System Dynamics Modeling of Energy Transition Impact on Residential Energy Affordability in Indonesia

Abstract

This study develops a system dynamics model to analyze Indonesia’s transition from fossil-fueled electricity generation to renewables and its effects on residential energy affordability. The model integrates energy supply, demand, and fiscal modules to capture the interplay among generation mix, pricing, subsidies, and household income and affordability index for different consumer electricity segments, categorized as 450 VA and 900 VA recipients’ group. Three policy scenarios—Business-as-Usual, Coal Phase Down, and Coal Phase Out—are simulated from 2020 to 2060. Results indicate that while an accelerated shift toward renewable energy supports national decarbonization targets, it also tends to increase electricity generation costs and prices. A rapid coal phase-out could impose higher tariff burdens and diminish affordability for vulnerable households if subsidy reforms are not carefully managed. These insights suggest that a balanced, gradual approach is needed—one that supports renewable capacity expansion while providing targeted measures to protect low-income consumers during the transition.