Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara Region
The conversion of existing diesel-fuel power plants in remote areas of Indonesia to gas is a practical solution for the reduction of carbon emissions. However, the transportation of natural gas from its sources to plant gates across the vast and dispersed islands of the Indonesian archipelago using...
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| Format: | Article |
| Language: | English |
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EconJournals
2023-07-01
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| Series: | International Journal of Energy Economics and Policy |
| Subjects: | |
| Online Access: | http://econjournals.com/index.php/ijeep/article/view/14446 |
| _version_ | 1797780940932513792 |
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| author | Andy Noorsaman Sommeng Usman Usman Jonathan Kurnianto |
| author_facet | Andy Noorsaman Sommeng Usman Usman Jonathan Kurnianto |
| author_sort | Andy Noorsaman Sommeng |
| collection | DOAJ |
| description |
The conversion of existing diesel-fuel power plants in remote areas of Indonesia to gas is a practical solution for the reduction of carbon emissions. However, the transportation of natural gas from its sources to plant gates across the vast and dispersed islands of the Indonesian archipelago using small-scale Liquefied Natural Gas (LNG) poses challenges in terms of economics and investment risks. Therefore, this study aims to analyze the techno-economic risks of converting diesel power plants spread across the Nusa Tenggara region to gas with acceptable prices. The real options method is applied to perform the economic evaluation based on a proposed cost-effective LNG distribution scheme. The gas demand from eight power plants with a total capacity of 347 MW across the region is 9,176 BBTU annually. The profitability analysis is carried out using Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP), and Profitability Index (PI) values showing USD 56,876,674, 15.3%, 7.25 years, and 1.48, respectively. The risk analysis using the real options method suggests that the investment risk is lower if the program starts in the first year with 20 years of operation. The use of gas lowers the cost of generation per kilowatt-hour and reduces carbon emissions compared to diesel-fueled power plants.
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| first_indexed | 2024-03-12T23:50:53Z |
| format | Article |
| id | doaj.art-01555a63ff1142eeb3f524a365dab8c3 |
| institution | Directory Open Access Journal |
| issn | 2146-4553 |
| language | English |
| last_indexed | 2024-03-12T23:50:53Z |
| publishDate | 2023-07-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Energy Economics and Policy |
| spelling | doaj.art-01555a63ff1142eeb3f524a365dab8c32023-07-13T14:34:49ZengEconJournalsInternational Journal of Energy Economics and Policy2146-45532023-07-0113410.32479/ijeep.14446Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara RegionAndy Noorsaman Sommeng0Usman Usman1Jonathan Kurnianto2Department of Chemical Engineering, Faculty of Engineering, Universitas Indonesia, Depok 16424, Indonesia,Research Center for Process and Manufacturing Industry Technology, National Research and Innovation Agency, South Tangerang 15314, Indonesia.Department of Chemical Engineering, Faculty of Engineering, Universitas Indonesia, Depok 16424, Indonesia, The conversion of existing diesel-fuel power plants in remote areas of Indonesia to gas is a practical solution for the reduction of carbon emissions. However, the transportation of natural gas from its sources to plant gates across the vast and dispersed islands of the Indonesian archipelago using small-scale Liquefied Natural Gas (LNG) poses challenges in terms of economics and investment risks. Therefore, this study aims to analyze the techno-economic risks of converting diesel power plants spread across the Nusa Tenggara region to gas with acceptable prices. The real options method is applied to perform the economic evaluation based on a proposed cost-effective LNG distribution scheme. The gas demand from eight power plants with a total capacity of 347 MW across the region is 9,176 BBTU annually. The profitability analysis is carried out using Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP), and Profitability Index (PI) values showing USD 56,876,674, 15.3%, 7.25 years, and 1.48, respectively. The risk analysis using the real options method suggests that the investment risk is lower if the program starts in the first year with 20 years of operation. The use of gas lowers the cost of generation per kilowatt-hour and reduces carbon emissions compared to diesel-fueled power plants. http://econjournals.com/index.php/ijeep/article/view/14446Binomial LatticeMonte Carlo SimulationDiesel to Gas ConversionSmall Scale LNGNusa Tenggara Region |
| spellingShingle | Andy Noorsaman Sommeng Usman Usman Jonathan Kurnianto Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara Region International Journal of Energy Economics and Policy Binomial Lattice Monte Carlo Simulation Diesel to Gas Conversion Small Scale LNG Nusa Tenggara Region |
| title | Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara Region |
| title_full | Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara Region |
| title_fullStr | Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara Region |
| title_full_unstemmed | Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara Region |
| title_short | Techno-Economic and Risk Assessment of Small-Scale LNG Distribution for Replacing Diesel Fuel in Nusa Tenggara Region |
| title_sort | techno economic and risk assessment of small scale lng distribution for replacing diesel fuel in nusa tenggara region |
| topic | Binomial Lattice Monte Carlo Simulation Diesel to Gas Conversion Small Scale LNG Nusa Tenggara Region |
| url | http://econjournals.com/index.php/ijeep/article/view/14446 |
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