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Insights into Small-Scale LNG Supply Chains for Cost-Efficient Power Generation in Indonesia

Author

Listed:
  • Mujammil Asdhiyoga Rahmanta

    (PT. PLN (Persero) Puslitbang Ketenagalistrikan (Research Institute), Jl. PLN Duren Tiga No. 102, Pancoran, Jakarta 12760, Indonesia
    Department of Mechanical and Industiral Engineering, Universitas Gadjah Mada, Jl. Grafika No. 2, Yogyakarta 55281, Indonesia)

  • Anna Maria Sri Asih

    (Department of Mechanical and Industiral Engineering, Universitas Gadjah Mada, Jl. Grafika No. 2, Yogyakarta 55281, Indonesia)

  • Bertha Maya Sopha

    (Department of Mechanical and Industiral Engineering, Universitas Gadjah Mada, Jl. Grafika No. 2, Yogyakarta 55281, Indonesia)

  • Bennaron Sulancana

    (PT. PLN (Persero) Puslitbang Ketenagalistrikan (Research Institute), Jl. PLN Duren Tiga No. 102, Pancoran, Jakarta 12760, Indonesia
    Department of Metallurgical & Materials Engineering, Universitas Indonesia, Kampus UI, Depok 16424, Indonesia)

  • Prasetyo Adi Wibowo

    (PT. PLN (Persero) Puslitbang Ketenagalistrikan (Research Institute), Jl. PLN Duren Tiga No. 102, Pancoran, Jakarta 12760, Indonesia
    Department of Civil and Environmental Engineering, Universitas Gadjah Mada, Jl. Grafika No. 2, Yogyakarta 55281, Indonesia)

  • Eko Hariyostanto

    (PT. PLN (Persero) Puslitbang Ketenagalistrikan (Research Institute), Jl. PLN Duren Tiga No. 102, Pancoran, Jakarta 12760, Indonesia
    Departemen Interdisiplin Keteknikan, Fakultas Teknik, Universitas Indonesia, Gedung InterDisciplinary Engineering (IDE), Kampus UI, Depok 16424, Indonesia)

  • Ibnu Jourga Septiangga

    (Department of Mechanical and Industiral Engineering, Universitas Gadjah Mada, Jl. Grafika No. 2, Yogyakarta 55281, Indonesia)

  • Bangkit Tsani Annur Saputra

    (Department of Mechanical and Industiral Engineering, Universitas Gadjah Mada, Jl. Grafika No. 2, Yogyakarta 55281, Indonesia)

Abstract

This study demonstrates that small-scale liquefied natural gas (SS LNG) is a viable and cost-effective alternative to High-Speed Diesel (HSD) for power generation in remote areas of Indonesia. An integrated supply chain model is developed to optimize total costs based on LNG inventory levels. The model minimizes transportation costs from supply depots to demand points and handling costs at receiving terminals, which utilize Floating Storage Regasification Units (FSRUs). LNG distribution is optimized using a Multi-Depot Capacitated Vehicle Routing Problem (MDCVRP), formulated as a Mixed Integer Linear Programming (MILP) problem to reduce fuel consumption, CO 2 emissions, and vessel rental expenses. The novelty of this research lies in its integrated cost optimization, combining transportation and handling within a model specifically adapted to Indonesia’s complex geography and infrastructure. The simulation involves four LNG plant supply nodes and 50 demand locations, serving a total demand of 15,528 m 3 /day across four clusters. The analysis estimates a total investment of USD 685.3 million, with a plant-gate LNG price of 10.35 to 11.28 USD/MMBTU at a 10 percent discount rate, representing a 55 to 60 percent cost reduction compared to HSD. These findings support the strategic deployment of SS LNG to expand affordable electricity access in remote and underserved regions.

Suggested Citation

  • Mujammil Asdhiyoga Rahmanta & Anna Maria Sri Asih & Bertha Maya Sopha & Bennaron Sulancana & Prasetyo Adi Wibowo & Eko Hariyostanto & Ibnu Jourga Septiangga & Bangkit Tsani Annur Saputra, 2025. "Insights into Small-Scale LNG Supply Chains for Cost-Efficient Power Generation in Indonesia," Energies, MDPI, vol. 18(8), pages 1-29, April.
    • Handle: RePEc:gam:jeners:v:18:y:2025:i:8:p:2079-:d:1636915
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    References listed on IDEAS

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    1. Dimitrios Dimitriou & Panagiotis Zeimpekis, 2022. "Appraisal Modeling for FSRU Greenfield Energy Projects," Energies, MDPI, vol. 15(9), pages 1-21, April.
    2. Jokinen, Raine & Pettersson, Frank & Saxén, Henrik, 2015. "An MILP model for optimization of a small-scale LNG supply chain along a coastline," Applied Energy, Elsevier, vol. 138(C), pages 423-431.
    3. Muhammad Arif Budiyanto & Agus Sunjarianto Pamitran & Triana Yusman, 2019. "Optimization of the Route of Distribution of LNG using Small Scale LNG Carrier: A Case Study of a Gas Power Plant in the Sumatra Region, Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 179-187.
    4. Alice Bittante & Henrik Saxén, 2020. "Design of Small LNG Supply Chain by Multi-Period Optimization," Energies, MDPI, vol. 13(24), pages 1-19, December.
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