The New Waste-to-Energy Policy: A Sustainable Strategy against Urban Waste and Environmental Pollution

Indonesia’s Waste-to-Energy policy promotes the conversion of waste into renewable energy through sustainable and environmentally friendly methods. This approach aims to tackle urban waste challenges while supporting the country’s green energy transition.

Waste Management Regulatory Framework

Law No. 18 of 2008 on Waste Management (“Waste Management Law”), that plays a vital role on the environmental law in Indonesia, mandates the government and local governments to ensure the implementation of proper and environmentally sound waste management to improve public health and environmental quality. One of the principles in the implementation of waste management is the principle of utility (asas manfaat). The principle of utility means that waste management should adopt an approach that considers waste as a resource that can be utilized to meet the needs of society.

In order to implement the mandate of the Waste Management Law, the government issued Presidential Regulation Number 18 of 2016 on the Acceleration of Waste-Based Power Plant Development in DKI Jakarta, Tangerang City, Bandung City, Semarang City, Surakarta City, Surabaya City, and Makassar City (“Presidential Regulation No. 18/2016”). Presidential Regulation No. 18/2016 aims to convert waste into an energy source, improve environmental quality, and strengthen the role of the national electricity sector through the accelerated development of Waste-Based Power Plant (“PLTSa”).

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Presidential Regulation No. 18/2016 focuses on accelerating the development of waste-based plants in seven (7) locations. Presidential Regulation No. 18/2016 was subsequently revoked and replaced by Presidential Regulation No. 35 of 2018 on the Acceleration of the Development of Waste-Based Power Plants Using Environmentally Friendly Technology (“Presidential Regulation No. 35/2018”). Through Presidential Regulation No. 35/2018, The coverage area for the acceleration of PLTSa development has been expanded to 12 (twelve) regions, including DKI Jakarta, Bekasi City, Bandung City, Denpasar City, and Manado City.

Nevertheless, Presidential Regulation No. 35/2018 was considered ineffective. In 2023, the total waste accumulation in Indonesia reached 56.63 million tons per year. Of this amount, only 39.01% was properly managed, while the remaining 60.99% remained unprocessed and was disposed of through open dumping. This situation has caused environmental pollution, environmental damage, and public health issues, resulting in a waste emergency, particularly in urban areas. To address these issues, the government issued Presidential Regulation Number 109 of 2025 on the Management of Urban Waste through the Conversion of Waste into Renewable Energy Using Environmentally Friendly Technology (“Presidential Regulation No. 109/2025”), which revoked Presidential Regulation No. 35/2018.

Presidential Regulation No. 109/2025 was issued to address waste generation and accumulation through the Conversion of Waste into Renewable Energy Using Environmentally Friendly Technology (“PSE”), enabling waste to be utilized to support national energy security. PSE is implemented through the following:

• Environmentally Friendly Technology-Based Waste-to-Electricity Plants (“PSEL”)
• Environmentally Friendly Technology-Based Waste-to-Renewable Bioenergy Plants (“PSE Bioenergy”);
• Environmentally Friendly Technology-Based Waste-to-Renewable Fuel Plants (“PSE Renewable Fuel”); and
• Other by-products of PSE.

This article will discuss key changes in Presidential Regulation No. 109/2025 compared to Presidential Regulation No. 35/2018, with a more in-depth discussion on PSEL.

Key Changes in Presidential Regulation No. 109/2025

Expansion of Waste Management Methods

In contrast to Presidential Regulation No. 18/2016 and Presidential Regulation No. 35/2018, which were limited to converting waste into electricity through PLTSa, Presidential Regulation No. 109/2025 broadens the scope of waste processing into four (4) forms: electricity, bioenergy, renewable fuels, and other by-products.

According to Article 27 of Presidential Regulation No. 109/2025, PSE Bioenergy includes biomass and biogas. PSE Bioenergy products can be utilized for self-consumption and/or sold to the public as a substitute for fossil fuels. Furthermore, pursuant to Article 28 of Presidential Regulation No. 109/2025, processed waste can produce PSE Renewable Fuel in the form of liquid fuel, which may be used for self-consumption and/or sold for:

1. Power plants;
2. Transportation;
3. Other uses.

For other PSE by-products, their designation shall be determined by the minister responsible for energy affairs.

Regional Criteria for PSEL Implementation

Presidential Regulation No. 18/2016 and Presidential Regulation No. 35/2018 focus on accelerating the development of PLTSa in designated areas. Meanwhile, through Presidential Regulation No. 109/2025, the government emphasizes that the implementation of PSEL must be based on the fulfillment of certain criteria, not solely on location. Article 4 of Presidential Regulation No. 109/2025 regulates the criteria for regencies/cities eligible to implement PSEL, as follows:

1. The availability of waste volume distributed by the local government to PSEL is at least 1,000 (one thousand) tons/day during the PSEL operational period;
2. The availability of the Regional Revenue and Expenditure Budget (“APBD”) allocated and realized by the Regional Government for waste management, including the collection and transportation of waste from the source to the PSEL location;
3. Availability of land for waste management and PSEL construction; and
4. Commitment to the formulation of regional regulations on sanitation service fees.

Article 9 of Presidential Regulation No. 109/2025 further explains that the availability of waste volume as referred to in Article 4 letter a includes:

1. Household waste and waste similar to household waste in accordance with the provisions of laws and regulations; and
2. Waste originating from waste accumulation (timbulan sampah) and waste deposits (timbunan sampah).

The definition of household waste and waste similar to household waste is regulated in Government Regulation No. 81 of 2012 on the Management of Household Waste and Waste Similar to Household Waste (“GR No. 81/2012”). According to Article 1, Point 1 of GR No. 81/2012, household waste refers to waste generated from daily household activities, excluding human excreta and specific waste. Meanwhile, waste similar to household waste refers to household-type waste originating from commercial areas, industrial areas, special zones, social facilities, public facilities, and/or other facilities.

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The operation of PLTSa currently faces various challenges, particularly regarding the insufficient availability of domestic waste to ensure sustainable operation. Meanwhile, PLTSa technology requires a consistent volume of waste in order to operate efficiently. Therefore, the establishment of a minimum waste supply criterion of 1,000 (one thousand) tons per day by the regional government is a crucial initial step to guarantee sustainable and efficient PLTSa operation, while maximizing its impact on addressing waste emergencies. Moreover, the criteria set forth in Presidential Regulation No. 109/2025 create opportunities for expanding PSEL implementation to other regions, provided that the stipulated requirements are met, so that waste management coverage no longer limited to specific areas.

Stages of PSEL Implementation

Presidential Regulation No. 35/2018 stipulates that in the implementation of waste management, district/city governments may, either individually or jointly, enter into partnerships with waste management operators. Such partnerships are formalized through agreements between the district/city government and the respective waste management business entity. Furthermore, Article 6 of Presidential Regulation No. 35/2018 provides that, in accelerating the development of PLTSa, governors or mayors may assign Regional-Owned Enterprises (“BUMD”) to implement the projects in accordance with the laws and regulations governing BUMD management, or conduct a competitive selection of business entities following the provisions of laws and regulations on government procurement of goods and/or services or public-private partnership arrangements in infrastructure provision. Nevertheless, Presidential Regulation No. 35/2018 does not provide detailed provisions regarding the stages of PSEL implementation.

Presidential Regulation No. 109/2025 stipulates in detail that the implementation of PSEL shall be carried out in stages of planning and implementation.  The implementation stage includes:

• Designation of regencies/cities
  In the designation of regencies/ciriess, the regional government submits a statement of readiness for the development of PSEL to the minister responsible for environmental protection and management, accompanied by the following requirements:

1. Fulfillment of the criteria set forth in Article 4 (see the explanation of the criteria above);
2. Integration of PSEL development into regional planning documents and the regional waste management master plan; and
3. Conducting public consultations with communities around the proposed PSEL site.

The minister responsible for environmental protection and management shall verify and evaluate the readiness of the regional government, involving the ministers responsible for domestic affairs and energy. Selected regencies/cities shall be determined by the minister responsible for environmental protection and management. The results of this designation will serve as the basis for conducting technical and economic feasibility studies as well as the selection of PSEL Business Entity Operators (“BUPP PSEL”).

• Selection of BUPP PSEL
  The selection of BUPP PSEL is carried out by BPI Danantara, which will be elaborated in the following section.
• Cooperation Agreement
  The cooperation agreement is concluded between the Regional Government and the BUPP PSEL. The agreement shall, at a minimum, include provisions:

1. the availability of land for use (pinjam pakai) without charge;
2. readiness and commitment for waste collection and transportation;
3. the duration of the cooperation;
4. defaults in the implementation of the cooperation;
5. compensation in the event that waste availability does not meet the required standards during the cooperation; and
6. the status of assets after the cooperation period.

• Fulfillment of Permits Prior to Commencing Construction
  The fulfillment of permits prior to commencing construction shall be carried out through the Online Single Submission (OSS) system in accordance with the provisions of laws and regulations governing risk-based business licensing.
• Power Purchase Agreement (“PPA”)
  Article 5 of Presidential Regulation No. 109/2025 explicitly stipulates that PT PLN (Persero) is mandated to purchase electricity generated by PSEL. This provision differs from Presidential Regulation No. 35/2018, under which the assignment to PT PLN (Persero) to purchase electricity from PLTSa had to be proposed in advance by the governor or mayor, in accordance with their respective authorities, to the Minister of Energy and Mineral Resources. The Power Purchase Agreement (PPA) is entered into between PT PLN (Persero) and BUPP PSEL to govern the electricity purchase by PT PLN (Persero).

Whereas the implementation stage includes:

• Construction, which is carried out by the BUPP PSEL and must be periodically reported to the minister responsible for governmental affairs in the energy sector;
• Fulfillment of permits during and/or after construction through the OSS system, in accordance with the provisions of laws and regulations governing risk-based business licensing; and
• Operation

PSEL commences commercial operation after:

• obtaining an operational feasibility certificate from the minister responsible for governmental affairs in the energy sector; and
• the signing of the PSEL commercial operation minutes by PT PLN (Persero) and BUPP PSEL with an operational period of 30 (thirty) years.

During the operational phase, the BUPP PSEL shall:

• construct, operate, and maintain the PSEL;
• sell electricity to PT PLN (Persero) as stipulated in the PPA;
• implement pollution and/or environmental damage control in accordance with applicable laws and regulations; and
• prepare annual reports consisting of waste processing and PSEL operation reports.

Regulation of the Role of the Daya Anagata Nusantara Investment Management Agency (“BPI Danantara”) in PSEL

In 2025, through Law No. 1 of 2025 on State-Owned Enterprises (“SOE Law”), the President delegated part of his authority over the management of state-owned enterprises (SOE) to BPI Danantara. In exercising its mandate, the SOE Law grants BPI Danantara the authority to establish an investment holding and an operational holding. The investment holding is primarily tasked with managing investments and optimizing assets to enhance investment value. Whilst, the operational holding is responsible for overseeing the operational management of SOEs.

In the implementation of PSEL under Presidential Regulation No. 109/2025, BPI Danantara plays an active role. Article 5 of the Regulation stipulates that BPI Danantara, through its investment holding, operational holding, and/or SOE and/or its subsidiaries, shall carry out the selection of BUPP PSEL and/or undertake investments in the organization of PSEL that are commercially, financially, and risk-management feasible. In addition, BPI Danantara is also responsible for conducting technical and economic assessments related to PSEL implementation.

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BPI Danantara, through its investment holding, operational holding, and/or SOE and/or its subsidiaries, prepares technical and economic assessments for the development of PSEL in regions designated by the minister responsible for environmental protection and management. These assessments include:

• the volume of waste and the calorific value that can be generated from waste processing;
• the suitability and availability of the PSEL site;
• the availability of supporting systems for PSEL sustainability, including waste collection and transportation systems;
• identification, mitigation recommendations, and allocation of risks.

In relation to the selection of BUPP PSEL, BPI Danantara, through its investment holding, operational holding, and/or SOE and/or its subsidiaries, conducts the selection of BUPP PSEL in accordance with the established criteria and based on the provisions for investment cooperation implementation for SOE and/or its subsidiaries. In the event that no participants register for the BUPP PSEL selection, or no participants meet the criteria, SOE and/or its subsidiaries, through BPI Danantara, shall submit a report on the results of the BUPP PSEL selection to (i) the Minister responsible for coordination, synchronization, and control of governmental affairs in the field of environmental protection and management; (ii) the Minister responsible for environmental protection and management; (iii) the Minister responsible for energy; and (iv) the Minister responsible for domestic governmental affairs. This report shall then be followed up with a coordination meeting to facilitate cooperation between the regional government and interested business entities in becoming BUPP PSEL.

Provisions Governing the Criteria for PSEL Business Operators

Presidential Regulation No. 35/2018 does not specifically regulate the criteria for business entities that may be appointed to develop PLTSa in cooperation with regional governments. In contrast, Presidential Regulation No. 109/2025 clearly stipulates the criteria for BUPP PSEL that are eligible to participate in the selection process conducted by BPI Danantara. The minimum criteria for BUPP PSEL eligible to participate in this selection process include:

• possessing proven and up-to-date PSEL technology in accordance with environmentally friendly technological developments and suitable for the type of waste to be processed;
• having sufficient financial capacity and fulfilling investment obligations; and
• having experience in PSE and complying with all applicable regulations and standards.

Perpres No. 109/2025 also stipulates that, under certain circumstances, the selection of BUPP PSEL may be conducted through a direct appointment mechanism. The criteria for such circumstances include:

• there is only one participant who meets the criteria;
• the location meets the conditions of a waste emergency that requires immediate handling and is determined by the minister responsible for environmental protection and management;
• there is a PSEL developer previously appointed by the regional government before the enactment of Presidential Regulation No. 109/2025, and the previous appointment has been terminated in a manner that is final and binding on the parties involved.

Duration of the PPA

Presidential Regulations No. 35/2018 and No. 109/2025 both stipulate that the purchase of electricity by PT PLN (Persero) from BUPP PSEL must be formalized through a PPA. Nevertheless, Presidential Regulation No. 35/2018 does not specify the duration of the PPA. In contrast, Presidential Regulation No. 109/2025 explicitly states that the PPA shall have a term of 30 (thirty) years, commencing from the date the PSEL is declared to have reached commercial operation. This PPA term may be extended in accordance with the provisions of the Minister of Energy and Mineral Resources Regulation No. 5 of 2025 on Guidelines for Power Purchase Agreements from Power Plants Utilizing Renewable Energy Sources.

With the establishment of this PPA term, it implies that the regional government must ensure that the minimum waste supply of 1,000 tons per day is consistently met throughout the duration of the PPA, which is at least 30 (thirty) years.

Electricity Purchase Price

Presidential Regulation No. 35/2018 regulates that the electricity purchase price by PT PLN (Persero) is determined based on the capacity of the PLTSa sold to PT PLN (Persero) as follows:

• For capacities up to 20 MW (twenty megawatts), the price is set at USD 13.35 cents/kWh for interconnection to high voltage, medium voltage, or low voltage networks; or
• For capacities exceeding 20 MW (twenty megawatts) interconnecting to high or medium voltage networks, the purchase price (USD cents/kWh) is calculated as Purchase Price = 14.54 − (0.076 × PLTSa capacity sold to PT PLN (Persero)).

The electricity purchase price by PT PLN (Persero) includes all costs for network procurement from the PLTSa to the PT PLN (Persero) grid. This purchase price is applied in the PPA without negotiation and without price escalation.

In Presidential Regulation No. 109/2025, the purchase price of electricity is no longer determined based on capacity. In Presidential Regulation No. 109/2025, the purchase price of electricity is set at USD 0.20 (twenty US cents) per kWh (kilowatt per hour) for all capacities. Furthermore, the electricity purchase price by PT PLN (Persero) under Presidential Regulation No. 109/2025 excludes the cost of electricity infrastructure procurement provided by PT PLN (Persero). Article 19 paragraph (6) of Presidential Regulation No. 109/2025 further stipulates that electricity purchase transactions by PT PLN (Persero) shall be conducted under the following conditions:

• The price is set in the PPA without negotiation and without price escalation;
• The price becomes effective once the PSEL is declared to have achieved commercial operation in accordance with the PPA schedule;
• No fines or penalties (take-and-pay) shall apply if the contracted capacity is not achieved due to technical issues beyond the control of the BUPP PSEL or insufficient waste supply from the regional government; and
• Priority access (must-dispatched) to the PT PLN (Persero) grid, in accordance with the agreed annual contracted energy.

Notably, provisions (iii) and (iv) above were not explicitly regulated under Presidential Regulation No. 35/2018.

Article 20 of Presidential Regulation No. 109/2025 stipulates that if the assignment of electricity procurement from PSEL by PT PLN (Persero) results in an increase in basic power generation costs, including the cost of constructing an electricity network from the PSEL location to the PLN network, PT PLN (Persero) is entitled to receive compensation for all costs incurred, and payment of such compensation shall be made in accordance with the provisions of laws and regulations.

Elimination of Waste Processing Service Fee Assistance to Regional Governments

Presidential Regulation No. 35/2018 stipulates that the funding required to accelerate the development of PLTSa shall come from the APBD and may be supported by the State Budget (“APBN”) and/or other legitimate sources in accordance with the provisions of laws and regulations. Funding sourced from the APBN is used to subsidize waste management service costs for local governments, with a maximum amount of Rp500,000 (five hundred thousand rupiah) per ton of waste. Nevertheless, this provision was subsequently repealed in Presidential Regulation No. 109/2025.

Legal Implications of Presidential Regulation No. 109/2025

With the issuance of Presidential Regulation No. 109 of 2025, the implementation of PSEL projects that commenced prior to its enactment shall remain governed by the provisions of Presidential Regulation No. 35 of 2018. Such ongoing PSEL implementations include projects in which:

• the regional government has designated a PSEL developer;
• a cooperation agreement between the regional government and the PSEL developer was signed prior to the enactment of this Regulation; and/or
• PPA between PT PLN (Persero) and the PSEL developer was executed prior to the enactment of Presidential Regulation No. 109 of 2025.

Nevertheless, if the implementation of a PSEL project fails to convert waste into electrical energy, significantly reduce waste volume, and/or shorten the waste processing time using environmentally sound and proven technology, the regional government, PSEL developer, and/or PT PLN (Persero) may adopt the provisions of Presidential Regulation No. 109/2025, provided that the prior process has been formally terminated and such termination is final and binding among the parties.

The issuance of Presidential Regulation No. 109/2025 is expected to promote the sustainable utilization of waste as an energy source as part of efforts to address the waste emergency and environmental pollution. This regulation is also expected to resolve various challenges in the development of waste-based power plants. In addition, with the implementation of a fixed tariff for 30 years, this Presidential Regulation is expected to provide legal and financial certainty for investors.

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Law:

• Law No. 18 of 2008 on Waste Management
• Presidential Regulation Number 18 of 2016 on the Acceleration of Waste-Based Power Plant Development in DKI Jakarta Province, Tangerang City, Bandung City, Semarang City, Surakarta City, Surabaya City, and Makassar City
• Presidential Regulation No. 35 of 2018 on the Acceleration of the Development of Waste-Based Power Plants Using Environmentally Friendly Technology
• Presidential Regulation Number 109 of 2025 on the Management of Urban Waste through the Conversion of Waste into Renewable Energy Using Environmentally Friendly Technology
• Law No. 1 of 2025 on State-Owned Enterprises
• Minister of Energy and Mineral Resources Regulation No. 5 of 2025 on Guidelines for Power Purchase Agreements from Power Plants Utilizing Renewable Energy Sources

News or Article:

• Merdeka, Terungkap! PLTSa Serang Hadapi Krisis Pasokan Sampah, Bagaimana Nasib Proyek Energi Bersih dated 2 October 2025, https://www.merdeka.com/peristiwa/terungkap-pltsa-serang-hadapi-krisis-pasokan-sampah-bagaimana-nasib-proyek-energi-bersih-476043-mvk.html?page=3, accessed on 2 November 2025