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

• Main Authors: Budi, Rizki Firmansyah Setya, Sarjiya, Sarjiya, Hadi, Sasongko Pramono
• Format: Article PeerReviewed
• Language: English
• Published: Elsevier 2022
• Subjects: Electrical and Electronic Engineering
• Online Access: https://repository.ugm.ac.id/278844/1/Budi_TK.pdf; https://repository.ugm.ac.id/278844/; https://www.elsevier.com/locate/energy; https://doi.org/10.1016/j.energy.2022.125014
• Institution: Universitas Gadjah Mada

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 elec- tricity 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.