Competitiveness of Utility-Scale Wind Farm Development with Feed-In Tariff in Indonesia

Abstract

Indonesia needs additional 35,000 MW electricity power generation capacity to support the economic development to 2020, and at the same time, Indonesia must increase the portion of renewable energy in the energy mix up to 23% by 2025. Wind farm investment in Indonesia is facing a stalemate due to high risk and the lack of investment assurance in Indonesia. With the aim to increase the wind penetration in Indonesian energy market, this research assesses the competitiveness of wind energy compared to other energy sources by considering the wind farm potential in Indonesia. As an archipelago with five major islands, Indonesia has a unique opportunity to develop wind farm industry. This paper presents a research progress on comprehensive review of wind energy potential in Indonesia and their ability to compete with existing fossil-driven energy market. In this research, a Feed-in Tariff (FIT) policy is simulated as leverage policy to jump-start the development of wind farm in Indonesia. Results show that some part of Indonesia has a good potential for wind energy, and it is competitive enough to provide power cheaper than diesel and gas power plant with the use of FiT policy. However, it could cause a mixed of negative and positive impact to the stakeholders which should be addressed to induce the development of wind farm industry.