Road map for the energy transition in Bali Indonesia: System Dynamics approach

On the 22nd of April 2016, now also known as the ”Earth day”, the Paris Agreement has been brought to live. This agreement is constructed by all nations to fight together against a common enemy, namely climate change. Over the past few years it has become more difficult then ever before to ignore the effects of global warming. While species which have lived on the face of earth for over a thousand years are dying out, while natural disasters such as typhoons, tsunamis, extreme droughts and floods are drastically increasing in occurrence and while we measure new record years of climate change perceiving every year over the past decade it finally becomes inevitable to start taking measures to fight against climate change in order to allow humans and all other species living on this planet to survive. The Paris Agreement is one of the leading most respected agreement combating this cause, it bring together all the nations to sum up their efforts in order to try and mitigate and adapt the effects of climate change. The main goal of this act is to enforce the global response to the danger coming from the change in climate. To achieve this goal a target has been placed which states, the global temperature rise this century should stay well below 2 degrees Celsius. Every country has made its own individual pledge to help achieve the goal set by the Paris Agreement. Indonesia the 4th most populated country in the world is one of them. Indonesia is not only one of the most populous countries, but also one of the most polluting countries, with emissions coming from deforestation and enormous coal-fired power generation pipelines. Next to this, Indonesia’s location makes it highly vulnerable to the consequences of climate change. Therefore, Indonesia pledged to reduce it’s greenhouse gases, however up until now their targets have been rated as “Highly Insufficient”, meaning that they only show modest signs of improvement. The cause of this, is their development of coal fired plants, as they plan to build further 6 GW of such power plants by 2022 and around 27 GW by 2028. Therefore, it becomes inevitable to star moving the investments in coal for the next years towards renewable energy sources, such zero-carbon methods are for Indonesia to start the right pathway to attain the Paris Agreement and sustainable development. This is the reasoning behind the development of this research. However, since entire Indonesia seems like a too big of a challenge for one research. Therefore, this research aims at picking one of it’s islands and hoping that by designing an effective road map for the energy transition on this island will lead for others to follow. The island of choice has been Bali, a well knows and highly visited island in the archipelago. The target set by Indonesia are taken over for the case of the energy sector in Bali. These targets are the following, first a foremost a total greenhouse gas reduction of 11% by the energy sector compared to the reference scenario should be achieved by 2030. Second, to help meeting the first target a 23% penetration of renewable energy in the total electricity mix should be achieved by 2025. Last, these two targets should not hinder the expansion of the total capacity to satisfy the growing electricity demand at all time. From these targets and a literature review about energy transition on islands and renewable energy technology on islands the following main research question as been constructed: What plausible road map can ESDM follow, in order to accelerate the energy transition in Bali, while assuring that the demand is covered, to help Indonesia achieve their targets? In order to find the solution to this question four sub research question have been set up. These require the implementation of a system dynamics model. From the literature study and research done on similar islands which have already achieved a successful transition towards renewable energy, a total of 15 different scenarios have been constructed. These scenarios are possible outcomes of particular applications of 8 different policies, which the Ministry of Energy and Mineral Resources (MERM) or in Indonesian Energi dan Sumber Daya Minera (ESDM) has the power off to apply. First, a system analysis is given, which introduces all of the information required of the system, which is in this case the island of Bali and its electricity network. This analysis also demonstrates the current structure of the electricity network and explains why the transition of renewable energy is happening at such a slow pace. There are multiple reasons for this, ranging from cultural barriers to overcome as also geographical difficulties for the construction of renewable energy sources. In addition, there is also the issue that the balinese people are used to coal and oil powered electricity and see renewable technologies as methods coming along with a high risk. After the system analysis setting the boundaries of the complex system a road map development is introduced. In this chapter, it is explained how the different policies have to be applied, in order to construct the 15 different simulations of the future. This is followed by a chapter describing the model setup. First a conceptual model is designed including all of the mechanisms in work at the electricity network transition. The implementation of these feedback loops and of the policies into the system dynamics model is explained in great detail. Next to this, a table can be found in this chapter including all of the main input variables with the sources and assumption taken to determine their values. Before running the simulation with the final input variables, a verification and validation of the system dynamics model is demonstrated. This chapter verifies that the computerised model represents the conceptual model introduced before. Next, a validation testing if the simulation can support what it stands for is carried out. This has been done by investigating whether the main theories and assumptions elemental for the conceptual model are valid. In addition to this, the model is checked on errors and whether all of the units included in all of the equations are valid. At the end of this chapter a sensitivity analysis is executed. In this sensitivity analysis the different input variables are modified, in order to see the response on the output variables. This ensures that the system dynamics model representing the electricity network of Bali is indeed valid and can be use for further analysis. In the follow up chapter, the results of the different simulations are given and they are being compared to the main targets introduced at the beginning. From the total of 15 scenarios there are only 5 which meet the most important requirements. Therefore only these 5 scenarios are deployed into a trade-off table. The conclusion of this chapter is that the scenario S12+TE is the best choice for ESDM. This scenario represents a 24% growth rate of the solar PV sector stimulated by ESDM. Next to this, it requires a modification of the onsite oil fired power plants, so that they can run on cleaner fuel, namely liquefied natural gas. In addition to this, this scenario also requires to raise the taxes on fossil fuels, give out subsidies for solar PV projects, fix the land cost of farmland which has potential for solar farms and it includes an evolution of efficiency of photo voltaic cells from 17% to 30% within the next 10 years. This scenario would have a total cost of 2,050 million US dollars, to ensure them that they would achieve all of their targets by 2030. This result is then being reflected on in the final chapter, where some concluding remarks are given on the different results and methods. Next to this, several ideas are given to help improve any future follow up work on this research.Engineering and Policy Analysi