Electricity pricing system; Electricity market liberalization; Energy trilemma; Indonesia; Renewable energy sources
Abstract :
[en] Indonesia's current energy policy, which relies on cheap fossil fuels and focuses on two out of the three horns of the energy trilemma, namely, energy security and energy equity, may impede its efforts to higher shares of renewable energy sources. This paper develops three generic models that allow policymakers to analyze the impact of introducing a wholesale electricity market managed under either a nodal, a zonal, or a uniform pricing system on the three horns of the energy trilemma. It evaluates the models using a simplified network representation of the Indonesian electricity sector. The results indicate that under the model assumptions made, and given the used input parameters as well as the used metrics for the three horns of the energy trilemma, a uniform pricing system might help Indonesia to balance its energy trilemma.
Disciplines :
Energy Management information systems
Author, co-author :
Heffron, Raphael J.
Körner, Marc-Fabian
Sumarno, Theresia
Wagner, Jonathan
Weibelzahl, Martin
FRIDGEN, Gilbert ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
External co-authors :
yes
Language :
English
Title :
How different electricity pricing systems affect the energy trilemma: Assessing Indonesia's electricity market transition
scite shows how a scientific paper has been cited by providing the context of the citation, a classification describing whether it supports, mentions, or contrasts the cited claim, and a label indicating in which section the citation was made.
Bibliography
ADB, Renewable Energy Financing Schemes for Indonesia. 2019 (Manila, Philippines).
ADB, Fast-tracking the SDGs: Driving Asia-Pacific Transformations. 2020.
Agora Energiewende, The Liberalisation of Electricity Markets in Germany - History, Development and Current Status. https://www.agora-energiewende.de/en/publications/the-liberalisation-of-electricity-markets-in-germany/#:~:text=History%2C%20Development%20and%20Current%20Status&text=In%201996%2C%20Germany%20became%20one,to%20a%20liberalised%20electricity%20market.&text=Liberalisation%20has%20delivered%20cost%2Dreductions,most%20reliable%20in%20the%20world, 2019 (accessed 30 May 2021).
Batih, H., Sorapipatana, C., Characteristics of urban households’ electrical energy consumption in Indonesia and its saving potentials. Renew. Sust. Energ. Rev. 57 (2016), 1160–1173, 10.1016/j.rser.2015.12.132.
Bjørndal, M., Jørnsten, K., Zonal Pricing in a Deregulated Electricity Market. EJ. 2001, 22, 10.5547/ISSN0195-6574-EJ-Vol22-No1-3.
Bjørndal, M., Jørnsten, K., Benefits from coordinating congestion management—the Nordic power market. Energy Policy 35 (2007), 1978–1991, 10.1016/j.enpol.2006.06.014.
Bjørndal, M., Jørnsten, K., Pignon, V., Congestion management in the nordic power market — counter purchases and zonal pricing. Compet. Regul. Netw. Ind. 4 (2003), 271–292, 10.1177/178359170300400302.
Bohn, R.E., Caramanis, M.C., Schweppe, F.C., Optimal pricing in electrical networks over space and time. RAND J. Econ., 15, 1984, 360, 10.2307/2555444.
Boucher, J., Smeers, Y., Alternative models of restructured electricity systems, part 1: no market power. Oper. Res. 49 (2001), 821–838, 10.1287/opre.49.6.821.10017.
Burke, P.J., Kurniawati, S., Electricity subsidy reform in Indonesia: demand-side effects on electricity use. Energy Policy 116 (2018), 410–421, 10.1016/j.enpol.2018.02.018.
Burke, P.J., Widnyana, J., Anjum, Z., Aisbett, E., Resosudarmo, B., Baldwin, K.G., Overcoming barriers to solar and wind energy adoption in two Asian giants: India and Indonesia. Energy Policy 132 (2019), 1216–1228, 10.1016/j.enpol.2019.05.055.
Burstedde, B., From nodal to zonal pricing: A bottom-up approach to the second-best. 2012 9th International Conference on the European Energy Market (EEM 2012), Florence, Italy. 2012, 2012, IEEE, 1–8.
Chang, Y., Li, Y., Renewable energy and policy options in an integrated ASEAN electricity market: quantitative assessments and policy implications. Energy Policy 85 (2015), 39–49, 10.1016/j.enpol.2015.05.011.
Chao, H.-P., Peck, S., A market mechanism for electric power transmission. J. Regul. Econ. 10 (1996), 25–59, 10.1007/BF00133357.
Conejo, A.J., Sioshansi, R., Rethinking restructured electricity market design: lessons learned and future needs. Int. J. Electr. Power Energy Syst. 98 (2018), 520–530, 10.1016/j.ijepes.2017.12.014.
Daxhelet, O., Smeers, Y., The EU regulation on cross-border trade of electricity: a two-stage equilibrium model. Eur. J. Oper. Res. 181 (2007), 1396–1412, 10.1016/j.ejor.2005.12.040.
Ding, F., Fuller, J.D., Nodal, uniform, or zonal pricing: distribution of economic surplus. IEEE Trans. Power Syst. 20 (2005), 875–882, 10.1109/TPWRS.2005.846042.
Ditjen EBTKE, Statistik EBTKE 2016. Direktorat Jenderal Energi Baru, Terbarukan dan Konservasi Energi. 2016 (68 pp.).
Dutu, R., Challenges and policies in Indonesia's energy sector. Energy Policy 98 (2016), 513–519, 10.1787/5js0cqqk42ls-en.
Egerer, J., Weibezahn, J., Hermann, H., Two price zones for the German electricity market—market implications and distributional effects. Energy Econ. 59 (2016), 365–381.
Ehrenmann, A., Smeers, Y., Inefficiencies in European congestion management proposals. Util. Policy 13 (2005), 135–152, 10.1016/j.jup.2004.12.007.
Eikeland, P.O., Electricity market liberalisation and environmental performance: Norway and the UK. Energy Policy, 26, 1998.
Gan, D., Bourcier, D.V., Locational market power screening and congestion management: experience and suggestions. IEEE Trans. Power Syst. 17 (2002), 180–185.
Gil, H.A., Lin, J., Wind power and electricity prices at the PJM market. IEEE Trans. Power Syst. 28 (2013), 3945–3953.
Gleixner, A., Bastubbe, Michael, Eifler, Leon, Gally, Tristan, Gamrath, Gerald, Gottwald, Robert Lion, Hendel, Gregor, Hojny, Christopher, Koch, Thorsten, Lübbecke, Marco E., Maher, Stephen J., Miltenberger, Matthias, Müller, Benjamin, Pfetsch, Marc E., Puchert, Christian, Rehfeldt, Daniel, Schlösser, Franziska, Schubert, Christoph, Serrano, Felipe, Shinano, Yuji, Viernickel, Jan Merlin, Walter, Matthias, Wegscheider, Fabian, Witt, Jonas T., Witzig, Jakob, The SCIP Optimization Suite 6.0. Technical Report. Optimization Online http://www.optimization-online.org/DB_HTML/2018/07/6692.html, 2018.
Global Energy Monitor, Global Coal Plant Tracker. https://endcoal.org/tracker/, 2020 (accessed 19 March 2020).
Grimm, V., Martin, A., Schmidt, M., Weibelzahl, M., Zöttl, G., Transmission and generation investment in electricity markets: the effects of market splitting and network fee regimes. Eur. J. Oper. Res. 254 (2016), 493–509, 10.1016/j.ejor.2016.03.044.
Gunningham, N., Managing the energy trilemma: the case of Indonesia. Energy Policy 54 (2013), 184–193, 10.1016/j.enpol.2012.11.018.
Handayani, K., Krozer, Y., Filatova, T., Trade-offs between electrification and climate change mitigation: an analysis of the Java-Bali power system in Indonesia. Appl. Energy 208 (2017), 1020–1037, 10.1016/j.apenergy.2017.09.048.
Heffron, R.J., McCauley, D., de Rubens, G.Z., Balancing the energy trilemma through the Energy Justice Metric. Appl. Energy 229 (2018), 1191–1201, 10.1016/j.apenergy.2018.08.073.
Heffron, R., Körner, M.-F., Wagner, J., Weibelzahl, M., Fridgen, G., Industrial demand-side flexibility: a key element of a just energy transition and industrial development. Appl. Energy, 269, 2020, 115026, 10.1016/j.apenergy.2020.115026.
Hogan, W.W., Contract networks for electric power transmission. J. Regul. Econ. 4 (1992), 211–242, 10.1007/BF00133621.
Hogan, W.W., Electricity market restructuring: reforms of reforms. J. Regul. Econ. 21 (2002), 103–132.
IBM, IBM ILOG CPLEX Optimization Studio. 2019, IBM.
IEA, Electricity Generation by Source, Indonesia 1990–2019. 2020, IEA https://www.iea.org/fuels-and-technologies/electricity (accessed 30 May 2021).
IEA, World Energy Investment 2020. https://webstore.iea.org/download/direct/3003, 2020 (accessed 31 August 2020).
IESR, A Roadmap for Indonesia's Power Sector: How Renewable Energy Can Power Java-Bali and Sumatra. 64 pp http://iesr.or.id/pustaka/technical-report-a-roadmap-for-indonesias-power-sector/, 2019 (accessed 4 March 2020).
IESR, Calculator of Levelized Cost of Electricity for Power Generation Technologies. http://iesr.or.id/lcoe-tools/, 2019 (accessed 19 March 2020).
IISD, Getting to 23 Per Cent: Strategies to scale up renewables in Indonesia. https://www.iisd.org/sites/default/files/publications/23-per-cent-renewables-indonesia.pdf, 2019 (accessed March 2020).
Jenabi, M., Fatemi Ghomi, S.M.T., Smeers, Y., Bi-level game approaches for coordination of generation and transmission expansion planning within a market environment. IEEE Trans. Power Syst. 28 (2013), 2639–2650, 10.1109/TPWRS.2012.2236110.
Kahn, A.E., Cramton, P.C., Porter, R.H., Tabors, R.D., Uniform pricing or pay-as-bid pricing: a dilemma for California and beyond. Electr. J. 14 (2001), 70–79.
Kemenkumham, R.I., Government Regulation of the Republic of Indonesia Number 79 of 2014 on National Energy Policy. 2014.
Kennedy, S.F., Indonesia's energy transition and its contradictions: emerging geographies of energy and finance. Energy Res. Soc. Sci. 41 (2018), 230–237, 10.1016/j.erss.2018.04.023.
Kessides, I.N., The impacts of electricity sector reforms in developing countries. Electr. J. 25 (2012), 79–88.
Koch, T., Rapid Mathematical Prototyping. 2004.
Leuthold, F., Weigt, H., von Hirschhausen, C., Efficient pricing for European electricity networks–the theory of nodal pricing applied to feeding-in wind in Germany. Util. Policy 16 (2008), 284–291.
Liebman, A., Reynolds, A., Robertson, D., Nolan, S., Argyriou, M., Sargent, B., Green finance in Indonesia. Sachs, J., Woo, W.T., Yoshino, N., Taghizadeh-Hesary, F., (eds.) Handbook of Green Finance 1st ed, vol. 98, 2019, Springer Singapore, Singapore, 1–30.
Lovei, L., The Single-Buyer Model : A Dangerous Path toward Competitive Electricity Markets. 2000 (4 pp.).
Maksum, H., Lambok, C., Biaya Marginal Tenaga Listrik Di Wilayah Sumatera: Marginal Cost of Electricity in Sumatra. Ketenagalistrikan dan Energi Terbarukan. 2014, 13.
Maulidia, M., Dargusch, P., Ashworth, P., Ardiansyah, F., Rethinking renewable energy targets and electricity sector reform in Indonesia: a private sector perspective. Renew. Sust. Energ. Rev. 101 (2019), 231–247, 10.1016/j.rser.2018.11.005.
MEMR, Peraturan Menteri ESDM No. 17 Tahun 2013 Tentang Pembelian Tenaga Listrik Oleh PT Perusahaan Listrik Negara (Persero) Dari Pembangkit Listrik Tenaga Surya Fotovoltaik. 2013.
MEMR, Peraturan Menteri ESDM No. 19 Tahun 2016 Tentang Pembelian Tenaga Listrik dari Pembangkit Listrik Tenaga Surya Fotovoltaik oleh PT Perusahaan Listrik Negara (Persero). 2016.
MEMR, Peraturan Menteri Energi dan Sumber Daya Mineral Nomor 50 Tahun 2017 Tentang Pemanfaatan Sumber Energi Terbarukan Untuk Penyediaan Tenaga Listrik. 2017.
MEMR, Peraturan Menteri ESDM No. 12 Tahun 2017 Tentang Pemanfaatan Sumber Energi Terbarukan Untuk Penyediaan Tenaga Listrik. 2017.
MEMR, Rencana Umum Energi Nasional. https://www.esdm.go.id/id/publikasi/ruen, 2017 (accessed 9 January 2021).
MEMR, Rencana Umum Ketenagalistrikan Nasional 2019–2038. 2019, Ministry of Energy and Mineral Resources (441 pp.).
MEMR, Statistik Ketenagalistrikan Tahun 2019: Edisi No. 33. https://gatrik.esdm.go.id/assets/uploads/download_index/files/c5eff-statistik-ketenagalistrikan-2019-final-.pdf, 2020 (accessed 16 January 2021).
Müsgens, F., Ockenfels, A., Peek, M., Economics and design of balancing power markets in Germany. Int. J. Electr. Power Energy Syst. 55 (2014), 392–401.
Oggioni, G., Smeers, Y., Market failures of Market Coupling and counter-trading in Europe: an illustrative model based discussion. Energy Econ. 35 (2013), 74–87, 10.1016/j.eneco.2011.11.018.
Pechan, A., Where do all the windmills go? Influence of the institutional setting on the spatial distribution of renewable energy installation. Energy Econ. 65 (2017), 75–86, 10.1016/j.eneco.2017.04.034.
Pollitt, M., Electricity reform in Chile. Lessons for developing countries. J. Network Ind., 2004, 5.
Pollitt, M.G., The role of policy in energy transitions: lessons from the energy liberalisation era. Energy Policy 50 (2012), 128–137, 10.1016/j.enpol.2012.03.004.
PT PLN, Rencana Usaha Penyediaan Tenaga Listrik PT PLN (Persero) 2018 - 2027. 2018, PT Perusahaan Listrik Negara (687 pp.).
PT PLN, Rencana Usaha Penyediaan Tenaga Listrik PT PLN (Persero) 2019–2028. 2019, PT Perusahaan Listrik Negara (735 pp.).
Rotmans, J., Kemp, R., van Asselt, M., More evolution than revolution: transition management in public policy. Foresight 3 (2001), 15–31.
Sakya, I.M.R., Simanjutak, U.R., Schavemaker, P.H., van der Sluts, L., Experience with internal competition using the single buyer model in Jawa Bali - Indonesia. 2006 Eleventh International Middle East Power Systems Conference, 2006.
Schweppe, F.C., Caramanis, M.C., Tabors, R.D., Bohn, R.E., Spot Pricing of Electricity. 1988, Springer, Boston, MA (384 pp.).
Singh, H., Hao, S., Papalexopoulos, A., Transmission congestion management in competitive electricity markets. IEEE Trans. Power Syst. 13 (1998), 672–680, 10.1109/59.667399.
Sioshansi, F.P., Electricity market reform: what has the experience taught us thus far?. Util. Policy 14 (2006), 63–75, 10.1016/j.jup.2005.12.002.
Stoft, S., Transmission pricing zones: simple or complex?. Electr. J. 10 (1997), 24–31, 10.1016/S1040-6190(97)80294-1.
Syadli, H., Abdullah, M.P., Hassan, M.Y., Hussin, F., Demand side management for reducing rolling blackouts due to power supply deficit in Sumatra. J. Teknol., 2014, 69, 10.11113/jt.v69.3202.
Tabrizian, S., Technological innovation to achieve sustainable development—renewable energy technologies diffusion in developing countries. Sustain. Dev. 27 (2019), 537–544, 10.1002/sd.1918.
Vogelsang, I., Electricity Transmission Pricing and Performance-based Regulation. EJ. 2006, 27.
Walton, S., Tabors, R.D., Zonal transmission pricing: methodology and preliminary results from the WSCC. Electr. J. 9 (1996), 34–41, 10.1016/S1040-6190(96)80456-8.
Weibelzahl, M., Nodal, zonal, or uniform electricity pricing: how to deal with network congestion. Front. Energy 11 (2017), 210–232, 10.1007/s11708-017-0460-z.
Weibelzahl, M., Märtz, A., On the effects of storage facilities on optimal zonal pricing in electricity markets. Energy Policy 113 (2018), 778–794, 10.1016/j.enpol.2017.11.018.
Weibelzahl, M., Märtz, A., Optimal storage and transmission investments in a bilevel electricity market model. Ann. Oper. Res. 287 (2020), 911–940, 10.1007/s10479-018-2815-1.
World Bank, Gross Domestic Product 2018. https://datacatalog.worldbank.org/dataset/gdp-ranking, 2019. (Accessed 7 February 2020)
World Bank, Population 2018. https://databank.worldbank.org/data/download/POP.pdf, 2019 (accessed 27 February 2020).
World Bank, Access to Electricity (% of Population) - Indonesia. The World Bank https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=ID&name_desc=false, 2020. (Accessed 7 February 2020)
World Bank, Poverty headcount ratio at $1.90 a day (2011 PPP) (% of Population). The World Bank https://data.worldbank.org/topic/poverty?locations=ID, 2020.
World Bank, World Bank Country and Lending Groups. https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups, 2020.
World Bank, Getting Electricity: Price of Electricity, US Cents Per kWh (DB16-20 Methodology). 2021, The World Bank https://govdata360.worldbank.org/indicators/h6779690b?country=IDN&indicator=42573&viz=line_chart&years=2014,2019&indicators=944 (accessed 30 May 2021).
Similar publications
Sorry the service is unavailable at the moment. Please try again later.