Abstract
Development of renewable energy seen as one of the solutions when we talk about the climate change issue. Rapid growth and uncontrolled fossil fuel usage start to have an impact on world society. Renewable energy is a reliable solution to reduce further fossil fuel exploitation. This research is aiming to know consideration factors for domestic investors' decision to support the development of renewable energy in Indonesia as one of the funding beside FDI. Data gathered by the two-stage collection process – the first stage is in an expert interview to determining frameworks (AHP model) of factors related to domestic investment. The second stage is testing the framework using the AHP approach for each level in a pairwise comparison. This research showed that the domestic investors perceived access to the grid is crucial due to the market condition where government-owned companies fully control all power distribution. Getting the transparency on project clarity also critical for the independent power producers (IPP). By having it, the IPP can get a clear picture of the project requirement and provide the best proposal to the prospective investor. The last important factor is having Feed-in Tariff (FIT) pricing policy, which allowed guarantee fixed electricity prices. The IPP will be able to get financial return certainty and be relatively more comfortable forecasting their project cash flow.
Highlights
One problem of developing renewable energy nowadays is the investor's perspective about the cost of initial investment to the project executed
All independent power producers are set to sell their electricity to the PLN as the state-owned enterprises for electrical business under the power purchase agreement
There is a BOOT scheme applied under ministerial regulation No 53/2018, which gives investors an obligation to transfer their renewable energy project to the PLN after the power purchase agreement comes to an expired period
Summary
One problem of developing renewable energy nowadays is the investor's perspective about the cost of initial investment to the project executed. The Renewable Energy development project initially seen to have higher initial costs (CAPEX) and relatively lower operating costs (OPEX). Facts above usually occur in developing countries, where access for long-term funding is not easy to get for the newly established company. This fact is ironic since many sources of renewable energy are spread to developing countries with their natural resources. Total production per unit of energy is higher compare with the total production cost of fossil fuels
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