9.2. LK benefit – cost simulation
The purpose of this simulation in this paper, we will use the following numbers: Total LK capacity (P) = 1000 MW, which number is taken from the largest unit of power plant in Indonesia. Production time is annual based, h = 8760 hours. Period of simulation: 10 (ten) year basis. Feed in tariff, f = 0.01 USD/kWh, the price of which is taken from the current government regulated tariff for electrical energy.
As depicted previously, LK provides opportunity for local business players to own small scale power plant or waste to energy plant. It means that LK will give social benefit as a lot job opportunity to people to run thousands of LK plants around the country. The method that will be used to quantify such social benefit in this paper will be derived from the potential additional tax income for the nation, both from company taxes and individual income taxes. For simplification, other social benefit of LK including more comfortable neighbourhood, increasing buying power, reducing unemployment rate, and energy security improvement are not be included in this calculation. For simulation purpose, we will take the moderate package of 5 ton waste per day, which employs around 12 workers with regional minimum wage per year is IDR 40,000,000 or equivalent USD 3,000
Refer to Table 5, the package of 5 ton of waste per day is estimated to have Net Present Value of USD 146.558. The country will have potential income from added value and corporate income tax at least 20 % or USD29,312. Estimated capacity of LK with 5 ton waste per day is 120 kW, so the total potential corporate income tax from 1000 MW LK is 1000,000 / 120 x USD29,312 = USD 244.263.410.
The individual tax potential is calculated from the income of 12 workers who work in 5 ton package waste (120 kW capacity). The total income in this LK is 12 x USD3000 = USD36,000 and the potential tax (15%) from 1000 MW LK is 15% x 1,000,000/120 x USD 36,000 = USD 300,000,000.
Every kWh of electrical energy is similar to 0.00012 Ton coal equivalent and if the price of coal is USD40/ton, then any kWh used of renewable LK plant will save: 0.00012 x USD40 = USD 0.0048. Since the package of 5 ton waste may produces 720 kWh/day (Table 5), the total environmental benefit resulted from 1000 MW LK plants will be: 1,000,000 / 120 x 720 x 365 x USD 0.0048 = USD 10.512.000
A huge number of plants under distributed generation system, require rigorous control and monitoring that can be expressed as additional cost. For the purpose of this simulation, we will pick the moderate value of this cost as 5% of Capital Expenditure (Capex). For the package of 5 ton waste, the capex is USD123,940 and the total cost of 1,000 MW LK will be: 1,000,000 / 120 x 5% x USD123,940 = USD 51,641,667
The benefit of the conventional system is derived from the lower investment cost per unit of large power plant and the better system reliability compare to that of LK. We will use Coal Power Plant to represent the large CS power plant and the average capital cost of this kind in Indonesia is USD 1,218/kW (Wahid, 2016). While the capital cost for LK plant is calculated from the typical cost of 5 ton waste package LK (Table 4) with 20 hours daily operation. Capex for 5 ton is USD 123,940 and the capacity is 720 kWh / 20 h = 36 kW. The cost per kW of LK = 123,940/36 = 3,443 USD/kW. So, the total cost of 1000 MW LK plants will be: 1000,000 x USD (3,443 – 1,218) = USD 2.224.777.778
Conventional system has better reliability since it has a lot of redundant power plants that interconnected one into another. Reliability can be represented by the delta reliability (less duration of interruption compare to the LK system), in hours per year. For the purpose of this calculation we assume that the maximum of shortage in LK plants is 10 days or 240 hours a year. So, we can pick three conditions of delta; 72 hours, 120 hours, days, and 240 hours outages per year. For instance, if the delta is 120 hours, the benefit will be: 1000,000 kW x 120 hours x 0,01 USD/kWh = USD1,200,000
Transmission line (T/L) cost is taken from Andrade, Juan et. Al (2016), which stipulated that the Grid connection cost for Generating Technology is within the range of 114 USD/kW for the small plant and 227USD/kW for the large plant that far from load. So, we can pick the number of 227 USD/kW as transmission lines cost for this simulation. If the total capacity of plants is 1000 MW, the T/L cost will be: 1000,000 x USD 227 = USD 227,000,000
In the electricity industry, revenue is coming from energy sales in USD/kWh. It other words, any single hour delay means the potential loss of income is similar to the capacity of unit in kW times the tariff. For example: if capacity is 1000 MW or 1,000,000 kW and average tariff in Indonesia 0,07 USD, then the potential loss is USD 70,000 per hour or USD 1,680,000 per day of delay. This value will be used to calculate the total delay cost for several conditions. For simulation purpose, we will pick 3 (three) different conditions: one month delay, six month delay, and one year delay. For example, if the project slippage is one month, the cost will be: 30 x USD 1,680,000 = USD 50,400,000.