Reliability-cost trade-offs for electricity industry planning with high variable renewable energy penetrations in emerging economies: A case study of Indonesia’s Java-Bali grid

Yusak Tanoto, Navid Haghdadi, Anna Bruce and Iain MacGill

Energy, 2021, vol. 227, issue C

Abstract: Electricity industries in emerging economies face particular challenges in delivering affordable, environmentally sustainable, and secure power given growing demand and limited financial resources. While supply reliability is often poor and emission reductions given lower priority, solar and wind are now amongst our cheapest supply options but highly variable. Our study seeks to demonstrate the potential value of trading-off reliability standards against higher renewables and lower industry costs in future generation planning. We use an open-source, evolutionary programming-based, capacity expansion planning tool, NEMO, to solve least cost generation mixes for Indonesia’s Java-Bali grid in 2030. We explicitly test the cost and emission impacts of reliability targets of 0.005%–5% unserved energy (USE), modelled as both a hard optimization constraint and a penalty price on USE in the cost function. Our results highlight that lower reliability targets can increase solar and wind penetrations, reducing CO2 emissions while reducing industry costs. Both methods of incorporating reliability delivered similar outcomes but pricing USE had some advantages for optimization over hard constraint setting. While the impacts of lower reliability on consumers requires careful consideration, our study highlights the potential cost and emission implications of arguably unrealistic reliability targets in generation planning for emerging economies.

Keywords: Reliability-cost trade-offs; Generation planning; Fixed unserved energy; Priced unserved energy; Emerging economies (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:227:y:2021:i:c:s0360544221007234

DOI: 10.1016/j.energy.2021.120474

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