Afi Ramadhani

The integration of renewable generation such as solar and wind is crucial to achieving decarbonization objectives. This paper provides a survey of engineering, economics, and policy challenges associated with this integration, focusing primarily on the dual problems of zero-marginal-cost generation and intermittency. From the engineering perspective, we describe challenges in the operation and planning stages of electric power systems faced with increasing renewable penetration. We review the economic challenges for restructured electricity markets and highlight important implications for energy policies designed to promote growth and spur innovation in the renewable energy sector. We argue that the engineering, economic, and policy aspects of managing zero- marginal-cost, intermittent renewable energy cannot be decoupled—these challenges are inexorably linked. Hence, we describe how these three fields must work together to understand the key interactions that will make the transition to a low-carbon energy landscape a success.

It has long been recognised that national oil companies (NOCs) offer the means for funding and delivering fuel subsidies as a politically valuable good. But what happens when the oil begins to run out? Fiscal pressures will clearly increase, but there is also evidence that net importers with NOCs are still more likely to have subsidies than those without. A key question about countries moving through this transition is therefore whether and how the role of NOCs in the subsidy regime changes as the classic logic erodes. We examine these issues in a detailed case study of Indonesia, which became a net oil importer in the early 2000s. A series of partial reforms of FFS has followed, but subsidies remain and the NOC still plays a central role in their delivery. We find that certain functions of the NOC, such as obfuscating the fiscal cost of subsidies, have eroded. But increasing fiscal pressure has not so far overcome the political lock-in of subsidies and institutional inertia in the role of the NOC. Fundamental reform remains unlikely in the short term, but separating the upstream and downstream businesses of the NOC and changing its governance could help support that reform.

The integration of renewable generation such as solar and wind is crucial to achieving decarbonization objectives. This paper provides a survey of engineering, economics, and policy challenges associated with this integration, focusing primarily on the dual problems of zero-marginal-cost generation and intermittency. From the engineering perspective, we describe challenges in the operation and planning stages of electric power systems faced with increasing renewable penetration. We review the economic challenges for restructured electricity markets and highlight important implications for energy policies designed to promote growth and spur innovation in the renewable energy sector. We argue that the engineering, economic, and policy aspects of managing zero- marginal-cost, intermittent renewable energy cannot be decoupled—these challenges are inexorably linked. Hence, we describe how these three fields must work together to understand the key interactions that will make the transition to a low-carbon energy landscape a success.

It has long been recognised that national oil companies (NOCs) offer the means for funding and delivering fuel subsidies as a politically valuable good. But what happens when the oil begins to run out? Fiscal pressures will clearly increase, but there is also evidence that net importers with NOCs are still more likely to have subsidies than those without. A key question about countries moving through this transition is therefore whether and how the role of NOCs in the subsidy regime changes as the classic logic erodes. We examine these issues in a detailed case study of Indonesia, which became a net oil importer in the early 2000s. A series of partial reforms of FFS has followed, but subsidies remain and the NOC still plays a central role in their delivery. We find that certain functions of the NOC, such as obfuscating the fiscal cost of subsidies, have eroded. But increasing fiscal pressure has not so far overcome the political lock-in of subsidies and institutional inertia in the role of the NOC. Fundamental reform remains unlikely in the short term, but separating the upstream and downstream businesses of the NOC and changing its governance could help support that reform.