RE–high upfront investment costs and low operational costs – results in renewable energy investments being especially sensitive to financing costs.
Financing Costs
Technology Costs
Conventional RE Project
Financing Costs
Technology Costs
LCOE LCOE
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Page 34 high interest rate
W h y , d e s p i t e b i g p o t e n t i a l , s o l i t t l e i n s t a l l a t i o n s t o R E ?
If interest rate for financing are high, RE projects quickly become expensive, as compared to conventional projects.
Increse in the interest rates of cost and equity:
low interest rateSo
urc
e:
UN
DP (
2013)
Deri
skin
gR
en
ew
ab
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erg
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vest
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t
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C O S T S T R U C T U R E O V E R L I F T I M E O F W I N D A N D G A S P R O J E C T
The cost structure of a wind onshore over its lifetime compared to a natural gas power plant
Source: UNDP (2013) Derisking Renewable Energy Investment
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C O S T S T R U C T U R E O V E R L I F T I M E O F W I N D A N D G A S P R O J E C T
Investment costs account for approx. 80% of the total lifetime technology costs for wind but only 15% for gas.
O&M costs are relatively low for wind energy , high for gas (fuel cost)
RE investments exchange long-term fuel costs for upfront investment costs .
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A D O U B L E D E D G E K N I F E 🔪B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T S
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A D O U B L E D E D G E K N I F E – B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T S
Barriers to the development of RE projects
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A D O U B L E D E D G E K N I F E 🔪B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T S
Barriers to the development of a power project in general and to RE projects in particular are two fold 🔪
Firstly , they are barriers to the development
Secondly, they increase the risk of success and thereby increase the financing cost:
So
urc
e:
UN
DP (
2013)
Deri
skin
gR
en
ew
ab
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vest
men
t
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A D O U B L E D E D G E K N I F E 🔪B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T S
Barriers to the development of a power project in general and to RE projects in particular are two fold 🔪
Policies such as permit simplification, reduced counterparty risk, attractive and stable RE support schemes can deriskinvestment and lower LCOE of RE project
So
urc
e:
UN
DP (
2013)
Deri
skin
gR
en
ew
ab
leEn
erg
yIn
vest
men
t
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A D O U B L E D E D G E K N I F E 🔪B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T S
Barriers to the development of a power project in general and to RE projects in particular are two fold 🔪
Policies such as permit simplification, reduced counterparty risk, attractive and stable RE support schemes can deriskinvestment and lower LCOE of RE project
Source: UNDP (2013) Derisking Renewable Energy Investment
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A D O U B L E D E D G E K N I F E 🔪B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T S
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B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T SS U R V E Y I N S I G H T S
Wind power13%
Geothermal power13%
Biomass/Biogas power
plants11%
Micro-hydro power16%
Large hydro power
9%
Solar PV38%
Technology
Project developer
19%
Investor / Financing Institution
6%
Utility4%
Government15%
Association13%
NGO10%
Research / Academia
15%
other18%
Stakeholder
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A D O U B L E D E D G E K N I F E – B A R R I E R S T O T H E D E V E L O P M E N T O F R E P R O J E C T S
Barriers to the development of RE projects
Source: Woodman et al (2017)
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I N S I G H T S F R O M T H E S U R V E YA D M I N I S T R A T I V E B A R R I E R S
0 2 4 6 8 10 12 14 16 18
NO BARRIER
LOW BARRIER
MEDIUMBARRIER
HIGH BARRIER
VERY HIGHBARRIER
No. of responses
Administrative Barriers
Land availibility
Complexity of administrative procedure
Duration of administrative procedure
Cost of administrative procedure
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I N S I G H T S F R O M T H E S U R V E YE L E C T R I C I T Y M A R K E T S T R U C T U R E A N D R E G U L A T I O N
0 2 4 6 8 10 12 14 16 18 20
NO BARRIER
LOW BARRIER
MEDIUM BARRIER
HIGH BARRIER
VERY HIGH BARRIER
No of respondants
Electricity market structure and regulation
Balancing costs for deviations between forecast & generation of electricity
Reliability of long term contracts (Power Purchase Agreements)
Availability of long term contracts (Power Purchase Agreements)
Market concentration in PLN (lack of unbundling)
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I N S I G H T S F R O M T H E S U R V E YG R I D I N F R A S T R U C T U R E A N D R E G U L A T I O N
0 2 4 6 8 10 12 14 16
NO BARRIER
LOW BARRIER
MEDIUM BARRIER
HIGH BARRIER
VERY HIGH BARRIER
No. of responses
Grid infrastructure and regulation
Predictability of future electricity grid development
Predictability & transparency of the grid connection procedure
Dispatch of renewable electricity (potential uncompensated curtailment)
Cost of getting grid access
Lead time for getting grid access
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I N S I G H T S F R O M T H E S U R V E YE C O N O M I C A N D P O L I T I C A L F R A M E W O R K
0 2 4 6 8 10 12
NO BARRIER
LOW BARRIER
MEDIUM BARRIER
HIGH BARRIER
VERY HIGH BARRIER
No of respondans
Economic and political framework
Revenue risk under the present RE support scheme (tariff adjustments to support scheme)
Overall reliability of the RE support scheme (risk of sudden changes to support scheme)
Remuneration level for renewable electricity (expected income for RE project under support scheme)
Targets for RE deployment (legally binding RE targets)
General national policy stability (frequently changing strategies and regulations)
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C o n c l u s i o n s
LCOE can be divided in technology costs and financing costs.
Technology costs have showed massive cost reductions globally.
Financing costs depend on interest rate and country specific risks and barriers.
Barriers can be reduced by right policies, finance can be de-risked
Thereby, LCOEs can drop even more in years to come
Questions or comments?
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Th a n k s f o r y o u r a t t e n t i o n
Take part in the survey here: https://by4794.customervoice360.com/uc/energi/
Sources and recommended literature:
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C OF F E E B R E A K
W O R K S H O P , M A R C H 2 , 2 0 2 0 – W Y N D H A M H O T E L J A K A R T A
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I M P L I C A T I O N S F O R L O N G T E R M P L A N N I N G O F I N D O N E S I A
D I S C US S I ON : R E F L E C TI N G K E Y I N S I G HTS ON P L A N N I N G A N D P R OC E S S E S
W O R K S H O P , M A R C H 2 , 2 0 2 0 – W Y N D H A M H O T E L J A K A R T A
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C O N T R O V E R S I A L T O P I C 1C H E A P E L E C T R I C I T Y V S . S U S T A I N I N G C O A L I N D U S T R Y
Key ins ight: Solar PV and wind will, in 5 years from now, be definitely cheaper than coal.
Solar PV already less than 6 US cent /kWh, technology costs will certainly fall even more.
Java-Bali grid is big enough to take 10-15% share of variable RE, so far close to 0%.
Coal mining is a backbone industry, providing employment, profits, public-income at local and national level.
2025: Will PLN go for the cheapest technology?
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C O N T R O V E R S I A L T O P I C 2H A R M F U L E C O N O M I C I M P A C T S
Key ins ight: Reliance on coal and higher electricity prices can harm industrial competitiveness
Energy and electricity intensive industries might relocate to emerging economies with cheaper prices.
Exporting products to other countries that impose boarder carbon taxes or regulatory measures using grid emission factors as indicator can strongly harm exports.
India (175GW RE target), Vietnam (5GW RE in 2019) and other countries moving more quickly could leave Indonesia behind.
Will economic impacts of us ing coal harm Indonesia?
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C O N T R O V E R S I A L T O P I C 3 C O S T O P T I M A L T E C H N O L O G Y M I X
Key ins ight: Official planning documents and targets in RUEN, RUPTL, NDCs, could be cost-optimized
Cost optimization models considering costs per unit of electricity, lifetime of plant, impact on power system as a whole, would lead to a different composition of power sector.
Different plans with different pathways (RUEN, RUKN, RUPTL) could be streamlined based on minimal costs for PLN and consumers.
Are there backs ides to us ing cost optimization? If not, why isn’t it cons idered more strongly?
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C O N T R O V E R S I A L T O P I C 4G L O B A L W A R M I N G
Key ins ight: Low cost RE in the power sector can support CO2 emiss ion reduction targets
Coal, even supercritical or ultra-supercritical, has the highest emission factor among all fuels.
Indonesia is top 4 country with envisioned coal-fired plans development.
Indonesia aims to reduce its GHG emissions as internationally communicated.
Should the energy sector contribute more strongly with low-cost RE to mitigation efforts?
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I M P L I C A T I O N S F O R L O N G T E R M P L A N N I N G O F I N D O N E S I A
WR A P -UP A N D N E X T S TE P S
W O R K S H O P , M A R C H 2 , 2 0 2 0 – W Y N D H A M H O T E L J A K A R T A
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D E C R E A S I N G C O S T S F O R R E - T E C H N O L O G I E S A N D I T S I M P L I C A T I O N F O R E N E R G Y P L A N N I N G
We are happy to receive your feedback!
We will publish results and a report. Please provide your email to receive updates.
Please follow the project on our website
https://www.isi.fraunhofer.de/en/competence-center/energiepolitik-energiemaerkte/projekte/ndc-update.html#tabpanel-1
Many thanks for your time and the ins ights shared!
© Fraunhofer ISI
Johannes Eckstein, Jose A. OrdonezMarch 2, 2020 – Wyndham Casablanca Hotel, Jakarta
D E C R E A S I N G C OS TS F OR R E -TE C HN OL OG I E S A N D I M P L I C A TI ON S F OR L ON G TE R M P L A N N I N G OF I N D ON E S I A
Please reach out for further contactand for receiving updates
Johannes Eckstein
+4916096959236 (Whatsapp)
Jose A Ordonez
+491723188851 (Whatsapp)
Please visit our project website forfurther information
https://www.isi.fraunhofer.de/en/competence-center/energiepolitik-energiemaerkte/projekte/ndc-update.html#tabpanel-1