This study focused on assessing the economic feasibility of Small-Scale LNG (SSLNG) development from a flare gas in South Sumatra, Indonesia. The study measured profitability using three financial indicators: internal rate of return (IRR), net present value (NPV), and payback period (PP). The study also used sensitivity analysis to find selected variables that are strongly correlated with the economic aspects of SSLNG production. The variables consist of (1) Average flare gas production; (2) Flare gas price; (3) LNG selling price; (4) CAPEX; and (5) OPEX. The study also used those variables to find the optimum result with scenario analysis. The results show that the SSLNG development from a flare gas is economically feasible if three variables: LNG selling price, CAPEX, and flare gas price follow the optimum scenario.
• Renewable energy (RE) projects in Indonesia usually have IRR between 10% and 15% and PP around 6 to 30 years • Attractive return usually could be found in large scale RE projects, although there are numerous other factors involved including technology developments, capacity scale, power purchasing price agreements, project locations, as well as interest rates and applied incentives. • Crowdfunding (CF) has big potential to contribute to the financing of RE projects especially financing small scale RE projects. • P2P lending usually targeted short-term loans with high interest rates. Therefore, it cannot be employed as an alternative financing for RE projects in Indonesia. • Three types of CF that can be employed as an alternative for RE project funding in Indonesia. Namely, securities, reward, and donation-based CF. In addition, hybrid models such as securities-reward and reward-donation could also be explored according to the project profitability. • Several benefits offer by securities crowdfunding (SCF) compared to conventional banking and P2P lending, as follows: (1) issuer do not need to pledge assets as collateral; (2) do not require to pay instalment each month; (3) issuer share risks with investors with no obligation to cover the investor’s loss; (4) applicable for micro, small, medium, enterprises (MSMEs) with no complex requirements; and (5) there is possibility to attract investors with bring specific value. • Several challenges that need to be tackled such as the uncertainty of RE regulations; (1) issuer’s inability in managing the system and business; (2) the absence of third parties in bridging between CF platform and potential issuer from RE project owner; (3) the lack of financial literacy of the potential funders; and (4) lastly the inadequacy of study regarding potential funders in escalating the RE utilisation in Indonesia.
Highlights • Individual investors prefer to have an investment with high ROI rather than a low-profit investment with environmental and social benefits. • Males invest and donate more money than females in terms of quantity and frequency. • People with a level of education above an associate degree (D3) have a significantly higher level of willingness to invest and donate to green project, compared to people with a lower level of education. • In general, people with a higher income level have a higher willingness to invest. However, there is no proof on the relationship between level of income and willingness to donate. • The age increases have a positive correlation with the willingness to invest in green project. Nevertheless, people >44 years old are more interested in donating than investing. • The younger generation (<44 years) tends to pick higher returns and short payback periods compared to the older generations (>44 years). • The respondents tend to invest and donate to the project located in the frontier, outermost, and least developed region (3T) even though the majority of the respondents are from Java, Madura, and Bali. • A social project such as health and education are preferable projects chosen by the respondents to invest and donate to, followed by the conservation, climate crisis, region’s welfare, and clean energy access. • Clean energy has not been seen as one of the preferred targets for green project investors and donors due to the poor knowledge of its direct impact on the environment and people’s welfare. • The average willingness to invest and donate is IDR 10,527,004 and IDR 2,893,079/person/annum with desired return on investment (ROI) and payback period (PP) of 5–8% 24 months, respectively. • Respondents prefer to donate more money to reward donations than donations without reward. • There is an enormous potential of crowdfunding as green project alternative financing, including renewable energy. The total investment could reach up to IDR 192 trillion (USD 13.4 billion)/annum and up to IDR 46 trillion (USD 3.2 billion)/annum for donation. • The main bottlenecks are poor financial literacy and the lack of platforms to facilitate public participation. • COVID-19 has decreased willingness to pay and invest due to income reduction and the uncertain economic recovery situation. However, it makes people pay more attention to the sustainability factor (shifting paradigm in investment).
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
customersupport@researchsolutions.com
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.