Exploring viable energy efficiency business models in Indonesia

The report identifies significant financial, regulatory, and awareness barriers that hinder energy efficiency projects in Indonesia, noting that traditional shared and guaranteed savings models are often unsuccessful. It proposes three alternative models—service or device, leasing and purchase, and quality energy service—to reduce perceived risks for investors and clients, while emphasizing the need for stronger government regulation and financial incentives to meet national energy saving targets.

• Energy efficiency projects are viewed as high-risk by owners and investors due to a lack of knowledge regarding technologies and business models, as well as limited access to energy consumption benchmarking and impact measurement data.
• ESCOs struggle to bridge the gap between clients and investors because of a lack of confidence stemming from previous underperformance of energy savings, which led to payment defaults.
• Financial risk is the primary obstacle to energy efficiency projects, specifically regarding the uncertainty of risk and return calculations, potential cost increases, and payment defaults.
• Traditional shared savings models fail in Indonesia because both the clients and the ESCOs are typically small and face similar difficulties in accessing bank financing.
• The guaranteed savings model is hampered by a lack of trust in the capacity of ESCOs and the fact that clients must assume the debt risk from the bank.
• The 'service or device' business model reduces investment costs and construction risks by offering subscription or purchase options and providing technical guarantees on energy savings.
• The 'leasing and purchase' model lowers bank default risk because the ESCO acts as the borrower and is paid by clients through installments or a final purchase, backed by ESCO guarantees.
• The 'quality energy service' model targets large energy-intensive companies and minimizes risk by using an escrow account as collateral and partnering with the state-owned utility company PLN.
• None of the proposed business models can eliminate regulatory risks, which require stable and reliable government regulations to be resolved.
• The industrial sector possesses the largest energy saving potential to help Indonesia reach its target of 17% energy savings by 2025.

APA

Wijaya, M. E., Zeki, M., & Siagian, A. P. (2021). Exploring viable energy efficiency business models in Indonesia. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/11/Exploring-viable-energy-efficiency-business-models-in-Indonesia.pdf

Chicago

Wijaya, Muhammad Ery, Muhammad Zeki, and Albertus Prabu Siagian. Exploring viable energy efficiency business models in Indonesia. Climate Policy Initiative, 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/11/Exploring-viable-energy-efficiency-business-models-in-Indonesia.pdf.

Wikipedia

{{cite report |last1=Wijaya |first1=Muhammad Ery |last2=Zeki |first2=Muhammad |last3=Siagian |first3=Albertus Prabu |title=Exploring viable energy efficiency business models in Indonesia |publisher=Climate Policy Initiative |date=November 2021 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2021/11/Exploring-viable-energy-efficiency-business-models-in-Indonesia.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wijaya2021exploring, author = {Wijaya, Muhammad Ery and Zeki, Muhammad and Siagian, Albertus Prabu}, title = {{Exploring viable energy efficiency business models in Indonesia}}, institution = {Climate Policy Initiative}, year = {2021}, month = nov, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2021/11/Exploring-viable-energy-efficiency-business-models-in-Indonesia.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }