Estimating the Demand for Electricity in Urban Indonesia

Indonesia  is  interested  in  reforming  electricity  pricing  to  move  towards  market  prices.    Part  of  that reform will be the acceleration  of use of pre-­‐paid  meters, which use a different pricing schedule, reduce collection  costs  for  the  electric  company,  and  reduce  non-­‐technical  losses.  Furthermore,  in Indonesia, energy policy is an important topic: Indonesia has traditionally  had high subsidies for energy (both fuel and electricity), which have been reduced considerably  in recent years due to the high cost of sustaining them, as well as inequality concerns. Understanding the implications of changes in electricity subsidies on electricity consumption is therefore a first-order policy issue in Indonesia.

The  study  aims  to  provide  rigorous  evidence  related  to  current  and  future  energy  demand  and  supply considerations by:

  • Testing  the  impact  of  transitioning  households  from  post-­‐paid  to  pre-­‐paid  meters  to allow  for direct  estimation  of the  impacts  of pre-­paid  meter  on  non-­‐technical  losses,  consumption,  and other important outcomes.
  •  Estimating the  demand  curve  for  electricity  by  experimentally  varying  its  price  to  be  able  to obtain shorter and longer run estimates  of the demand curve, where the longer run one allows for consumers to alter their holdings of energy using appliances.
  • Testing  whether   current   poverty   targeting   which   in   part   bases   anti-­‐poverty   programs on electricity utilization stifles electricity demand, disincentivizing investment in productive assets.

Outputs

  • Research in progress.

    Project last updated on: 3 Dec 2014.