Economic analysis of wind power integration in the Eastern Sumba grid, Indonesia
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The island of Sumba serves as an example of a physically isolated electricity market that continues to burn diesel fuel to generate electricity despite possessing abundant sources of wind power. In an effort to encourage wind power use in Eastern Sumba, NREL has recently conducted a study evaluating the technical feasibility of integrating wind power into the Eastern Sumba grid. A cost-benefit analysis with three economic indicators has been performed for measuring the economic feasibility of integrating an 850-kW wind power system in the Eastern Sumba grid. The results demonstrated that the wind power system carries a much lower generation cost and subsidy rate than the diesel generator with a payback period of 2.9 years. Three cost-reduction scenarios were proposed to bring the generation cost to a breakeven point with the current electricity price. While a breakeven point could not be reached, the combination of CRF and CAPEX reduction scenario has successfully reduced the wind power system generation cost by 35% and cut the current energy subsidy by 94%. This study is hoped to encourage more rigorous renewable energy deployment in Eastern Sumba and to catalyze the process of reaching 100% electrification rate in the Sumba island with renewable energy power generation.