Supply- and Demand- Side Effects of Power Sector Planning with Independent Power Producers: A Case of Indonesia

Abstract

This paper examines the implications of changing of operating mode or duration of contract of independent power producers in power sector planning in Indonesia. In particular, an approach is developed to assess the contributions of supply- and demand-side effects to the changes in CO₂, SO₂ and NO_x emissions from the power sector due to changing of operating mode or duration of contract of independent power producers. The results show that the supply side effect would increase the CO₂, SO₂ and NO_x mitigations, however, the demand side effect would act in the opposite direction. The results also show that the CO₂, SO₂ and NO_x emission mitigations would increase if the operating mode or duration of contract is increased from 60 to 80% or from 5 to 15 years respectively.