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

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 electricity 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.

Automated summary

Obtaining the optimal power purchase agreements (PPA) is crucial in deregulated generation expansion planning. A proposed model based on game theory and multi-scenario analysis was applied to the Bangka Belitung power system, resulting in an optimum PPA of 30% of generation cost and levelized electricity cost of 6.009 cents USD/kWh. The utility's inability to offer a PPA lower than 30% led to increased costs by renting diesel power plants, affecting the levelized cost of electricity to 8.629 cents USD/kWh.