Exploring viable energy efficiency business models in Indonesia
Indonesia faces growing power demand. Due to this demand, Indonesia is shifting from being an oil exporter to an oil importer, leading the government to acknowledge this future concern, and issue its presidential decree (PP) no.5/2006. This was later detailed in the national energy policy (Kebijakan Energi Nasional or KEN) and its blueprint of national energy management 2005 – 2025. Energy conservation and efficiency were clearly indicated as one of the pillars of Indonesia’s energy policy to respond to the looming energy supply problem. The following year, the government released its law no.30/2007, which mandates the implementation of specific energy conservation measures. These are specified within the
government regulation no.70/2009 on energy conservation. Later, PP no.79/2014 on national energy policy (KEN) was issued, revoking PP no.5/2006. Under the new policy, the Ministry of Energy and Mineral Resources (MEMR) set new targets to reduce energy consumption, final energy intensity, and energy elasticity with a horizon up to 2025. In line with the government’s increasing focus on energy efficiency, the technical ministries have implemented several policies in different energy sub-sectors that have implications for energy conservation measures.
These include:
- The preparation of energy intensity standards (green industry standards) by the Ministry of Industry
- Regulation of the Ministry of Energy and Mineral Resources (MEMR) no.14/2012 on energy management Presidential regulation no.55/2018, which stipulates energy diversification in the
transportation sector through the transportation master plan for Jakarta, Bogor, Depok, Tangerang, and Bekasi - Establishment of eco-building standards through the regulation of the Ministry of Public Works and Public Housing (PUPR) no.92/PRT/M/2015 regarding the implementation of energy-efficient house designs.
From the private sector’s point of view, energy service companies (ESCO) have become a global business vehicle and model for efficient energy provision. They can help energy users, companies, industries, and commercial sectors improve equipment efficiency. ESCOs were implemented quite successfully to promote energy efficiency in many developed countries, such as the USA, Canada, and Japan. Many developing economies, including Indonesia, still face several barriers in implementing ESCOs on a large scale. However, there are successful cases like India’s EESL model which is a public sector funded “super ESCO” with a wide mandate and better access to capital. Itis able to take risks that normal private ESCOs could not.
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