Govt to subsidize electricity from waste-to-energy projects

By Calvin Purba

The Indonesian government, as part of efforts to improve the economic viability of waste-to-energy (WTE) projects, will provide subsidies for electricity generated from such facilities.

Rosan Perkasa Roeslani, CEO of Danantara, Indonesia’s sovereign wealth fund, said the subsidy scheme will follow the planned removal of tipping fees—currently paid by regional governments—and the increase in WTE electricity tariffs. Both changes are expected to be formalized in the upcoming revision of Presidential Regulation No. 35/2018.

“With this new structure, previously regional governments had to provide tipping fees as part of the WTE program. But under the new structure, that requirement will no longer exist,” Rosan said during the National Coordination Meeting on Waste-to-Energy Management at Wisma Danantara Indonesia on Tuesday (September 30). “All of that will now be absorbed directly by PLN, and PLN will then receive subsidies from the central government.”

Rosan did not disclose the amount of subsidies to be provided.

The subsidies will be channeled through state-owned electricity utility PT PLN, which will purchase all electricity produced by WTE facilities at a fixed tariff of US$0.20 per kilowatt hour (kWh), according to Coordinating Minister for Food Affairs Zulkifli Hasan. Once the revised regulation is issued, project permitting is expected to take three to six months, followed by construction periods of around 12 to 18 months.

Looking ahead, Danantara plans to develop 33 WTE power projects across the country. These projects are still awaiting the regulatory revisions, which are set to include key changes such as the elimination of tipping fees and a new tariff mechanism.

Read also : Danantara targets waste-to-energy plant auctions by end-2025

Speaking at the same event, Danantara Managing Director of Investment Stefanus Ade Hadiwidjaja said the projects will be developed in collaboration with local governments, the Ministry of Environment and Forestry, and the Ministry of Energy and Mineral Resources (ESDM).

“Danantara will play a role in selecting the right partners and technologies, while also co-investing in the development of these facilities,” Stefanus said. “The main goals of the project are to clean up the environment, reduce the waste emergency, and convert waste into energy using optimal technology.”

The technology of choice will be incineration, and the energy generated will be fully absorbed by PLN.

Stefanus estimated that developing a WTE facility capable of processing 1,000 tons of waste per day would require investment of between Rp2 trillion and Rp3 trillion, including supporting infrastructure. He added that Danantara will open a competitive tender for private firms, technology providers, and regionally owned enterprises (BUMD) interested in participating.

“The partner selection process will be conducted transparently. We will invite technology partners from both domestic and international players and encourage the participation of local governments and BUMDs,” he said.

The 33-city WTE project is expected to bring significant environmental and economic benefits. During the construction phase, each project could employ between 500 and 1,000 workers, with the build period estimated at 18 to 24 months. Once operational, the need for operational staff will also drive further job creation, contributing to a broader multiplier effect in local economies.

The Indonesian Independent Power Producers Association (APLSI) welcomed the WTE initiative but highlighted key challenges such as land availability in urban areas, the reliability of municipal waste supply, water access, emissions control, and the handling of hazardous residue.

Editing by Reiner Simanjuntak