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Indonesia's deregulated generation expansion planning model based on mixed strategy game theory model for determining the optimal power purchase agreement

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  • Setya Budi, Rizki Firmansyah
  • Sarjiya,
  • Hadi, Sasongko Pramono

Abstract

—Obtaining the optimal power purchase agreements (PPA) in deregulated generation expansion planning is crucial. A lower PPA provided by the utility results in the independent power producer (IPP) becoming disinterested in investment. On the other hand, a higher PPA increases the government's financial burden. Therefore, this study proposes a generation expansion planning model that considers the deregulated market and PPA determination. A game theory based on a mixed strategy method and bi-level model is used in this research. To obtain the PPA optimum value, a multi-scenario analysis is conducted by changing the PPAs from 25% to 100% of the generation cost. The proposed model is applied to the Bangka Belitung power system. The results of the multi-scenario analysis show that the optimum PPA is 30% of Bangka Belitung's generation cost. This PPA creates an optimum generation expansion planning with a levelized electricity cost of 6.009 cents USD/kWh. However, the utility cannot offer a PPA of less than 30% of the generation cost because the private sector is not interested in investing. Therefore, it forces the utility to rent diesel power plants and increases the LCOE to 8.629 cents USD/kWh.

Suggested Citation

  • Setya Budi, Rizki Firmansyah & Sarjiya, & Hadi, Sasongko Pramono, 2022. "Indonesia's deregulated generation expansion planning model based on mixed strategy game theory model for determining the optimal power purchase agreement," Energy, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:energy:v:260:y:2022:i:c:s0360544222019119
    DOI: 10.1016/j.energy.2022.125014
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    References listed on IDEAS

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    1. Marios Stanitsas & Konstantinos Kirytopoulos, 2023. "Sustainable Energy Strategies for Power Purchase Agreements (PPAs)," Sustainability, MDPI, vol. 15(8), pages 1-19, April.
    2. Jose Barroco & Peerapat Vithayasrichareon, 2023. "Accelerating the Energy Transition through Power Purchase Agreement Design: A Philippines Off-Grid Case Study," Energies, MDPI, vol. 16(18), pages 1-26, September.

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