PRODUCTS SELECTION OF RENEWABLE ENERGY MARKET-BASED INSTRUMENT AT INDONESIA BASED ON CUSTOMER, REGULATOR, AND SUPPLIER PREFERENCES (CASE: TEXTILE AND FOOTWEAR INDUSTRY SECTOR)

• Main Author: Nastasia Lazuardi, Andita
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/87863
• Institution: Institut Teknologi Bandung

The participation of companies involved in SBTi and RE100 drives their needed of RECs for reporting scope 2 emissions using the market-based method. REC is a market-based renewable energy instrument that certifies that every 1 MWh of electricity used comes from renewable energy sources. At 2023, revenue of Rp187.572.65.450 was obtained from REC sales, with the largest contribution coming from textile and footwear industry sector, amounting to 26.27%. On the other hand, in order to realizing Indonesia's commitment to achieving NZE by 2060 as a concrete manifestation of the implementation of the NDC, which is the obligation of the Paris Agreement participating countries, Indonesia enacted UU No. 98 of 2021. The law regulates carbon trading through the cap and trade and offset mechanisms. In the offset mechanism, the instrument traded is carbon credit. REC and carbon credit are generally known as market-based renewable energy instruments. Carbon credit is an instrument that states the reduction of 1 ton of CO2 emissions from a specific project, one of those is a renewable energy power plant project. From 2021 to 2024, there were 83 renewable energy power plants that were completed. To optimize the energy attribute revenue from these renewable energy power plants, it is necessary to select the appropriate product type, as renewable energy power plants can only be registered for one type of instrument. The selection is based on customer preferences, which in this case are focused on the textile and footwear industry sector, the regulator represented by the Ministry of Energy and Mineral Resources (Kemen ESDM), and the supplier, which in this case is PLN. This research aims to understand the preferences of these three parties regarding market-based renewable energy instrument products, and to identify strategies that PLN can implement to optimize revenue from the sale of market- based instruments. The method used is exploratory sequential mixed method. Started with interviews with customers, regulators, and suppliers, the results of which were used as the basis for creating a questionnaire distributed to customers. Next, inferential statistical tests were conducted with the help of SPSS to determine whether there are differences in preferences for purchasing REC and carbon credits over a period of 1 to 3 years and a period of 3 to 5 years based on the characteristics of the customers. The results of the customer interviews indicate that there is a group of customers who have a preference for REC, and another group of customers who have not yet decided on their preference. The findings from customer interviews were confirmed by quantitative research, which stated that more than 50% of respondents tend to choose REC within a period of 1 to 3 years, although there are preference differences between the group of customers without NZE targets and the group of customers without a history of REC purchases. More than 50% of respondents also agreed that they tend to choose REC for a period of 3 to 5 years, although there were differences in preferences among the group of customers who do not have an NZE target. In the preference for purchasing carbon credits, most do not have a preference for carbon credits for a period of 1 to 3 years, although the group of customers with NZE stated neutrality. Customers have not yet been able to decide their inclination towards purchasing carbon credits for the next 3 to 5 years. The results of the interview with the regulator indicated their preference for carbon credit products, while suppliers expressed their preference for REC for the current period but are preparing for the sale of carbon credits in the future. Strategies that PLN can use to optimize revenue from REC and carbon credits include offering special prices for long-term REC purchase contracts, initiating forums/seminars related to the importance of NZE target ownership and knowledge about carbon credit products, providing discounts to customers who purchase REC for the first time, ensuring the ownership of green energy attributes at PLN and IPP power plants, and preparing systems and mechanisms to support future carbon credit sales. This research contributes by providing insights to PLN and policymakers regarding existing preferences, and is expected to help formulate strategies and policies related to the selection of market-based renewable energy instruments to support the achievement of Indonesia's NZE target.