Techno-Economic Optimization of PV-BESS Peaker to Replace Thermal Plants: A Case Study of the Madura PV-BESS Project, Indonesia

Abstract

An important challenge for the energy transition will be a triple challenge in island nations—between decarbonization, supply security, and cost affordability. We investigate the techno-economic viability of 75 MWp Solar Photovoltaic (PV) System integrated with 50 MW/250 MWh Battery Energy Storage System (BESS) in Madura. It is known that the electrical subsystem in the region is at the most significant risk due to the current power failure, which in N-1 contingency events resulted in a power deficit of 177 MW and a significant risk of full power outages. Based on different optimization schemes and waterfall sensitivity analysis, the current project has determined the impact of six scenarios on Levelized Tariff (ABEF components) outcomes. According to simulation results, while base case scenario results in a prohibitive tariff of 23.47 cUSD/kWh, the introduction of more strategic measures, particularly revenue stacking through off-peak energy sales, green financing (4% soft loan), local content exemption, and regulatory incentives, can considerably reduce the tariff by 31.52% to 16.07 cUSD/kWh. Specifically, this optimized tariff provides 28.85% lower fuel costs compared to the average pricing of fuel cost of current thermal peaker power plant owned by PLN Indonesia Power (22.59 cUSD/kWh) and is 46.38% lower compared to diesel and gas engines fuel cost in Indonesia (29.98 cUSD/kWh). These findings shows that utility-scale PV-BESS functions not only as a "Defender" asset for grid frequency and voltage stability but also as a financial hedge against fossil fuel price volatility, offering a strategic roadmap for policymakers in emerging markets.