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Waste & Pollution

Updated waste to energy rules link the circular economy and clean power

By Sirkularium Editorial Team, 9 min read

Municipal waste processing facility

Presidential Regulation 109/2025 replaces a seven-year-old framework that produced only two working plants out of twelve planned, setting a fixed tariff, a firm approval timeline, and a lower waste threshold to try to make the next round of projects actually get built.

At a glance
1,000 tonnes/day
Minimum waste feedstock a local government must guarantee to qualify for a plant
US$0.20/kWh
Fixed tariff PLN pays for electricity generated, locked for 30 years with no escalation
10 business days
Window PLN has to sign a power purchase agreement once a developer's licensing is complete
2 of 12
Facilities that became operational under the prior 2018 regulation over six years

A new legal foundation for waste to energy

Indonesia has replaced the regulatory backbone of its waste-to-energy programme. Presidential Regulation No. 109 of 2025, signed by President Prabowo Subianto on 10 October 2025, supersedes Presidential Regulation No. 35 of 2018, which the legal community had come to regard as too weak to drive projects from paper to construction. The new rule, eight chapters and 33 articles long, folds in and replaces two other regulations as well, on marine waste and on national household waste strategy, consolidating what had been three separate legal instruments into one.

Then-Minister of Environment Hanif Faisol Nurofiq, who signed off on the regulation before the April 2026 cabinet change that brought in current minister Mohammad Jumhur Hidayat, described the shift in direct terms.

"Penanganan sampah menjadi energi terbarukan ini merupakan langkah nyata menuju transformasi sistem pengelolaan sampah nasional yang berbasis teknologi ramah lingkungan," he said, meaning that converting waste into renewable energy is a concrete step toward transforming the national waste management system around environmentally sound technology.

The regulation is explicit that waste-to-energy output is not limited to electricity. Facilities can also produce bioenergy, renewable fuel oil, and other by-products, giving developers more than one revenue stream to work with depending on local waste composition.

What the regulation actually changes

Three mechanical changes distinguish PR 109/2025 from its predecessor. First, PLN, the state utility, now pays a fixed feed-in tariff of US$0.20 per kilowatt-hour, locked for 30 years from the commercial operation date, with no escalation clause. Second, once a developer has satisfied its pre-construction licensing requirements through Indonesia's Online Single Submission system, PLN must execute the power purchase agreement within 10 business days, a hard deadline that did not exist before. Third, regional governments are now required to provide land free of charge for both construction and operation, removing what had often been a slow, locally negotiated step.

Institutionally, the regulation centralises coordination under BPI Danantara, the state investment management agency, which now selects and prepares the business entities that will build and run each facility, known as BUPP PSEL. Revenue also flows differently: rather than developers collecting payments from both PLN and regional governments separately, as under the 2018 framework, all revenue now comes through a single agreement with PLN, with the government committing to compensate PLN if generation costs rise, treating waste-to-energy as a public service obligation. The threshold for eligibility has also been set at a minimum of 1,000 tonnes of household waste per day, which analysts say makes major metropolitan areas across Indonesia's main islands, plus a number of medium-sized cities, newly viable for a plant, up from an initial focus limited to 12 designated areas.

Why the tariff number matters

A fixed price of US$0.20 per kilowatt-hour sounds like a technical detail, but it is the number that determines whether financing a plant is realistic. It is, by design, well above Indonesia's average generation cost, and according to IDN Financials it sits notably higher than the US$0.12 to US$0.15 per kilowatt-hour range currently paid for solar power under separate renewable energy rules. That gap is deliberate: waste-to-energy plants carry higher capital and operating costs than solar arrays, and a below-cost tariff would guarantee that no developer bids. But it also means the state, ultimately the central budget, absorbs a larger cost per unit of electricity than it would from other renewable sources, and legal analysts at Ashurst Perkins Coie note that the mechanism for how PLN's compensation for that cost gap will actually work in practice has not yet been fully clarified or tested.

The execution gap the new rule is trying to close

The clearest justification for a new regulation is the record of the old one. Under PR 35/2018, only two of twelve planned waste-to-energy facilities became operational over roughly six years, a gap that illustrates how much execution risk sits between a signed regulation and a running plant. PR 109/2025 addresses several of the specific frictions that slowed that earlier round: the old approval chain required sign-off from a district legislature, a regent, a provincial government and legislature, multiple ministries, and PLN in sequence, while the new structure compresses that into a single coordinated process anchored by Danantara.

Two risks carried over regardless of the new legal text. Local governments still have to reliably deliver hundreds of tonnes of sorted, consistent waste every day, and analysts caution that effective coordination between national agencies and municipal collection systems has been uneven in other public-private infrastructure sectors in Indonesia before. And because the regulation sets a feedstock volume requirement without mandating upstream waste segregation, and Indonesia's waste stream is estimated at 55 to 60 percent organic material, there is a real possibility that plants end up burning unsorted mixed waste, which is both less efficient and more polluting than processing a properly sorted residual stream. Environmental impact assessments, meanwhile, now receive automatic approval within two months under the accelerated process, a change that speeds up permitting but leaves less room for the kind of scrutiny a slower review would provide.

Reading it well

Waste to energy is one tool within a larger hierarchy, not a default answer to a city's waste problem. It works best where reduction, source sorting, and material recovery have already captured what they can, leaving a genuinely residual stream suited to energy recovery. Built too early, or sized without matching local waste composition, a plant can pull material away from recycling systems that need it and lock a city into feeding a furnace for the length of a 30-year tariff commitment. The government's own target, tied to Indonesia's 2060 net zero ambitions, treats these facilities as one contributor among several, alongside refuse-derived fuel, pyrolysis, composting, and community-level sorting.

Sirkularium's view

For government and public institutions, PR 109/2025 removes several of the specific obstacles that stalled the previous round of projects, a fixed and bankable tariff, a hard deadline for PLN to sign, and land provided without cost. That is a meaningfully stronger starting position than 2018. What it does not resolve on its own is upstream waste sorting, the operational discipline needed to guarantee daily feedstock volumes, and clarity on how PLN's cost compensation will actually be funded and audited over three decades. Local governments preparing to qualify for a facility would do well to invest in source segregation infrastructure now, both because it protects recycling markets from being starved of material and because a cleaner feedstock stream makes any eventual plant cheaper to run and easier to justify environmentally. The two-out-of-twelve record under the old rule is the benchmark this regulation now has to beat, and the pace of the accelerated licensing chain, rather than the tariff number itself, is likely to be the clearest early signal of whether it will.

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Sirkularium

Sirkularium is a thought-leadership and advisory institution accelerating the circular transition across solid waste, water, and energy, working with government and public institutions.

In waste and pollution, Sirkularium helps design collection, sorting, and recovery systems, draft policy and roadmaps, and turn waste into a managed resource.

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