International Journal of Engineering Advanced Research eISSN: 2710-7167 [Vol. 4 No. 2 June 2022]
Journal website: http://myjms.mohe.gov.my/index.php/ijear
A SYSTEM DYNAMICS MODELLING ON THE ANALYSIS OF SUBSIDIES PROVISION IN THE ELECTRIC BUS MARKET
SHARE
Dyah Chandra Pitaloka1* and Sutanto Soehodho2*
1 2 Faculty of Engineering, Universitas Indonesia, Depok, INDONESIA
*Corresponding author: [email protected]; [email protected]
Article Information:
Article history:
Received date : 17 June 2022 Revised date : 22 June 2022 Accepted date : 25 June 2022 Published date : 30 June 2022
To cite this document:
Pitaloka, D. C., &Soehodho, S. (2022). A SYSTEM DYNAMICS
MODELLING ON THE ANALYSIS OF SUBSIDIES PROVISION IN THE
ELECTRIC BUS MARKET SHARE. International Journal of Engineering Advanced Research, 4(2), 76-88.
Abstract: Presidential Regulation Number 55 of 2019 concerning the Acceleration of the Battery-Based Electric Vehicle Program on August 12, 2019, encourages the development of electric vehicles in Indonesia. This is a good opportunity to create a better order for the city's public transportation in Indonesia from conventional buses to electric buses. DKI Jakarta now is at the first stage of developing electric buses as public transportation and is targeting that by 2030 all the public buses operated in Jakarta are using electrical. However, the conversion of conventional fuel-fueled buses to electric buses for public transport service is facing some challenges, such as the price of electric buses two times more expensive than conventional buses, the differences in the total cost of electric buses and fossil fuel bus operation, and also need to provide charging facilities infrastructure. Therefore, the financial ability of the public transport operator and policy support from the Government is very important in the development of electric buses as public transportation.
This study analyzes and makes a System Dynamics model for the development of electric buses in Jakarta by considering the policies of the DKI Jakarta Government regarding the subsidy amount provided to accelerate the use of electric buses. The scheme and the provision of subsidies provided by the Government, the total cost of ownership of electric buses, and vehicle taxes set by the Government are used as variables that affect the simulation model of the electric bus market in Jakarta.
Based on the model it is shown that from 2022 to 2030 the
1. Introduction
Indonesia is currently accelerating the development of electric vehicles, as stated in Presidential Regulation Number 55 of 2019 concerning the Acceleration of the Battery-Based Electric Motorized Vehicle Program on August 12, 2019. Issues concerning the necessity to accelerate the implementation of the electric vehicle in Indonesia cover the motorized vehicle growth, fuel needs, air pollution, national energy resilience, and the investment cost of electric vehicles. One of the Government's programs to accelerate the implementation of electric vehicles is the conversion of conventional fuel-fueled buses to electric buses for public transport service.
The transition from conventional buses to electric buses is facing some challenges and opportunities. The use of electric buses as a means of public transportation has several advantages, including being classified as environmentally friendly and energy-saving transportation, and it creates a higher quality of life in the city. This is in line with the Blue Sky Program launched by the DKI Jakarta Government in 2019, with one of the strategies carried out through the use of electric-based vehicles, including for public transportation by electric buses. Along with the policy to promote public transport use in Jakarta, it is expected that the use of electric buses also allows significant results in reducing local air pollution from the transportation sector. DKI Jakarta now is at the first stage of developing electric buses as the public transportation and targets that by 2030 all the public buses operated in Jakarta are using electrical.
But it is known that the investment cost of one electric bus is two to four times more expensive than conventional buses. Additional infrastructure costs are also necessary to install the charging facilities to support consistent and sustainable bus operation. Another consideration concerning the battery as electricity storage has a limited lifetime. Thus, the bus operator should replace it after 8 years operated. This study analyzes and makes a System Dynamics model for the development of electric buses in Jakarta by considering the policies of the DKI Jakarta Government regarding the subsidy amount provided to accelerate the use of electric buses. Several obstacles in the development of electric buses as public transportation in a city, including financial and institutional barriers will be developed into variables in the dynamic model that is built.
Several variables are introduced to the model to measure sensitivity to the implementation of electric buses covering the provision of subsidies from the Government, electric bus operating cost, and vehicle tax amount. Furthermore, the dynamics system model represents the factual condition of bus electric market share in Indonesia.
fossil fuel bus used is decreasing, and by the end of 2030, the proportion between electric buses and fossil fuel buses almost reached the target.
Keywords: Subsidies, the total cost of ownership, Electric Bus, System Dynamics.
2. Literature Review System Dynamics
System Dynamics is a study of the structure and behavior of socio-technical systems to guide effective decision-making, learning, and policy of growing dynamic complexity in the world (Sterman, 2000). In System Dynamics Modeling and Simulation book, Springer Texts in Business and Economics, 2017 (Bala et al., 2017), explained that there are six important steps in building a dynamic system model include problem identification and definition, system conceptualization, model formulation, model test and evaluation, use of the model, implementation and dissemination as well as learning/strategy/infrastructure design. In the context of transportation systems, System Dynamics modeling is very appropriate because it serves to reveal the structure of the underlying system and the dynamic transitions that arise from this structure. Furthermore, System Dynamics can assist in developing experimental transportation tools to explore various transport policies and provide a platform for learning about transportation issues (Abbas & Bell, 1994). In studies related to the market share of Electric Vehicles, System Dynamics is mostly used to predict future changes in the EV market share and explore key factors influencing the diffusion of EVs (Wang et al., 2019).
Electric Bus Development
At this time the adoption of electric buses as an urban public transport fleet is growing worldwide.
In the Spring 2018 report on Electric Buses in Cities, Bloomberg New Energy Finance describes the widespread revolution of electric buses, where in 2016 China was able to register 340 electric city buses every day. In the same year 2016, Europe operated around 70 buses daily (E-magazine, Sustainable Bus, 2020). Developments in Indonesia are currently at an early stage where the Ministry of Transportation is preparing a Road Map to support the acceleration of the Battery- Based Electric Motor Vehicle Program for road transportation in Indonesia by following Presidential Regulation Number 55 of 2019. The Ministry of Transportation has made various efforts to accelerate the Battery-Based Electric Motor Vehicle Program in Indonesia, such as by issuing several related regulations, using the battery-based electric vehicle as an operational vehicle for the Ministry of Transportation, encouraging public transportation such as Transjakarta, Damri, Airport Transportation to use buses with electric power, and encouraging the use of electric buses through Buy The Service (BTS) program in several cities. DKI Jakarta now is at the first stage of developing electric buses as public transportation by gradually replacing conventional buses with electric buses. And for the target Transjakarta plans to provide about 10000 electric buses on the Transjakarta route that can be enjoyed by 2030.
Barriers to Adopting Electric Buses
In general, the barriers of a city in implementing electric buses as public transportation can be categorized into technology barriers, financial barriers, and institutional barriers. Each of these barriers can be divided into several elements those are vehicle and battery, the organizing operator, and electric charging infrastructure (Org et al., n.d.). The stages of development that a city goes through to adopt electric buses can be divided into 5 stages, the first stage is there are no planning substances, has started planning but there are no pilot tests, the city is running an initial pilot program, the city has passed an initial pilot program, and the last stage is mass adoption.
2.1 Problem Statement and Scoping
Studies on electric vehicles that have been carried out in Indonesia generally discuss the adoption of electric vehicles for private vehicles, both electric motorcycles, and electric cars. There has been no research related to the potential use of electric vehicles, especially buses as public transportation in a city. In this study, an analysis of electric vehicles as public transportation in Jakarta will be carried out using System Dynamics modeling. System Dynamics was chosen as the modeling method because the System Dynamics methodology can provide a better understanding of the system structure and deduction of system behavior (Setiawan, 2019). This study focuses to analyze the potential market share of electric buses in Jakarta with the implementation of subsidies from the government and exemption of the electric vehicle purchase tax. Modeling is carried out for the time range from 2022 to 2030.
3. Method
This study focuses to analyze the potential market share of electric bus adoption in Jakarta with the implementation of a policy of providing subsidies using System Dynamics. The conceptualization model is represented as a Causal Loop Diagram and Diagram of the System. A simulation analysis of the subsidy scheme is carried out for large-sized buses operating in Jakarta to see the potential market share.
Identification Significant Factors
The first stage of the study is identifying significant factors that influence the development of electric-based public buses in cities, by doing study literature and making an interview with stakeholders. Previous studies focused on electric vehicles, electric bus market share, and System Dynamics can be seen in Table 1.
Table 1: List of Relevant Literature
No Previous works Topics Region Methods
1 (J. Q. Li, 2016) E-Bus market share Worldwide Qualitative & Quantitative Analysis
2 (X. Li et al., 2018)
E-Bus market share 14 Countries in America, Asia-Pacific, and Europe
Comparation study
3 (Org et al., n.d., 2019)
E-Bus market share Worldwide Comparation study
4 (Irawan et al., 2018)
Hybrid car market share
Indonesia Preference Survey
& Response Logit Model 5 (Setiawan,
2019)
E-vehicle market share
Indonesia System Dynamics & Agent Based Modelling
6 (Lonan & Ardi, 2020)
E-vehicle market share
Indonesia System Dynamics
Variables Determination
The second stage of this study is the determination of the key variables to be used in the costruction Causal Loop Diagram (CLD). Several important key variables in the development of electric buses as public transportation are developed in a Causal Loop Diagram that can show the interactions and interrelationships between the factors. This study chooses some key factors that influence the development of electric vehicles as public transportation which are some of them describes in Table 2.
Table 2: List of Variables and Definition Related to the Study
Variables Definition
Transport Operator’s Subsidy Share
The share of transportation operator subsidies is part of the subsidy from the
Government given to public transport operators. The amount of subsidies provided by the Government is influenced by the components included in vehicle operating costs which include investment costs, taxes, operational costs, and vehicle maintenance costs.
Total Cost of Ownership
The total cost of vehicle ownership is used to calculate the costs incurred over the entire life cycle of the vehicle. TCO is calculated as the sum of operating costs and investment costs.
APBD (regional revenue and expenditure budget)
APBD is a detailed list that is systematically made containing plans for regional revenues and expenditures for one fiscal year.
Operational Cost Operational costs are the sum of driver fees, energy costs, maintenance, and insurance and electricity grid costs.
Investment cost The investment cost is determined by the depreciation of the bus, charger, and battery (Grauers et al., 2020).
Vehicle tax Motor vehicle tax is a tax that must be paid by every motorized vehicle owner who operates his vehicle on public roads.
The correlation between subsidy share given by the Government to Bus Operator and the capability of the operator to provide public buses can be seen in the Causal Loop Diagram in figure 1 which is the conceptual model of the study. The total Operator budget which is obtained from revenue and subsidy from the government should be used to non-E-bus total cost and also E-Bus total cost with a (-) loop which represents a balancing loop. The capability of the Operator to provide a new E-Bus and convert the existing non-E-Bus to an electric bus is depend on the budget availability.
Figure 1 shows the research conceptual model formed in a CLD.
Figure 1: The Causal Loop Diagram
Model Development
After the development of CLD, the next step of modeling is the development of a Stock Flow Diagram. This stage is the development of a mathematical model or stock & flow diagram of the CLD that was previously made using the dynamic system simulation software Vensim. At this stage, changes and influences between variables can be seen in the form of mathematics or equations. The system dynamics model of the E-Bus market share is depicted in Figure 2.
Figure 2: System Dynamics Model of the E-Bus market share
4. Data Analysis
Some variables are validated based on the historical data obtained and they will be input into the Stock Flow Diagram. Validation data is one of the ways to convince the model developed accurately represented the current state of the system by observing the relationship of variables in the model. The variables which are validated based on the historical data are the number of bus passengers, the electric vehicle battery price, and APBD (regional revenue and expenditure budget). Historical data for the number of bus passengers is obtained from the annual data on the number of transjakarta bus passengers from 2015 until 2021 (PPID Transjakarta). Historical data for electric vehicle battery price is obtained from the price of electric vehicle batteries per kWh which continues to show a downward trend since 2010 (Bloomberg New Energy Finance).
Historical data for APBD is obtained from the annual regional revenue and expenditure budget from 2015 until 2022 (APBD Jakarta). Below are the results of those variables' validation.
Figure 3: Validation of Some Variables
In the left graph above, it can be seen that the historical data obtained with the model built have shown the same trend. While the right graph above, the blue line shows the trend from the model built to represent the growth of the variable until 2030.
5. Results and Discussion
The proportion of E-Bus and Non E-Bus
This model was built using data on bus fleet ownership by the operator in 2022, with the details of 4270 units of non-electric buses and 30 units of electric buses. Spesification of electric buses use are BYD bus from China type K-9 low deck with 12 meters length, battery capacity is 324 kWh, charging type plug-in DC, and maximum travel range about 250 km per one charge for 2.5 - 3 hours with 80 kWh charger type. The trend of growth in the number of bus fleets consisting of electric buses and non-electric buses until 2030 can be seen in the graph below.
Figure 4: Development of E-bus and Non E-bus
It can be seen in figure 4 that from 2022 to 2030 the amount of non-E-bus is decreased and the number of electric buses is increased, with the proportion of about 81% electric buses and 19%
non-electric buses. The number of electric buses by 2030 is the number of electric buses which are new fleet addition by bus operators plus the number of buses that are conversions from non-electric buses to electric buses after passing the non-electric bus operating period, which is 10 years. It means that from the result of the study, in 2030, not all public buses have been replaced with electric buses following the target set by the Government for bus electrification of 100% in Jakarta 2030.
The baseline financial support scheme used in this study to analyze the adoption of electric buses in Jakarta is the subsidies provided by the regional government for all public transport operators in Jakarta is about 6,2 trillion Rupiah (Regional Government DKI, 2022). Of the total subsidies provided, subsidies for public bus operators get the largest share, reaching around 4.5 trillion Rupiah for public service obligations. Besides the subsidy from the government, bus operator get revenue from the bus operational fare. In this study, the bus fare used is fixed but is influenced by the inflation rate. The graph in figure 5 shows the increase in the bus operator income from fare- box and the subsidy provision from the government during the adoption of electric buses.
Figure 5: Increased Farebox and Subsidy Provision
From Figure 5, it can be seen that the two lines show an upward trend, where the blue line represents the amount of fare-box obtained by bus operators, while the red line represents the provision of subsidies provided by the Government. It is also seen that the upward trend in the fare-box amount is slightly higher than the subsidies provision. Where in the next few years, with the increase in bus passenger’s growth, the amount of fare-box obtained by the operator may be higher than the subsidy provided by the Government.
6. Conclusion
In the adoption of electric buses as public transportation in a city in Indonesia, it is important to know the factors that support the electric buses development and also the barriers that a city has.
Jakarta now has passed the initial pilot program and started to prepare mass adoption of electric buses. The financial barrier to investment and operation of electric buses is supported by the Government through the provision of subsidies and also other policies that can reduce the investment costs for electric buses, including tax exemptions on the purchase of electric vehicles.
This study then analyzes the subsidies provision and scheme in electric buses market share in Jakarta. It is shown that from 2022 to 2030 the trend of public electric buses used are increasing and the fossil fuel buses used are decreasing, and by the end of 2030, the proportion between electric bus and fossil fuel bus almost reach the Government target.
Limitations in this study can be developed for further research. Different types of public transportation and also the amount of fare setting can affect the potential development of electric vehicles as public transportation in a city. Adjustment of public bus fares set by the Government will affect the revenue of transportation operators, which may result in adjustments to the provision of subsidies provided by the government. Government policy in the development of public transportation will greatly affect the potential electric bus market share in a city. This is related to the commitment and determination of subsidies provided to support the development of electric buses.
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