RPR-2011-17 - ERIA

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faster growing energy demand when their industrialization process commences; ii)Countries can gain from sub-regional cooperation and electricity trading on the onehand and will benefit from a resilient, competitive and effective energy market on theother hand; iii) Full-scale power trade tends to lead to full utilization of hydro power,which produces the lowest cost option ; iv) Deregulation and unbundling may haveunintended consequences; v) Market integration is often accompanied with domesticreforms and international harmonization of regulatory standards; and vi) The lowerincome group and the energy intensive industries will be disadvantaged by theremoval of energy subsidies.Finally, we make the following policy recommendations (R1-R6) forgovernments within the EAS member countries.R1: To promote continuously a closely integrated energy market, which can leadto a less volatile, more flexible and resilient market through regional cooperationsuch as infrastructure connectivity, trade and investment arrangement, and theharmonization of regulatory and technological framework.R2: To encourage free trade of electricity and more coordinated development ofenergy projects. This requires a fundamental review of energy security policies.R3: To build continuously an open, competitive and effective domestic energymarket. Equal access to energy infrastructure and finance for private investors is alsoimportant. In addition, it is necessary to enact necessary regulations, such ascompetition law, to protect both consumers and investors.R4: To adopt a gradual and incremental approach of subsidy removal so as tominimize the interruptions in member economies concerned. While low incomepeople should be compensated, reallocating the saved budget to targeted sectors, theso-called “sectoral approach”, should be carefully designed.R5: To boost electricity infrastructure. For EAS members with lowelectrification, the focus should be infrastructure development. For others, the policypriority is to achieve regional and nationwide interconnectivity.R6: To harmonise regulations and technical standards gradually in the electricityand gas sector. Members could initially identify the best practice or whatever mostsuits the conditions within the region. Subsequently members can act together tocatch up with the global best practice.vii
CHAPTER 1The Electricity Sector Leads Energy Market Integration inEast Asia: IntroductionYANRUI WUUniversity of Western Australia, AustraliaXUNPENG SHIEconomic Research Institute for ASEAN and East Asia (ERIA)FUKUNARI KIMURAEconomic Research Institute for ASEAN and East Asia (ERIA)Faculty of Economics, Keio University, Japan.Electricity market integration in East Asia is an important component of theenergy market integration (EMI) initiatives supported by the East Asian Summit(EAS) member countries. It is argued that an integrated East Asian electricity marketwould allow consumers to have access to competing suppliers within and beyondborders and enable electricity providers in member economies to deal with peakdemand and supply security better. Electricity market integration within the EASarea has made some progress with the Greater Sub-Mekong Region (GMS) as theforefront of changes. The proposed ASEAN Power Grid (APG) has also beenimplemented gradually. However, electricity market integration within the EASeconomies remains a challenging task. While physical infrastructure is oftenexpensive and financially demanding, institutional development is more importantand complicated since it is closely linked with market liberalization and regulation.To gain a better understanding of the issues involved and follow two previousERIA projects, this EMI project focuses on the electricity sector. In this introductorychapter, we first describe the objectives of this study in Section 1. The main findings1
Page 1: ERIA Research Project Report 2011,
Page 4 and 5: MR. GUMILANG ARYO SAHADEWO: Lecture
Page 6 and 7: studies, and energy sector subsidie
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Page 16 and 17: 7.36% (gas), 4.82% (paper & paper p
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Page 20 and 21: 1. IntroductionPrice and income are
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Page 24 and 25: Percentage of GrowthPrimary Energy
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Page 44 and 45: CHAPTER 3Power Generation and Cross
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There are a few reasons why natural
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development paths of power generati
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Economic Consulting Associates (ECA
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Table A3: Energy Resources for Powe
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CHAPTER 4Electricity Market Integra
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Figure 1: World Electricity Consump
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Figure 3: Sources of Electricity Ge
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comparatively low and fairly respon
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Table 2: Electricity Demand in EAS
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The Australian electricity sector u
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deregulation of retail power supply
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(www.des.gov.bn) and Berakas Power
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million kWhfrom Thailand and 1162 m
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o consumer protection and safety st
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CTE (2011), ‘Thai Power Sector’
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PWC (2009), Electricity Industry in
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1. IntroductionIn the fifth EAS, le
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the same type located in the same r
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Figure 1: The Type of FDI in Electr
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usually running small power plants.
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Table 1: The Technical Efficiency o
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market which would determine the el
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electricity, power plants are place
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can directly negotiate deals. The g
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6. China’s Lesson and Policy Impl
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ReferenceZunfa C. (2010), ‘Six Ch
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1. IntroductionAll around the world
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Unbundling can reduce the disadvant
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intermediate structure at the initi
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well as reducing transmission and d
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Table 2: Split of ECNZYear ChangesA
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The reform promoted a wave of merge
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major generators may have significa
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4.3. TransmissionThe electricity tr
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to have defined geographic areas of
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Figure 3: Efficiency Scores (Consta
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Figure 6: kWh-transmitted Weighted
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Figure 8: Retail Electricity Prices
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energy affordability issues the eff
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distribution businesses may discrim
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generation, distribution and retail
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Furthermore, the unbundling does no
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Arestis, P. and M. Sawyer (eds.), C
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Tirole, J. (1988), The Theory of In
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1. IntroductionEnergy cooperation i
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physical infrastructure had been de
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Although the Electricity Authority
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According to the Asian Development
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Table 4: Electricity Tariff of EDC
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2008). Overall power loss for the c
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IPPs, REEs, and other licensees tha
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4.2.1. Ministry of Industry, Mines
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2. National Transmission License: g
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5. Regional Cooperation and Trade5.
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Cambodia joined ASEAN as the 10 th
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Table 11: Generation Master Plan 20
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various connections and currently a
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Regarding big energy investment (ov
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7. Concluding RemarksSources in the
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EDC (2010), EDC Annual Report 2010.
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1. IntroductionThis research starts
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Table 1: Subsidy Expenditure in Ind
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2. Literature Review2.1. Fuel subsi
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Chateau (2011) would bring both eco
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Chateau, 2011). Burniaux and Chatea
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linkage effect explains that decrea
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Table 3: Social Accounting Matrix F
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Changes in the output multipliers i
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Table 6: Multiplier Analysis of SAM
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Table 8: Priority Sectors for Reall
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impact are: 1) chemical and cement
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Figure 5: Distributional Effect of
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continuing compensation programs fo
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International Energy Agency (IEA) (
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AppendixSectoral Reallocation Impac
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1. IntroductionThe East Asian (EA)
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Table 1: Fuel Subsidy in Malaysia 1
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Key Reasons Why Subsidy Needs to Be
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particularly at the Malaysian borde
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Figure 4 shows different magnitudes
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The United Nations Environment Prog
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All these assumptions are less real
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Since ( I - A ) -1 ( I - A ) = I, t
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fuel located at the total intermedi
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taxes include output taxes or subsi
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Table 7: Database Component of MIER
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Table 8: Malaysia GDP from Expendit
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Figure 6: Price Increase by Removal
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symbol star, i.e.* represents augme
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Table 11: Effects of Subsidy Remova
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Figure 8: Change of 10 % Indirect T
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unchanged, (the introduction of dum
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matters because it is the autonomou
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some supply side bottlenecks in the
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greater social protection in develo
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Department of Statistics, Malaysia
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AppendixesTable A1: Estimated Resul
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ChangeSector CE SectorVeneer Sheets
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1. BackgroundVietnam’s high econo
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2. Methodology and Data Preparation
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2.2. Deriving electricity intensity
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For the modeling purpose, this stud
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Further, the indirect effect (total
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that a number of households in rura
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ADB (Asian Development Bank) (2012b
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