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How Different Electricity Pricing Systems Affect the Energy Trilemma : Assessing Indonesia’s Electricity Market Transition

Title data

Heffron, Raphael J. ; Körner, Marc-Fabian ; Sumarno, Theresia ; Wagner, Jonathan ; Weibelzahl, Martin ; Fridgen, Gilbert:
How Different Electricity Pricing Systems Affect the Energy Trilemma : Assessing Indonesia’s Electricity Market Transition.
Asian Development Bank Institute
Tokyo , 2021 . - (ADBI Working Paper Series ; 1213 )

Official URL: Volltext

Project information

Project title:
Project's official titleProject's id
Projektgruppe WI Energie und kritische InfrastrukturenNo information

Abstract in another language

Many countries have a clear policy objective of increasing their share of renewable energy sources (RESs). However, a major impediment to higher RES penetration often lies in the
historically grown structures of a country’s electricity sector. In Indonesia, policymakers have relied on cheap fossil fuels and state control to provide the population with access to both reliable and affordable electricity. However, this focus on only two of the three horns of the energy trilemma, namely energy security and energy equity (and not sustainability), may put Indonesia at risk of missing its ambitious RES targets. In this context, a number of smallscale reform attempts to promote RES integration in recent years have proved to be
relatively unsuccessful. Like many other countries, Indonesia needs clear policy directions to avoid an unsustainable lock-in into a fossil fuel future. In the last decades, several other countries have successfully restructured their electricity sectors, for example by introducing
a wholesale market for electricity under different electricity pricing systems, including nodal, zonal, or uniform pricing. These countries may hold valuable experiences of overcoming the historically grown barriers to successful RES integration through a greater role for market
mechanisms. This paper develops three generic models that allow policymakers to analyze
the impact of introducing either a nodal, a zonal, or a uniform pricing system on the three horns of the energy trilemma in their country. We evaluate our model using a simplified network representation of the Indonesian electricity sector. Our results indicate that each of
the pricing systems is able to foster specific horns of the energy trilemma. Considering that any major reform intended to improve energy sustainability in Indonesia will only be a
success if it also addresses energy security and energy equity, we also discuss our results from the perspective of energy justice and the need to balance the country’s energy trilemma. Ultimately, we illustrate a transformation pathway for a more sustainable and just transition to a low-carbon economy in Indonesia.

Further data

Item Type: Working paper, discussion paper
Keywords: Electricity pricing system; Electricity market liberalization; Energy trilemma; Energy justice; Indonesia; Renewable energy sources
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Business Administration
Faculties > Faculty of Law, Business and Economics > Department of Business Administration > Professor Information Systems and Sustainable IT Management
Faculties > Faculty of Law, Business and Economics > Department of Business Administration > Former Professors > Professor Information Systems and Sustainable IT Management - Univ.-Prof. Dr. Gilbert Fridgen
Faculties > Faculty of Law, Business and Economics > Department of Business Administration > Professor Information Systems and Sustainable IT Management > Professor Information Systems and Sustainable IT Management - Univ.-Prof. Dr. Jens Strüker
Research Institutions
Research Institutions > Affiliated Institutes
Research Institutions > Affiliated Institutes > Fraunhofer Project Group Business and Information Systems Engineering
Research Institutions > Affiliated Institutes > FIM Research Center Finance & Information Management
Result of work at the UBT: Yes
DDC Subjects: 000 Computer Science, information, general works > 004 Computer science
300 Social sciences > 330 Economics
Date Deposited: 19 Mar 2021 08:55
Last Modified: 19 Mar 2021 08:55
URI: https://eref.uni-bayreuth.de/id/eprint/64081