Analysis of Factors Affecting the Electricity Supply in Indonesia

11 Pages Posted: 26 May 2017

See all articles by Tongam Sihol Nababan

Tongam Sihol Nababan

University of HKBP Nommensen, Faculty of Economics

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Date Written: May 25, 2017

Abstract

In Indonesia, the activities of supplying of electricity energy or generating of electricity power is still dominated by PT PLN (Persero). The supply of electricity has not been able to meet the demand of electricity by PT PLN. The electricity supply can be affected by amount of generation units, installed capacity, power capacity, investment, energy produced, fuel consumption, unit price of fuel, energy losses, the length of transmission and distribution network, interruption of distribution network, and captive power.

The aim of this study is to analyze the factors affecting on the supply of electricity in Indonesia. Based on the characteristics of the data available on each units of PT PLN or provinces, the data used in this study is panel data in period of year 2009–2014. Based on the results of Chow Test and Hausman Test, to analyze the pooled data it is better by using Fixed Effect Model. The result of estimation shows that the factors affecting the supply of electricity in Indonesia are the price (tariff) of electricity, the price of fuel, the length of transmission lines, the energy losses. The price (tariff) of electricity affects positively and significantly (α = 0.01) and elastic on the supply of electricity. The price of fuel, the length of transmission lines and the energy losses affect negatively and significantly (α = 0.01) and inelastic on the supply of electricity. While the number of distribution interruption has no significant effect on the supply of electricity. Statistically, all dummy variables of individuals (PLN operational unit/province) and time (year 2009–2014) affect significantly (α = 0.01) on the supply of electricity. It means that the patterns of electricity supply of PLN operational units and time patterns of electricity supply are different from the benchmarks.

It is hoped that PT PLN focusing attention on tariff policy, to diversify the input of power generating units, to optimize the length of transmission lines, and also to minimize the electricity energy losses.

Keywords: electricity, energy losses, pooled data, price (tariff), transmission and distribution

Suggested Citation

Nababan, Tongam Sihol, Analysis of Factors Affecting the Electricity Supply in Indonesia (May 25, 2017). USAEE Working Paper No. 17-312. Available at SSRN: https://ssrn.com/abstract=2974350 or http://dx.doi.org/10.2139/ssrn.2974350

Tongam Sihol Nababan (Contact Author)

University of HKBP Nommensen, Faculty of Economics ( email )

Jln. Sutomo No. 4A
Medan, North Sumatra 20118
Indonesia
08126411543 (Phone)

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