Risk Cost Analysis of Fuel Dependency in a Sustainable Energy Transition by Replacing HSD with LNG: A Case Study of Lombok Power System

Indonesia is an archipelagic country with a decentralized and isolated electricity system, such as Lombok. The Lombok Power System still relies on high-speed diesel (HSD) as the primary energy source for electricity generation. Indonesia has made efforts towards energy transition by replacing HSD with Liquefied Natural Gas (LNG). However, these efforts have not been successful, as evidenced by the continued presence of Gas Machine Power Plants that still rely on HSD, as seen in the Lombok system. This issue is due to the absence of supporting gas utilization infrastructure, an inadequate supply chain, and the suboptimal utilization of local energy. The unavailability of LNG and dependence on HSD have the potential to increase the Levelized Cost of Electricity (LCOE) of the system. Therefore, this study aims to analyse the fuel dependency risk on the LCOE in a sustainable energy transition with LNG as a replacement for HSD in Lombok Power System, Indonesia. The analysis was conducted by identifying potential risks in the LNG supply chain and evaluating their overall risk level on the LCOE of GEP. However, the risks associated with LNG supply chain disruptions, technological readiness, and price volatility need to be managed to ensure a stable and sustainable energy transition. Based on the results of LNG supply uncertainty, the Lombok System's LCOE increased from 13.01 c$/kWh to 16.27 c$/kWh due to the possibility of an increase in LNG prices in the future. The study recommends a risk management plan that includes the diversification of fuel sources, establishing a reliable LNG supply chain, and investing in research and development of LNG technology. One recommendation for diversifying primary energy sources is to increase the utilization of RE baseload, such as biomass, hydro, nuclear and solar power with batteries.