The Impact of Additioning ESG Factors in The Financial Model in Power Plant Development can be Categorized as a Burden or Benefit in PT XYZ

Abstract

The Indonesian government has set a roadmap to achieve a carbon neutral energy transition by 2060. In supporting this program, PT XYZ as a power generation company is focusing on building new power plants. Current power plant development only focuses on conventional concepts, namely price affordability and security of supply. However, in achieving a carbon neutral energy transition, it is necessary to add the pillar of acceptability. This acceptability pillar can be applied in the development of new projects by considering ESG factors (Environmental, Social, and Governance) which has an impact on the project's financial model. With the assignment allocation of 130 power generation projects from state own enterprise to PT XYZ assubholding, the author's suggestion is that PT XYZ should conduct a comprehensive study that evaluates the impact of ESG factors onfinancial model. This consideration aims to support the transition programnet zero emission, preventing environmental damage, allocating budgets efficiently, ensuring the long-term stability of the company's BPP, and maximizing company value. Although there are some opinions that consider ESG to be a burden, this research aims to evaluate or analyze that ESG is not a burden but a benefit for the development of new projects. The method used is to consider significant ESG factorsfinancial model projects, as well as assessing financial feasibility using methods such asInternal Rate of Return (IRR) andNet Present Value (NPV). This analysis takes into account the existence of limits on buying and selling prices set by state own enterprise (Persero) to prevent significant increases in BPP subsidies. Feasibility analysis of adding ESG factors to the construction of new generating projects provides the conclusion that ESG factors have savings benefits for PT XYZ.