Financial Feasibility Analysis of PLN Electricity Investment in the Palm Oil Industry

Muharpi. M; Doni Satria

doi:10.55927/eajmr.v5i8.285

Authors

Muharpi. M Padang State University
Doni Satria Padang State University

DOI:

https://doi.org/10.55927/eajmr.v5i8.285

Keywords:

Palm Oil Mill, Investment Feasibility, Capital Budgeting, PLN Electricity, Net Present Value

Abstract

Palm oil mills require a reliable electricity supply to support production and auxiliary operations. Diesel generators are commonly used during boiler start-up, turbine outages, and non-processing periods; however, their operation results in high fuel costs and carbon emissions. This study evaluates the feasibility of installing PLN electricity as an alternative power source using a 10-year investment horizon. Financial feasibility was assessed using Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), Return on Investment (ROI), Payback Period (PP), Discounted Payback Period (DPP), and sensitivity analysis. The results indicate that the investment is financially feasible, yielding an NPV of IDR 15.78 billion, an IRR of 180%, a PI of 16.36, an ROI of 2,796%, a PP of 0.59 years, and a DPP of 0.65 years. In addition, annual CO₂ emissions were reduced by 548,430.83 kg, and the investment remained feasible under all sensitivity scenarios.

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