Ismiriati Nasip, Muhtosim Arief, Firdaus Alamsjah and Dezie Leonarda Warganagara
Pertanika Journal of Tropical Agricultural Science, Volume 27, Issue 3, September 2019
Keywords: ESA & ESPC, game theory, LCC, retrofit, split incentive problem
Published on: 13 September 2019
The new financial model that provides monetary investment on savings arrangement financing is beginning to grow in Indonesia, especially in incentivizing energy efficiency. The split incentive problem identified in Indonesia shows that the currently designed program of incentives is still problematic for both providers and customers. This suggests that there are multiple alternatives to the incentives that are more suitable to assist in energy-efficiency implementation. Using case studies on retrofit financing for LED lamps in Indonesia, this study aimed to test the validity of those issues, which involved the process of energy decision-making within an organization. Triangulating the findings from case studies and questionnaire surveys, recommendations for future researchers, practitioners, and the government were made. The results indicated that retrofit financing in Indonesia is feasible. Financial metrics such as the analysis of discounted payback period, IRR, and NPV were used to further validate the result. The study also identified that the provider can use Game Theory as a tool to analyze the costs and benefits of retrofit business decisions to tackle the split incentive problems. These findings could lead to improvement in strategies in considering the effectiveness of a firms policy measures for delivering energy efficiency in the future.
ISSN 1511-3701
e-ISSN 2231-8542