Five Essays on Building Energy Efficiency and Policies in Indonesia

Abstract

Indonesia's energy demand is increasing as a result of growth in infrastructure and economy. As energy demand grows, opportunities for energy efficiency also expand in various sectors in Indonesia. The green retrofitting is an exception despite the vast opportunity, and Indonesia has multimillion-dollar energy efficiency potential. Nevertheless, only a tiny percentage of this available potential can be attained. Under technological innovation, retrofitting in building sectors is technically feasible and economically viable. New technologies could increase building energy efficiency and energy saving, where some of the techniques needed for retrofitting are already available in the market. However, acceptance among business owners varies across the building, industrial and commercial sectors. It is due to a lack of awareness about the savings potential of the best available technologies (one of the barriers). Hence, the government needs to help and incentivize new energy-saving companies (ESCOs) to enter the building energy efficiency sector. These incentives are necessary to overcome the paradox of the energy gap and let the ESCO enter the building energy performance program. With the explanation above, the author undertakes this study to learn more about the strategy of the ESCO to gain opportunities and open new markets in the building energy efficiency sector. It can be done by promoting the use of environmentally friendly technology equipment that ultimately aims to keep its performance growing on an ongoing basis. New opportunities that ESCO can do are to offer a Product Service System (PSS) business model in the form of Energy Saving Agreement (ESA) or Energy Saving Performance Contract (ESPC), which is known as the "retrofit" contract. Hence, the purpose of this research are as follow: 1) Investigate ESCO's confidence and tapping potential in energy efficiency business sectors, 2) To explore the retrofit practices and retrofit financing, 3) To investigate the decomposition Factors of Energy Consumption in Indonesia and Forecasting Energy Intensity, and 4) To analyze and evaluate the driving factors of carbon emissions in Indonesia. This dissertation consists of five independent essays. The dissertation explores the relationship between energy consumption, building energy efficiency (BEE) Industry, energy saving, energy conservation services company or energy service company (ESCO), and energy-economic growth relationships. This dissertation helps understand how market barriers are the main problem and affect the organization's energy efficiency development behavior. Understanding the market drivers and nature of the energy efficiency development and the consequences, its new PSS business model, the value of the investment, and new intelligent financing options will benefit all the participants. Energy efficiency retrofitting is viable in Indonesia. However, non-market and market barriers in implementing energy-saving vary across sectors. Thus, again, the energy efficiency retrofitting remains an anomaly. Indonesia requires a comprehensive set of government policies to spurs the building energy efficiency industry and avoid the "energy gap." Moreover, Indonesia will receive many benefits as a result of its building energy efficiency. By supporting the energy service companies and introducing new funding scheme rules in the building energy efficiency industry, the government will ensure and reduce the demand for energy consumption. It helps eliminate the need for new coal-fired power plants, reducing the necessity for more such plants. It also lowers energy imports, increases energy security, creates new jobs and businesses, increases efficiency and company competency, reduces emissions, and reduces the need for construction of a power plant. At the company or enterprise-level, higher energy efficiency will thus reduce operating costs and enhance profitability. At a national level, improved energy efficiency implies reduced energy imports, thus reducing foreign exchange pressures. It also increases the availability of renewable energy resources for others to utilize, allowing increases in energy-dependent activities to contribute to the population's economic well-being. The society also benefits from increased energy efficiency through reduced energy usage adverse environmental impacts (CO2 emissions). Unfortunately, the efforts to promote energy efficiency in Indonesia are hindered by factors such as a lack of economic incentives, diverse business models, and limited financing options. In addition, promotion efforts are hindered by incohesive legislation. Therefore, it appears more feasible to connect all the pieces of government policy and the external environment of Indonesian companies to support energy efficiency development.