Technical analysis on household energy consumption: LMDI decomposition index and innovative

Abstract

For decades, Indonesia’s Economic Development had achieved great high growth rates by using more labor input, capital investment, physical and human, and fostering competition. Over time, Indonesia’s energy intensity, which historically always been high compared to other industrialized economies. This study aimed to analyze decomposition factors of energy consumption by analyzing the link between the other nine factors and household energy use. The Logarithmic Mean Divisia Index were used to identify the determinant variables that drove a household’s energy usage. This study used a Time-series VECM model for prediction model analysis. The Logarithmic Mean Divisia Index (LMDI) and decomposition index were used to identify the determining technological, economic, and social factors driving a household’s energy consumption evolution. We analyzed the outcomes after applying the LMDI. We provided econometric individual time series VEC models, which we used for three targeting models: social, economic, and technical factors. We discovered that economic variables were the most significant factors that aggravated the change in household energy consumption based on LMDI. Technical factors, on the other hand, were the lowest. We found that the government might reduce its energy use over time by improving technological factors. Energy efficiency had been a cornerstone in managing growing energy use. The declining relevance of fewer labor-force in the previous decade was reflected in the negative indication of social factors at home. We discovered that the models were more stable while using Time Series VECM.