energy poverty and poverty alleviation in indonesia...
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Energy Poverty and Poverty Alleviation in Indonesia: Evidence from East Nusa TenggaraP R E PA R E BY M A X E N S I U S T R I S A M B O D O
R E S E A R C H T E A M : S I WA G E D H A R M A N E G A R A ( C O O R D I N ATO R ) , A H M A D H E L M Y F U A D Y, I N N ED W I A S T U T I , F E L I X W I S N U H A N D OYO, E R L A M YC H E L I S D A
J A K A R TA , 2 4 S E P T E M B E R 2 0 1 4
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Outline 1. Energy Poverty and Global Agenda
2. Global multidimensional poverty index
3. Promoting electricity infrastructure
4. Electricity access and poverty reduction: case study
5. Development agendas
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Energy PovertyThe International Energy Agency (IEA) defines energy poverty as a lack of access to modern energy services, i.e., access to electricity and clean cooking facilities.
Reddy and Reddy (1994) as cited in Masud and others (2007), said that energy poverty could be defined as “the absence of sufficient choice in assessing adequate, affordable, reliable, high-quality, safe and environmentally benign energy services to support economic and human development”.
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Why is it important?The World Summit on Sustainable Development, Johannesburg, South Africa, 2002, highlights the energy for sustainable development. The summit mention that:
…access to energy facilitates the eradication of poverty…improve access to reliable, affordable, economically viable, socially acceptable, and environmentally sound energy services and resources…
UN Resolution 65/151, decides to declare 2012 as the International Year of Sustainable Energy for All. There are three objectives that are going to be pursued up to 2030, namely: (1) ensuring universal energy access; (2) doubling the share of renewable energy; and (3) doubling the rate of improvement in energy efficiency.
UN Resolution 67/215, in 61st plenary meeting, 21 December 2012, decides to declare year 2014 – 2024, as the “UN Decade of Sustainable Energy for All”.
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Access to modern energy services in ASEAN, 2011
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World Energy Outlook 2012 – Energy Development Index 2010
Country Rank EDI
Household level energy access Community level energy access
Access to electricity indicator
Access to clean cooking
facilities indicator
Household level
indicator
Public Services Productive use
Community level
indicatorElectri-
fication rate
Per-capita residential electricity
consumption
Electricity access
indicator
Share of modern fuels in residential
total final consumption
Per-capita public
services electricity
consumption
Share of economic
energy uses in total final
consumption
Myanmar 71 0.10 0.49 0.05 0.15 0.00 0.07 0.02 0.21 0.12Laos 59 0.14 0.63 0.12 0.27 0.05 0.16 0.10 0.15 0.12Cambodia 56 0.16 0.31 0.06 0.14 0.05 0.09 0.02 0.42 0.22Indonesia 37 0.34 0.73 0.22 0.40 0.12 0.26 0.13 0.70 0.41Vietnam 36 0.35 0.98 0.31 0.55 0.07 0.31 0.06 0.74 0.40Philippines 34 0.38 0.83 0.17 0.38 0.21 0.29 0.11 0.83 0.47Thailand 15 0.64 0.88 0.42 0.61 0.20 0.40 0.79 0.96 0.88Malaysia 4 0.78 0.99 0.69 0.83 0.30 0.56 1.00 1.00 1.00
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Total 80 countries. Energy Development Index (EDI), which is devised as a composite measure of a country’s progress in transitioning to modern fuels and modern energy services, as a means to help better understand the role that energy plays in human development
Global Multidimensional Poverty Index (MPI)
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Percentage contribution of deprivations of each dimension to overall poverty
Country
1 2 3 4 5 6 7 8 9 10
Years of Schooling
Child School Attendance
Mortality (any age) Nutrition Electricity Improved
SanitationDrinking
Water Flooring Cooking Fuel
AssetOwnership
Thailand 29.2 11.5 19 12.2 1.2 4.8 4.4 2.5 10.6 4.6
Vietnam 18.5 14.3 12.9 12.2 1.5 12.1 5.5 5.5 13.1 4.4
Philippines 15.8 - 56.5 - 3.8 5.3 2.5 1.5 9.6 4.9
Indonesia 6.2 6.4 60.7 - 1.5 6.7 5.1 1.9 8 3.5
Lao PDR 16 15.4 18.9 11.5 6.3 9 5.3 2.3 10.9 4.4
Cambodia 14 8.1 13.5 19.3 10.9 10.6 6.8 1 11.9 4
Source: Alkire, S., A. Conconi, and S. Seth (2014): “Multidimensional Poverty Index 2014: Brief
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Electrification Ratio (2012)
0102030405060708090
100N
ADSu
mut
Sum
bar
Riau
Jam
biSu
mse
lBe
ngku
luLa
mpu
ngKe
p.Ba
bel
Kep.
Riau DK
IJa
bar
Jate
ng DIY
Jatim
Bant
en Bali
NTB NTT
Kalb
arKa
lteng
Kalse
lka
ltim
Sulu
tSu
lteng
Sulse
lSu
ltra
Goro
ntal
oSu
lbar
Mal
uku
Mal
utPa
p.Ba
rPa
pua
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Length of Transmissions Line (medium and low voltage) at Province Level 2012
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000N
ADSu
mut
Sum
bar
Riau
Jam
biSu
mse
lBe
ngku
luLa
mpu
ngKe
p.Ba
bel
Kep.
Riau DK
IJa
bar
Jate
ng DIY
Jatim
Bant
en Bali
NTB NTT
Kalb
arKa
lteng
Kalse
lka
ltim
Sulu
tSu
lteng
Sulse
lSu
ltra
Goro
ntal
oSu
lbar
Mal
uku
Mal
utPa
p.Ba
rPa
pua
kilo
met
er c
ircui
t (km
s)
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Length of Transmissions Line and Electrification Ratio
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R² = 0.379
0
20
40
60
80
100
120
6 7 8 9 10 11 12 13
Elec
trifi
catio
n ra
tio
Log transmission line
Rated Capacity (MW) and Convergence Rated CapacityNo Region 2009 2010 2011 2012 2013
1 Sumatera 3,327.59 (15.1) 3,761.68 3,157.38 3,020.89 2,885.76 (9.9)
2 Java-Bali 16,991.45 (77.1) 17,535.23 20,611.98 23,379.62 24,267.10 (83.7)
3 Kalimantan 766.04 (3.5) 1,063.27 674.23 664.29 695.76 (2.4)
4 Sulawesi 605.73 (2.7) 762.45 639.72 632.72 721.49 (2.5)
5 Papua 93.49 (0.4) 192.13 100.81 93.91 103.07 (0.4)
6 Maluku 92.05 (0.4) 96.96 91.19 94.61 99.82 (0.3)
7 West Nusa Tenggara 97.88 (0.4) 99.91 82.13 96.87 129.47 (0.4)
8 East Nusa Tenggara 73.40 (0.3) 29.22 93.48 103.31 107.30 (0.4)
Convergence rated capacity 1.987 1.915 2.093 2.155 2.165
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Convergence in electrification ratio and kWh sold per capita
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.4
2009 2010 2011 2012 2013
kWh
sold
per
cap
ita
Elec
trifi
catio
n Ra
tio
Convergency electrification ratio Convergency kWh sold per capitaLinear (Convergency electrification ratio) Linear (Convergency kWh sold per capita)
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Metodology - Location
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Ulumbu Geothermal and Waso Diesel Plant electrified 15 villages/areas
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Ulumbu Geothermal Power Plant
(installed capacity 2 x 2.5 MW; )-Nov 2011
TantongMarch 2014
Waso Diesel Power Plant (6,5 MW);
rent 2.3 MW
Wae ajang
Wewo
Pogeo
Paka
Legu
Iteng
Tae Melo
Sater MeseBarat
Ulungali
Umug
Pongkor Cancar
Tentang
Gelo WeluLungar 2KM
Peak load 7.2 MW; rated capacity 6.9 MW; January 2013); PLTM Wae Garit 1978
Saving due to less oil consumption from Ulumbu Power Plant – 2013 (in million IDR)
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
4,710 4,231
6,000 6,128 6,609 6,407
7,135 7,712 7,446
6,732 6,437 5,900
PENGHEMATAN (RP x 106)
Source: PLN Waso Office
Total IDR 75.4 billion
Characteristic Respondents
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Spending IDR
Control Treatment
Damu Lungar/Mesir Tantong
2013 2014 2013 2014 2013 2014
Food 136,011 181,000 196,508 297,123 185,923 136,750
Energy 102,756 223,814 126,516 94,898 136,731 170,208Non-energy (exclude food) 277,884 550,015 354,383 330,656 221,198 324,444
Total spending 516,651 954,829 677,407 722,678 543,852 631,403Total spending per capita 103,330 190,966 120,966 129,050 102,614 140,312Number of sample-households 43 187 51
National poverty line-Rural-March (IDR/Capita/Month); 2013 IDR 253,273; 2014 IDR 286,097
Access on Electricity
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Village 2013 2014Damu-on gridPLN-with meter 20 31
PLN-without meter 23 12Total household 43 43Tantong-on gridPLN-with meter 0 47
PLN-without meter 21 0Without - electricity 30 4Total household 51 51Lungar-off grid-SEHENConnected 99 98Not-connected 85Disconnected - 13New connected - 21Total household 187 187
1 Kalimantan Timur 3,2932 Maluku dan Maluku Utara 2493 Papua dan Papua Barat 12,0694 NTT 115,434
131,045TOTAL
Unit NameNONumber of
SEHEN's customers
Interrelated pathway on electricity access (Khandker, S.R., Barnes, D.F., & Samad, H.A., 2013, Welfare Impacts of Rural Electrification: A Panel Data Analysis from Vietnam, Economic Development and Cultural Change, 61(3):659-692
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Panel Estimation (OLS – FE – RE) – Model 1
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Independent variable
OLS FE RE
Coef. Std.Err. Coef. Std.Err. Coef. Std.Err.Family 0.1124 0.012* 0.161 0.081** 0.1127 0.013*Raskin -0.1446 0.071** 0.095 0.0913 -0.0996 0.067Floor 0.245 0.0727* -0.101 0.175 0.233 0.077*On grid 0.364 0.067* 0.3078 0.137** 0.344 0.088*SEHEN 0.0476 0.062 -0.419 0.169 0.036 0.64Rural grid -0.079 0.0693 0.302 0.145** -0.0265 0.088
Number of sample 537R-square/interclass variations 0.2067 0.549 0.197
Dependent variable: household spending
Note: *significant at 1%; ** significant at 5%; the Hausmann test suggested the FE model; the LM test suggested for RE model
Model 2We applied difference in difference (DID) estimation to calculate net benefit from having access on electricity. We selected three outcomes (outcome_vari) to measure the impact of electricity access as follows:
1. Share of kerosene spending to food spending
2. Share of kerosene spending to non-food spending
3. Share of kerosene spending to total spending
iikkiiiii xtreatedperiodtreatedperiodoutcome ,3210 ....var_
control variables (xk,i) such as total area of floor, beneficiary of cash transfer or not, beneficiaries of rice for the poor or not, and number of family member.
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Immediate ImpactsIndicator Tantong village
(treatment group)Damu village
(control group)Lungar village
(control group)
2013 2014 2013 2014 2013 2014Share of kerosene spending to energy spending
0.28 0.13 0.24 0.14 0.22 0.28
Share of kerosene spending to food spending
0.21 0.17 0.18 0.18 0.14 0.09
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Net Impact on Rural Electrification ProgramNo Output Net impact
without control variables
(observation 564)
with control variables(observation 521)
1 Share of kerosene spending to food spending -0.178* -0.176*
2 Share of kerosene spending to non-food spending -0.507* -0.551*
3 Share of kerosene spending to total spending -0.086* -0.092*
4 Share of food spending to non-food spending -1.420* -1.510*
Note: *significant at 5%
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We calculate how much CO2 emission can be reduced by replacing kerosene lamp with electricity from geothermal (we assume that geothermal consume small amount of fossil fuel). Between 2013 and 2014, the average kerosene spending decrease by IDR 15,100/family/month. The price of kerosene is IDR 4,000/litter. Thus one household can save kerosene by 3.8 liter per month (IDR 15,100 / IDR 4,000). In Tantong village there are 52 number of households, thus in a year Tantong village can reduce kerosene consumption by 2,371 litter (3.8 litter/month/household x 12 month x 52 households). If we convert 2,371 litter kerosene to CO2 emissions is about 5.4 ton CO2 (1 litter petrol = 2.3 kg CO2). The market price of kerosene is about IDR 11,000 per litter, then gap between economic price and subsidy price is about IDR 7,000 (IDR 11,000 –IDR 4,000). Thus total amount of subsidy that can be save is about IDR 16.6 million (USD 1,421 ; we assume IDR 11,600/USD). (Picture of Village Tantong, May 2013). (If we include carbon tax at 30USD/tonne, the net benefit is about IDR 18.5 million/year)
Externalities
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Development Agendas1. Reach electrification ratio 100% in 2019 2. Energy conversion program from kerosene to electricity3. Easing the installation cost (in the 1980s and 1990s, Rural Electrification Credit/Kredit Listrik
Perdesaan / KLP) 4. Village Fund5. Special Allocation Fund 6. One door policy (PLN and MEMR)7. Reallocate fuel and electricity subsidy for energy infrastructure8. Unit on rural electrification program in PLN
◦ The Rural Areas Electric Power Section, as stated in Decree No.058/DDPLN/59◦ Minister of Public Works and Electric Power Decree No.016/PRT/1976 dated 20 October 1976 formed a
Sub directorate of Rural electrification within PLN Directorate of Operation
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