Supply- and demand-side effects of power sector planning with demand-side management options and SO2 emission constraints

This paper examines the implications of SO2 emission mitigation constraints in the power sector planning in Indonesia-a developing country-during 2003-2017 from a long term integrated resource planning perspective. A decomposition model is developed to assess the contributions of supply- and demand-side effects to the total changes in CO2, SO2 and NOx emissions from the power sector due to constraints on SO2 emissions. The results of the study show that both the supply- and demand-side effects would act towards the reduction of CO2, SO2 and NOx emissions. However, the supply-side effect would play the dominant role in emission mitigations from the power sector in Indonesia. The average incremental SO2 abatement cost would increase from US$ 970 to US$ 1271 per ton of SO2, while electricity price would increase by 2-18% if the annual SO2 emission reduction target is increased from 10% to 25%.