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Remote area electricity supply: A system dynamics approach

Wachjoe, C. Kurniawan (1995) Remote area electricity supply: A system dynamics approach. PhD thesis, Murdoch University.

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The implementation of a stand-alone diesel power plant in remote areas creates high operating costs due to the high fuel cost (which includes high transportation costs) and the difficulty of providing adequate maintenance. The availability of renewable resources in these remote areas makes it worthwhile considering renewable energy sources, such as the wind generators and photovoltaic arrays, as expansion alternatives in attempting to reduce overall operational costs.

This study seeks to develop a framework which allows the electricity-economy interactions to be explored. The framework consists of a system dynamics approach for remote area electricity supply. A system dynamic model is developed for the analysis. The model is used to assess and study the future development of electricity supply by utilising the availability of local energy sources. The form of dynamic relationships among constructed mechanisms represents the interaction between electricity supply and demand. The electricity supply model focuses primarily on expanding generation capacity by choosing the best mix of new electrical generating capacity, given the anticipated electricity demand growth and the financial constraints of the utility. The electricity demand model is based on the dynamics of population and economic activity (the agricultural and industrial sectors). Population, added values, consumption, income, investment, and other major energy and economic aggregates are determined endogenously (within the model).

The assessment of future electricity supply systems for remote areas is undertaken by constructing the appropriate scenarios in the model and then discovering a set of policy designs that produce the desired result. As case studies, the model is then used to assess the long-term electricity supply options for the economy of the Shire of Esperance, Western Australia and Teratak Village, Lombok, Indonesia. The analysis emphasises and explores the structural mechanisms for electricity supply and the macro-economic effects of the electricity demand. Special consideration is given to the potential for depletion of oil resources and the development of renewable energy.

For the case study in the Shire of Esperance, it is found that the model can replicate the general historical trends of the local economy, the population sector, and the historical electricity demand and generation for the period 1980 to 1990. The future behaviour of the electricity demand tends to fluctuate with the amount of GDP per capita and the electricity price. The future electricity demand behaviour is very sensitive to the electricity price, while only slightly affected by GDP per capita. Meanwhile, the long-run electricity supply behaviour in the Shire of Esperance based on the diesel power plant and the wind farm energy system is still dominated by the diesel power plant in the 50 year simulation period. The important policy designs which can avoid future financial problems for the utility relate to pricing policy for diesel fuel and the financial policy of the supply systems.

In the case study of Teratak Village, the simulation results indicate that electricity demand growth is affected by both the economy of the local communities and the electricity price in the 50 year simulation period. The electricity price remains unchanged for any policy design because the front end investment of the photovoltaic power plant mainly influences the electricity production costs. The behaviour of the electricity supply systems, which are based on combinations of photovoltaic and micro hydro power plant, can satisfy the projected electricity demand until the year 2014. The implementation of policies on energy mix, load management and rate relief can avoid any electricity shortage and improve the electricity supply behaviour in Teratak Village.

Further evaluations from the two case studies indicate that implementing deregulation on electricity price (which allows the electricity price to equal the allowed electricity price) will help the utility's ability to invest in new generating capacity and solve the financial problems of the utility. These policies need to be considered in order to reduce the electricity production costs for decentralised power plants in remote areas. On the other hand, the inclusion of environmental externalities for each power plant will increase the competitiveness of the power plant based on renewable energy sources by providing lower electricity production costs in the long-term in comparison with the fossil fuel fired power plants.

The system dynamic model developed provides a very useful tool for assessing the sustainability of the future electricity supply in remote areas. Based on the two case studies, it was possible to implement this model for two very different situations in order to assess the impact of policy designs for improving the future behaviour of the remote area electricity supply. The model could be used to identify potential future problems in the existing supply systems. It was then used to assess the feasibility of alternative solutions that could be taken to satisfy the projected electricity demand based on the technological and financial options of the power plants and the availability of local renewable energy sources. With regard to local energy used for generating electricity, the model could suggest the best energy mix decisions for the electricity supply system in supporting the long-term electricity demand behaviour and qualitatively assess a set of policy designs proposed to improve the sustainability of this supply system.

Item Type: Thesis (PhD)
Murdoch Affiliation: Research Institute for Sustainable Energy
Notes: Note to the author: If you would like to make your thesis openly available on Murdoch University Library's Research Repository, please contact: Thank you.
Supervisor(s): Pryor, Trevor, Remmer, Dorothy and Knowles, Sally
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