Alternative Business Model for Energy Service Company in Indonesia

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 study 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 analyze and evaluate the driving factors of carbon emissions in Indonesia. The study 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 study 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.