The global energy sector is a substantial contributor to greenhouse gas emissions, responsible for approximately 75% of such emissions worldwide. Indonesia, ranking twelfth in energy consumption and ninth in global carbon dioxide (CO2) emissions from fuel combustion, is faced with the challenge of addressing its significant carbon footprint. This challenge is exacerbated by a projected 3.5% annual increase in energy consumption driven by anticipated economic growth. Notably, coal accounts for half of Indonesia's electricity generation capacity, producing 31.5 exajoules (EJ) annually and emitting 3 kilotons of CO2 per kiloton of coal consumed.

Despite its role as a major coal producer, Indonesia has set ambitious targets, aiming to achieve net-zero emissions by 2060, including a 29% reduction in carbon emissions by 2030. A pivotal step towards these goals is exploring alternative energy sources, with a particular focus on the New and Renewable Energy (NRE) sector.

Traditionally used for cooking, biomass energy has expanded within Indonesia's NRE sector, with sustainable biofuel and biogas gaining prominence. Indonesia possesses a substantial biomass potential, estimated at 32.6 gigawatts (GW), offering a sustainable avenue for biomass residue utilization. One promising avenue is co-firing biomass alongside coal in existing Coal-Fired Power Plants (CFPPs). However, initial pilot projects have encountered challenges, with co-firing percentages remaining below 20%, and coal retaining dominance in the energy mix.

This report addresses a critical knowledge gap hindering the progress of biomass co-firing in Indonesia. Its primary objective is to assess the techno-economic potential of retrofitting existing CFPPs in Indonesia for biomass co-firing. The assessment encompasses identifying abundant and suitable biomass residues for co-firing, exploring retrofit scenarios based on technical considerations, conducting an economic feasibility analysis of CFPP retrofitting, and proposing policy recommendations for Indonesia's Ministry of Energy and Mineral Resources.

The study reveals that agricultural by-products account for 70% of available biomass, followed by forestry residues (17%) and Municipal Solid Waste (MSW) (13%). Notable contributors among agricultural residues include rice and palm oil residues, each exhibiting substantial potentials. Forestry residues, such as solid and sawdust residues from pulpwood and sawn wood, also hold promise.

The technical potential for co-firing is estimated at 450 terawatt-hours (TWh), equivalent to the estimated electricity demand in 2030. To achieve practical implementation, proposed CFPP retrofit scenarios consider co-firing percentages, addressing pre-treatment of biomass, boiler efficiency, and equipment modifications.

Using the Levelized Cost of Electricity (LCOE) methodology, the economic assessment yields a range of outcomes, from 2.2 to 10 cents per kilowatt-hour ($c/kWh), based on distinct case studies. The report highlights the economic feasibility of biomass co-firing in Indonesia, even when compared to sub-critical/ultra sub-critical coal plants.

To support biomass co-firing, the report recommends policies such as a significant carbon tax, redirecting coal subsidies, and promoting biomass utilization to support biomass co-firing. Improving the supply chain by identifying biomass sources near coal mines and enhancing transportation infrastructure is also essential for ensuring a stable biomass supply. Despite some limitations in data sources and modeling, the study employs dynamic approaches to present result ranges and diverse scenarios, enhancing the validity of its findings.

In summary, the strategic implementation of recommended measures has the potential to significantly contribute to Indonesia's transition towards sustainable biomass co-firing practices in its energy sector, aligning with its emissions reduction and net-zero goals.