Decarbonization Roadmap and Energy System Scenarios for Southern Sulawesi System: Response to Demand Growth from Smelters Sector

Abstract

This study aims to develop a decarbonization roadmap and energy system scenarios for Southern Sulawesi System in response to a sharp increase electricity demand driven by the rapid expansion of nickel smelters through 2030. While Indonesia has pledged to cut GHG emissions under the Paris Agreement, the extraordinary pace of industrialization in this region, accelerated by the national mineral downstreaming policy, presents distinctive planning challenges. Unlike other regions, Southern Sulawesi has already achieved notable renewable energy mix of approximately 30%, yet this is now threatened by the sudden rise in industrial demand. The reserve margin is projected to decline significantly, primarily due to energy-intensive smelters, which now represent the largest source of electricity consumption relative to other areas in the country. This study is the first to incorporate updated electricity demand forecasts, particularly from the smelter sector, into a decarbonization framework using the Low Emission Analysis Platform (LEAP). It evaluates three scenarios: Business as Usual, National Plan (align with RUPTL 2021-2030), and the Southern Sulawesi System scenario. Each scenario assesses pathways to optimize generation cost, ensure demand fulfillment, and reduce emissions. Results indicate a steep demand surge between 2024-2025, and show that transitioning from coal to gas, combined with renewable energy expansion and co-firing strategies, can reduce GHG emissions up to 48% while achieving a 35% renewable share. The study underscores the urgency for targeted policy actions, including updated planning mechanisms, spatial and cross-sectoral coordination, and carbon pricing instruments, to ensure energy reliability and support a realistic clean energy transition.