Choice of Self-Generation in the Industrial Firms; A Case Study of Indonesia
Abimanyu, Anggito (Adv.Dr. Mark A. Bernstein), Dr. Mark A. Bernstein
-
This study investigates economic factors that industrial firms consider when deciding how much and what type of energy fuel to be used. The empirical result, based on the industrial firms data demonstrated the interaction of several independent variables that determines the firm's decision to choose the type of fuel. The key variables that affect the decision are cost of fuel/self-generation of electricity production, if there is any, fuel prices, energy fuel demand, type of industry, firms' value added, and the quality of service/reliability,which happens to be the most significant variable. The study will develop and econometrically tests a simultaneous choice model in a Tobit form model explaining the relative importance of several key economic factors. The study also use benefit-cost analysis shows that this type of a energy consumption is beneficial not only for both the firms, and the government/utility, but also the nation. Furthermore, the possibility establishment of a private provision market should help create more reliable and energy supply facilities. As a result, this could produce a better energy resource allocation,especially in the energy market. This study draws several direct and indirect implications to industrial firms, and the government/utility. Two important policy implications will be derived. For the industrial firms,the study should help to produce a better analysis on the strategy of cost minimization. The government/utility, with an understanding of the behavior of the industrial firms, would gain a better understanding concerning decisions on how to improve the energy service in a relatively environmentally sounds.
Kata Kunci : Self-Generation, Inaustrial Firms, Case, Indonesia
