Economic analysis of biomass gasification for generating electricity in rural areas in Indonesia

Abstract

The gaseous fuel from biomass gasification might reduce the consumption of diesel fuel by 70%. The investment cost of the whole unit with a capacity of 45 kWe was about IDR 220 million in 2008 comprised of 24% for gasification unit, 54% for diesel engine and electric generator, 22% for transportation of the whole unit from Bandung to the site in South Borneo. The gasification unit was made in local workshop in Bandung, while the diesel-generator was purchased also in a local market. To anticipate the development of biomass based electricity in remote areas, an economic analysis has been made for implementations in 2019. A specific investment cost of 600 USD/kW has been estimated taking account to the escalation and capacity factors. Using a discounted factor of 11% and biomass cost in the range of 0.03-0.07 USD/kg, the production cost of electricity would be in the range of 0.09-0.16 USD/kWh. This production cost was lower than that of diesel engine fueled with full oil commonly implemented in many remote areas in Indonesia at this moment. This production cost was also lower than the Feed in Tariff in some regions established by Indonesian government in 2017.