National Energy Security: An Analysis of Economic Growth and Energy Consumption at the Regional Level in Indonesia

Regional energy security is a critical component in ensuring sustainable development in Indonesia, a country with diverse geographical and economic characteristics. In 2022, more than half of Indonesia’s final energy consumption was concentrated in the Java-Bali region, highlighting regional disparities in energy use. This study aims to analyze the relationship between regional energy consumption and economic growth across Indonesia’s major islands—Sumatra, Java, Bali & Nusa Tenggara, Sulawesi, and Maluku & Papua. Specifically, the study tests three main hypotheses: the growth hypothesis (energy consumption drives economic growth), the conservation hypothesis (economic growth leads to increased energy consumption), and the neutrality hypothesis (no significant causality between the two). Using panel data and the Granger Causality test technique, the study categorizes regional behavior to identify specific patterns of causality. The results support the growth hypothesis in most regions, where increased energy consumption, particularly electricity usage, significantly contributes to regional economic growth. In Bali & Nusa Tenggara, where the economy relies heavily on tourism and services, the conservation hypothesis is more applicable, suggesting that economic activity drives energy demand. In contrast, the Maluku & Papua region exhibits the neutrality hypothesis, with weak or no causal relationship between energy consumption and economic growth. These findings offer both theoretical and practical implications: they reinforce the importance of regional energy planning in economic policy and highlight the need for tailored energy strategies to suit the specific dynamics of each region. Understanding these regional patterns provides essential input for policymakers to design equitable and efficient energy distribution frameworks.

Authors

Publication Details

Journal
Journal of Applied Economic Research
Published
2025-01-01
DOI
https://doi.org/10.15826/vestnik.2025.24.2.014
Citations
1
Primary Topic
Global Energy Security and Policy
Type
article
Field-Weighted Citation Impact
1.79
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article

National Energy Security: An Analysis of Economic Growth and Energy Consumption at the Regional Level in Indonesia

Lisa Hermawati, Siti Rohima, Anna Yulianita
1 citations
Journal of Applied Economic Research
Global Energy Security and Policy
1.79
article

National Energy Security: An Analysis of Economic Growth and Energy Consumption at the Regional Level in Indonesia

Lisa Hermawati, Siti Rohima, Anna Yulianita
article en
1 citations

Abstract

Regional energy security is a critical component in ensuring sustainable development in Indonesia, a country with diverse geographical and economic characteristics. In 2022, more than half of Indonesia’s final energy consumption was concentrated in the Java-Bali region, highlighting regional disparities in energy use. This study aims to analyze the relationship between regional energy consumption and economic growth across Indonesia’s major islands—Sumatra, Java, Bali & Nusa Tenggara, Sulawesi, and Maluku & Papua. Specifically, the study tests three main hypotheses: the growth hypothesis (energy consumption drives economic growth), the conservation hypothesis (economic growth leads to increased energy consumption), and the neutrality hypothesis (no significant causality between the two). Using panel data and the Granger Causality test technique, the study categorizes regional behavior to identify specific patterns of causality. The results support the growth hypothesis in most regions, where increased energy consumption, particularly electricity usage, significantly contributes to regional economic growth. In Bali & Nusa Tenggara, where the economy relies heavily on tourism and services, the conservation hypothesis is more applicable, suggesting that economic activity drives energy demand. In contrast, the Maluku & Papua region exhibits the neutrality hypothesis, with weak or no causal relationship between energy consumption and economic growth. These findings offer both theoretical and practical implications: they reinforce the importance of regional energy planning in economic policy and highlight the need for tailored energy strategies to suit the specific dynamics of each region. Understanding these regional patterns provides essential input for policymakers to design equitable and efficient energy distribution frameworks.

Journal of Applied Economic ResearchVol. 24(2)
Openalex Percentile: Top 13%
Global Energy Security and Policy
1.79
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