Utilization of Biomethane to Support Energy Security in Indonesia, Riau Province: A Case Study

Abstract

As the largest global palm oil producer, Indonesia contributes 59% to the world’s palm oil supply, producing 46.9 million tons of Crude Palm Oil (CPO) in 2021. However, this extensive production poses an environmental challenge through Palm Oil Mill Effluent (POME), estimated at 156 million m3 annually. POME treatment facilities release Biogas, predominantly Methane (CH4) at 50%–75%, a potent Greenhouse Gas (GHG) with 21 times the global warming potential of CO2. Conversely, Methane is a key component of widely used Natural Gas. Properly treated, POME-derived biogas can be upgraded to Biomethane, a clean and carbon-negative alternative for the Natural Gas Grid or fossil fuel substitution, estimated at 1,280 MWe, equivalent to 288 MMSCFD CH4. Despite Biomethane’s potential, its utilization remains limited to self-use in Palm Oil Mills or power plants, even in Riau Province, home to Indonesia’s largest oil palm plantation. PT Perusahaan Gas Negara Tbk survey identified potential customers in Riau willing to adopt natural gas, hindered by infrastructure and economic scale challenges. This research analyzes obstacles to biomethane business development in Indonesia, focusing on Riau Province, aiming to formulate an optimal distribution scheme and sustainable strategies. Methodologically, a mix of quantitative and qualitative data collection techniques, including literature studies, interviews, and questionnaires, informed a comprehensive analysis employing geographical, transportation cost, financial modeling, SWOT, and risk analyses. Findings suggest trucking as the optimal distribution mode for biomethane to scattered customers. Economic viability hinges on biomethane volume, necessitating stability and increased sales volume strategies. For Riau, four potential customers with a total daily demand of 11,248.93 m3 can be served affordably by selecting palm oil mills within a 76 km radius. Price and security supply considerations are crucial. This research provides insights into overcoming challenges and optimizing the biomethane business in Riau, offering a sustainable model for broader adoption in Indonesia.