Carbon credit and economic feasibility analysis of biomass-solar PV-battery power plant for application in Indonesia remote area

Yuliana Susilowati, Dindamilenia Choirunnisa Hardiyasanti, Sinta Widianingrum, Fitri Endrasari, Djati Wibowo Djamari, Aditiya Harjon Bahar, Jaya Wahono and Ibham Veza

Renewable Energy, 2023, vol. 219, issue P1

Abstract: The trend in the utilization of renewable energy is increasing worldwide, including in Indonesia. However, as an archipelago country, Indonesia is experiencing challenges in empowering its remote areas with green electricity. This study assesses economically the idea of a hybrid power plant of solar and/or biomass to alleviate remote areas electrification in Indonesia. The project is proposed in Sakti, Batukandik, and Batumadeg, in Nusa Penida, Bali. The project's ER is evaluated by CDM methodology; it is approximately 22,371.32 tCO2/year and potentially adds USD 447,426,32 annually. Afterwards, IRR and NPV are computed under two scenarios to access the worthiness of the project. IRR and NPV remain profitable after the electricity tariff reduction due to the additional carbon credits and biochar sales. Carbon credits alone contribute a slight improvement to the economic performance, yet it cannot be neglected. SA is then used to see the effect of feedstock price, electricity tariff, biochar sales, CAPEX/MW, and carbon credit towards IRR and NPV. Then, ERR is assessed to determine this project's feasibility and profit for the communities involved. The ERR value with and without the application of carbon credits are 32.66% and 28.19%, respectively. Moreover, this project can increase job opportunities by 62.60%. These values are obtained from several parameter calculations in the ERR analysis in this study, which include a producer surplus, costumer surplus, and job increase. The results of this study are expected to bring a contribution to the sustainable development goals and national economic activities in Indonesia.

Keywords: Solar-biomass power plant; Carbon credits; Clean development mechanism methodology; Sensitivity analysis; Economic rate of return analysis; Economic feasibility (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:219:y:2023:i:p1:s0960148123012983

DOI: 10.1016/j.renene.2023.119383

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