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Nodal Pricing: The Theory and Evidence of Indonesia Power System

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  • Dzikri Firmansyah Hakam

    (Centre for Energy, Petroleum and Mineral Law and Policy. University of Dundee, Scotland, United Kingdom,)

Abstract

This research presents a stylised nodal pricing model of Indonesia power system with engineering-economic constraints. The modelling in this research adopts the 8 nodes stylised model for the Sumatra power system, by incorporating generation, transmission and power system stability constraint. Nodal pricing analysis is performed based on Direct Current (DC) Optimal Power Flow (OPF) and marginal cost calculation in each node. This research is the first ever to estimate nodal prices in the Indonesian electricity market. Nodal pricing model in this paper provides a proper investment signals for Indonesian stakeholder in performing generation expansion planning.

Suggested Citation

  • Dzikri Firmansyah Hakam, 2018. "Nodal Pricing: The Theory and Evidence of Indonesia Power System," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 135-147.
    • Handle: RePEc:eco:journ2:2018-06-17
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    References listed on IDEAS

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    2. Florian Leuthold & Hannes Weigt & Christian Hirschhausen, 2012. "A Large-Scale Spatial Optimization Model of the European Electricity Market," Networks and Spatial Economics, Springer, vol. 12(1), pages 75-107, March.
    3. Hagspiel, S. & Jägemann, C. & Lindenberger, D. & Brown, T. & Cherevatskiy, S. & Tröster, E., 2014. "Cost-optimal power system extension under flow-based market coupling," Energy, Elsevier, vol. 66(C), pages 654-666.
    4. Richard Green, 2007. "Nodal pricing of electricity: how much does it cost to get it wrong?," Journal of Regulatory Economics, Springer, vol. 31(2), pages 125-149, April.
    5. Dzikri Firmansyah Hakam & Ayodele O. Asekomeh, 2018. "Gas Monetisation Intricacies: Evidence from Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 174-181.
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    Cited by:

    1. Dzikri Firmansyah Hakam & Sudarso Kaderi Wiyono & Nanang Hariyanto, 2020. "Competition in Power Generation: Ex-ante Analysis of Indonesia’s Electricity Market," Energies, MDPI, vol. 13(24), pages 1-20, December.
    2. Diego Larrahondo & Ricardo Moreno & Harold R. Chamorro & Francisco Gonzalez-Longatt, 2021. "Comparative Performance of Multi-Period ACOPF and Multi-Period DCOPF under High Integration of Wind Power," Energies, MDPI, vol. 14(15), pages 1-15, July.
    3. Hakam, Dzikri Firmansyah, 2019. "Mitigating the risk of market power abuse in electricity sector restructuring: Evidence from Indonesia," Utilities Policy, Elsevier, vol. 56(C), pages 181-191.
    4. Dzikri Firmansyah Hakam, 2023. "Mitigating Market Power and Promoting Competition in Electricity Markets through a Preventive Approach: The Role of Forward Contracts," Energies, MDPI, vol. 16(8), pages 1-31, April.
    5. Handrea Bernando Tambunan & Dzikri Firmansyah Hakam & Iswan Prahastono & Anita Pharmatrisanti & Andreas Putro Purnomoadi & Siti Aisyah & Yonny Wicaksono & I Gede Ryan Sandy, 2020. "The Challenges and Opportunities of Renewable Energy Source (RES) Penetration in Indonesia: Case Study of Java-Bali Power System," Energies, MDPI, vol. 13(22), pages 1-22, November.
    6. Geoffrey Mabea, 2023. "Simulating Generalised Locational Marginal Pricing for Power Markets in East Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 450-460, September.

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    More about this item

    Keywords

    nodal pricing; Sumatra power system; stylised model;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D60 - Microeconomics - - Welfare Economics - - - General

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