Presidential Regulation 109/2025 on Waste-to-Energy: Legal Analysis and Regulatory Framework 

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Executive Summary

Presidential Regulation Number 109 of 2025 concerning Urban Waste Management Through Processing Waste into Renewable Energy Based on Environmentally Friendly Technology represents fundamental reform of Indonesia's waste-to-energy regulatory framework. Enacted to replace Presidential Regulation 35/2018, this regulation addresses implementation barriers encountered under previous framework including insufficient minimum capacity thresholds, unclear payment mechanisms, limited technology scope, and inadequate coordination among government agencies. The new regulation establishes comprehensive legal foundation for waste-to-energy project development spanning thermal conversion, biological treatment, biochemical processes, and biofuel production, while introducing enhanced commercial frameworks supporting private investment and public-private partnership structures.¹

This legal analysis examines Presidential Regulation 109/2025 from regulatory compliance, project development, and commercial implementation perspectives. The regulation introduces several material changes affecting waste-to-energy project structuring including increased minimum waste volume requirements from 700 tons per day under previous regulation to 1,000 tons per day, expanded technology definitions encompassing broader range of conversion processes, centralized payment mechanisms improving project bankability, enhanced feed-in tariff structures supporting commercial viability, and strengthened institutional coordination frameworks. These modifications respond to limited implementation success under Perpres 35/2018, which resulted in few operational projects despite Indonesia's substantial municipal solid waste generation estimated at approximately 175,000 tons daily nationwide.

From business and investment perspectives, Presidential Regulation 109/2025 creates improved regulatory environment for waste-to-energy infrastructure development through clearer legal frameworks, enhanced commercial terms, and streamlined approval processes. The regulation applies to regional governments meeting minimum waste volume thresholds, project developers including private companies and state-owned enterprises, investors financing waste-to-energy infrastructure, and stakeholders across waste management and renewable energy value chains. Understanding regulatory requirements, compliance obligations, project structuring options, and approval processes proves essential for parties pursuing waste-to-energy opportunities under this new framework. This analysis provides comprehensive examination of regulatory provisions, legal implications, implementation requirements, and strategic considerations for waste-to-energy projects in Indonesian context.

The following sections analyze Presidential Regulation 109/2025's legal framework, key regulatory provisions, implementation requirements, project development procedures, commercial and financial structures, environmental and technical standards, institutional coordination mechanisms, and compliance obligations. Analysis draws exclusively on official regulation text, government announcements, and authoritative legal interpretations, avoiding speculation or unverified information. All regulatory references cite official sources ensuring accuracy and reliability for legal compliance and business planning purposes.

Regulatory Background and Legislative Context

Presidential Regulation 109/2025 represents culmination of efforts addressing implementation challenges encountered under previous waste-to-energy regulatory framework established through Presidential Regulation 35/2018. The earlier regulation introduced Indonesia's first comprehensive framework for waste-to-energy development, establishing principles for regional government obligations, technology standards, commercial arrangements, and institutional coordination. However, practical implementation revealed several structural limitations including minimum capacity thresholds proving too low for commercial viability, payment mechanisms creating revenue uncertainty discouraging private investment, technology scope excluding emerging conversion processes, and coordination frameworks insufficient for complex multi-stakeholder projects spanning municipal waste management, energy generation, and environmental protection domains.²

Legislative development of Presidential Regulation 109/2025 occurred through inter-ministerial consultation process involving Ministry of Environment and Forestry as lead agency, Ministry of Energy and Mineral Resources for electricity sector aspects, Ministry of Home Affairs for regional government implementation, Ministry of Finance for fiscal and payment mechanisms, and National Energy Council for policy alignment with national energy strategies. This consultation process identified key regulatory gaps requiring reform including inadequate minimum scale requirements resulting in economically unviable projects, unclear payment responsibility creating bankability challenges, limited technology definitions restricting innovation, and fragmented approval processes extending project development timelines. The new regulation addresses these gaps through targeted reforms while maintaining continuity with established waste management and renewable energy policy frameworks.

Legal hierarchy positioning of Presidential Regulation 109/2025 within Indonesian regulatory framework establishes its authority and relationship with other applicable laws. Presidential regulations (Peraturan Presiden or Perpres) constitute executive regulations issued by President implementing higher-level laws including Law 18/2008 on Waste Management and Law 30/2007 on Energy. Presidential Regulation 109/2025 operates subordinate to these laws while providing detailed implementation framework for waste-to-energy development. The regulation's provisions must align with higher-level legal requirements while ministerial regulations issued by relevant ministers provide further technical specifications implementing presidential regulation provisions. This hierarchical structure requires waste-to-energy projects to comply with multiple regulatory levels including laws establishing fundamental principles, presidential regulations providing implementation frameworks, and ministerial regulations specifying technical standards and procedures.

Regulatory objectives stated in Presidential Regulation 109/2025 encompass multiple policy goals including reducing municipal solid waste sent to landfills, generating renewable energy from waste resources, reducing greenhouse gas emissions from waste decomposition, creating economic value from waste materials, supporting national renewable energy targets, and demonstrating sustainable waste management practices. These objectives reflect integration of environmental, energy, and economic policy priorities requiring balanced implementation addressing sometimes competing considerations. Legal interpretation of regulatory provisions should consider these stated objectives, applying teleological interpretation principles favoring interpretations advancing stated policy goals while maintaining compliance with literal regulatory requirements where provisions establish clear obligations or restrictions.³

Scope of Application and Jurisdictional Requirements

Presidential Regulation 109/2025 establishes specific scope of application defining which jurisdictions, waste types, technologies, and projects fall within regulatory framework. Understanding scope provisions proves essential for determining regulatory applicability and compliance obligations. The regulation applies to urban waste management in regions meeting minimum waste volume thresholds, encompasses renewable energy generation from municipal solid waste through specified technology processes, and governs relationships among regional governments, project developers, energy off-takers, and regulatory authorities. Scope limitations exclude certain waste types including hazardous waste, industrial process waste, and agricultural residues unless specifically integrated with municipal solid waste streams meeting regulatory definitions and requirements.

Minimum waste volume requirement of 1,000 tons per day represents fundamental threshold determining regulatory applicability. This requirement applies at regional level, whether single municipality, regency, or integrated waste management zone combining multiple jurisdictions. The regulation permits jurisdictional consolidation where individual regions generate insufficient waste volumes, enabling smaller municipalities to collaborate establishing integrated waste management zones meeting minimum threshold collectively. Legal structuring of such collaborative arrangements requires inter-regional agreements establishing governance mechanisms, cost sharing arrangements, waste supply commitments, and dispute resolution procedures. These agreements must comply with Law 23/2014 on Regional Government provisions governing inter-regional cooperation, requiring regional parliamentary approval and Ministry of Home Affairs notification.²

Technology definitions within Presidential Regulation 109/2025 expand substantially beyond previous framework's thermal conversion focus. The regulation recognizes four primary technology categories including thermal conversion processes transforming waste through high-temperature treatment producing electricity, heat, or synthesis gas; biological treatment employing microorganisms to decompose organic waste producing biogas or other energy carriers; biochemical processes using chemical or biological catalysts converting waste into fuels or energy products; and biofuel production generating liquid or gaseous fuels from organic waste components. This technology-neutral approach permits innovation and adaptation to local waste characteristics, though all technologies must meet environmental performance standards for emissions, residue management, and overall environmental impact established through separate ministerial regulations.

Jurisdictional requirements for regulation implementation obligate regional governments meeting minimum thresholds to develop waste-to-energy programs as part of regional waste management strategies. These obligations include conducting waste characterization studies quantifying generation rates, composition, and characteristics; preparing waste-to-energy feasibility studies assessing technical and economic viability; developing procurement strategies for private sector participation; allocating budget for regional contributions to project costs; establishing waste supply commitments ensuring feedstock availability; and coordinating with relevant national and regional agencies throughout project development and implementation. Failure to fulfill these obligations may result in administrative sanctions including budget allocation restrictions or ministerial intervention under waste management law provisions, though practical enforcement remains subject to political and administrative constraints.

Project Development Framework and Approval Processes

Presidential Regulation 109/2025 establishes structured project development framework governing progression from initial planning through construction, commissioning, and commercial operations. This framework integrates requirements from multiple regulatory domains including waste management, environmental protection, energy sector regulation, and public procurement or public-private partnership frameworks. Understanding sequential approval requirements, responsible agencies, timelines, and documentation proves essential for project developers navigating regulatory processes. The regulation introduces streamlined coordination mechanisms intended to reduce approval timelines compared to previous fragmented approaches requiring separate applications to multiple agencies without coordinated review processes.

Initial planning phase requires regional governments to prepare waste-to-energy development plans integrated with regional waste management master plans and regional energy plans. These planning documents must demonstrate waste generation meeting minimum thresholds, identify suitable technology approaches based on waste characteristics, establish preliminary project configurations and capacity, assess environmental and social impacts requiring management, and determine procurement approaches for private sector participation. Planning documents require approval from regional parliaments as part of regional development planning processes, with technical review by Ministry of Environment and Forestry for waste management aspects and Ministry of Energy and Mineral Resources for energy generation components. This planning approval constitutes prerequisite for proceeding to detailed feasibility studies and project procurement processes.

Environmental impact assessment (AMDAL) requirements under Law 32/2009 on Environmental Protection and Management apply to waste-to-energy projects given scale, potential environmental impacts, and public interest considerations. AMDAL process requires preparation of environmental impact statements assessing potential effects on air quality, water resources, soil, ecology, public health, and social conditions; development of environmental management plans specifying mitigation measures and monitoring programs; public consultation enabling stakeholder input and addressing concerns; and technical review by environmental assessment commissions at appropriate governmental level. AMDAL approval constitutes mandatory prerequisite for project licensing, with approval validity typically five years requiring renewal if construction does not commence within validity period. Smaller projects potentially qualify for simplified environmental management plans (UKL-UPL) rather than full AMDAL, though waste-to-energy facilities generally exceed thresholds requiring full assessment.⁴

Procurement processes for private sector participation follow either public procurement law for government-funded projects or public-private partnership frameworks under Presidential Regulation 38/2015 for projects involving private financing. Public-private partnership approaches prove most common for waste-to-energy given capital intensity and specialized technical requirements. PPP procurement follows structured process including preliminary study demonstrating public need and PPP suitability, feasibility study assessing technical and commercial viability, government budget impact analysis, procurement preparation including tender documents, competitive tender process, evaluation and selection, contract negotiation, and transaction closing including financial commitment. Ministry of Finance through PPP unit (KPBU) provides oversight and approval at key stages, with transaction values exceeding thresholds requiring additional approvals from Ministry of National Development Planning and potentially Cabinet-level decisions for largest projects.

Energy sector licensing requirements under Ministry of Energy and Mineral Resources regulations apply to electricity generation aspects of waste-to-energy projects. Key licenses include electricity supply business license (IUPTL) authorizing electricity generation and potentially distribution activities, operational feasibility certification confirming technical readiness for commercial operation, and interconnection agreements with PLN (state electricity company) establishing technical and commercial terms for grid connection and power purchase. The regulation introduces provisions for streamlined licensing where projects meet specified technical and administrative requirements, reducing previously lengthy approval processes. However, practical implementation of streamlined procedures remains subject to ministerial regulation specifics and institutional capacity at relevant agencies, with developers advised to engage early with licensing authorities establishing clear timelines and requirements for specific project circumstances.

Commercial Framework and Financial Structures

Presidential Regulation 109/2025 introduces substantially revised commercial framework addressing bankability challenges that limited implementation under previous regulation. Central to these reforms is establishment of centralized payment mechanism through national budget allocation, enhanced feed-in tariff structure improving project economics, clarification of revenue sources and allocation, and standardization of commercial terms reducing negotiation complexity and transaction costs. These commercial framework improvements respond directly to investor and developer feedback identifying revenue uncertainty and payment risk as primary barriers to project financing and implementation. The new framework aims to provide sufficient revenue certainty and payment security enabling projects to secure commercial financing at reasonable costs.

Centralized payment structure represents fundamental shift from previous regulation where payment responsibility resided with regional governments, creating concerns about fiscal capacity and payment reliability particularly for smaller jurisdictions. Under Presidential Regulation 109/2025, waste-to-energy project payments are allocated through national budget mechanisms managed by designated ministry, providing payment assurance backed by central government fiscal capacity. This structure improves project bankability through credit enhancement from national government backing, though specific implementation details including budget allocation procedures, payment timing, and default remedies require elaboration through subsequent ministerial regulations and project-specific contracts. Legal implications include potential sovereign immunity considerations for dispute resolution, government budget appropriation requirements, and coordination between project contracts and national budget cycles.²

Feed-in tariff determination methodology under Presidential Regulation 109/2025 bases tariff levels on project cost recovery including capital costs, operating expenses, appropriate returns on investment, and risk premiums reflecting project-specific circumstances. Specific tariff levels require establishment through Ministry of Energy and Mineral Resources regulations implementing presidential regulation provisions, with tariffs potentially varying based on technology type, project scale, location, and other relevant factors affecting costs. The regulation provides for periodic tariff review and adjustment mechanisms addressing inflation, currency fluctuations, and changing cost structures over long project concession periods typically spanning 20-30 years. Tariff provisions must balance commercial viability enabling project financing with fiscal sustainability considering government payment obligations over extended periods, requiring careful analysis during tariff setting to avoid either unviable projects or excessive government costs.

Tipping fee structures complementing electricity tariffs compensate waste-to-energy facilities for waste disposal services provided to regional governments. These fees typically range from approximately IDR 200,000-500,000 per ton depending on project configuration, waste characteristics, and regional fiscal capacity, though specific fees require negotiation during project procurement reflecting particular project circumstances. Tipping fees must receive regional budget appropriation, creating potential payment risk where regional fiscal conditions deteriorate or political priorities shift. Presidential Regulation 109/2025 addresses this risk through centralized payment mechanisms, though implementation details determining whether tipping fees flow through central budget allocation or remain direct regional government obligations require clarification through ministerial regulations and project contracts. Legal documentation must clearly specify tipping fee payment responsibility, amounts, adjustment mechanisms, and remedies for non-payment protecting project economics.

Concession agreements or power purchase agreements constitute primary commercial contracts governing waste-to-energy project implementation and operations. These agreements establish parties' rights and obligations regarding waste supply, electricity purchase, payment terms, performance standards, risk allocation, and dispute resolution. Standard contract templates may emerge through ministerial guidance promoting consistency and reducing transaction costs, though projects retain flexibility adapting contracts to specific circumstances. Key commercial terms requiring negotiation include concession period typically ranging 20-30 years, capacity and minimum waste supply commitments, electricity purchase obligations and curtailment provisions, performance standards and liquidated damages, force majeure definitions and relief, change in law and regulatory change provisions, termination rights and compensation, and dispute resolution through arbitration or other mechanisms. Contracts must achieve bankable allocation of risks enabling project financing while protecting government interests and ensuring service continuity.

Technical Standards and Environmental Requirements

Presidential Regulation 109/2025 establishes framework for technical standards and environmental requirements governing waste-to-energy facility design, construction, operation, and monitoring. Specific technical standards require elaboration through ministerial regulations issued by Ministry of Environment and Forestry for waste management and environmental aspects, and Ministry of Energy and Mineral Resources for energy generation and grid connection requirements. These standards address technology performance requirements, emissions limitations, residue management, monitoring obligations, and operational practices ensuring environmental protection and public health while enabling efficient facility operations. Understanding applicable technical standards proves essential for technology selection, facility design, permitting, and ongoing compliance management.

Air emissions standards for waste-to-energy facilities establish maximum allowable concentrations for pollutants including particulate matter, sulfur dioxide, nitrogen oxides, carbon monoxide, hydrogen chloride, heavy metals, and dioxins/furans. Indonesian emissions standards for waste incineration facilities are established through Ministry of Environment regulations, with standards generally following international frameworks while adapted to local conditions. Compliance requires continuous emissions monitoring systems (CEMS) for key parameters, periodic stack testing for comprehensive pollutant assessment, and reporting to environmental authorities. Modern waste-to-energy technologies typically achieve emissions well below regulatory limits through advanced air pollution control systems including fabric filters, scrubbers, and selective catalytic reduction, though proper design, operation, and maintenance prove essential for sustained compliance.⁴

Residue management requirements address solid residues from waste-to-energy processes including bottom ash from combustion processes, fly ash captured in air pollution control systems, and other process residues. Bottom ash typically constitutes 15-25% of input waste mass, with characteristics potentially suitable for beneficial uses including construction materials, road base, or landfill cover subject to appropriate treatment and testing confirming environmental safety. Fly ash and air pollution control residues typically require hazardous waste management due to heavy metal concentrations and other contaminants, necessitating stabilization, secure landfilling, or other approved treatment. Regulatory framework for residue management follows Law 18/2008 on Waste Management and implementing regulations establishing classification criteria, management requirements, and disposal options. Waste-to-energy facilities must implement appropriate residue management systems with adequate capacity, proper handling procedures, and documentation demonstrating compliance with applicable standards.

Wastewater discharge from waste-to-energy facilities requires treatment meeting applicable standards before discharge to receiving waters or municipal sewerage systems. Wastewater sources include leachate from waste storage and handling areas, process water from air pollution control systems, cooling water blowdown, and general facility wash water. Treatment requirements depend on wastewater characteristics and receiving water or sewer system standards, typically requiring physical-chemical treatment for suspended solids and chemical contaminants, potential biological treatment for organic matter, and final polishing achieving discharge standards. Facilities must obtain wastewater discharge permits specifying discharge limits, monitoring requirements, and reporting obligations. Some facilities achieve zero liquid discharge through wastewater treatment and reuse systems, eliminating discharge while increasing water efficiency though requiring higher capital investment and operating costs.

Energy efficiency and performance standards ensure waste-to-energy facilities achieve appropriate conversion efficiencies and reliability. Thermal efficiency standards for electricity generation typically require net electrical efficiency exceeding 20-25% depending on technology and configuration, with combined heat and power applications potentially achieving 60-80% overall energy recovery. Availability and capacity factor requirements ensure reliable operations, typically specifying minimum operational availability of 85-90% and capacity factors reflecting anticipated waste supply and maintenance schedules. Performance standards affect project economics through capacity payments or performance adjustments in commercial contracts, creating financial incentives for reliable high-efficiency operations. Technical design must consider efficiency optimization balanced with capital costs, operational complexity, and maintenance requirements, with lifecycle cost analysis informing technology selection and configuration decisions.

Institutional Coordination and Implementation Mechanisms

Presidential Regulation 109/2025 establishes institutional coordination framework addressing multi-agency involvement in waste-to-energy project development and oversight. Effective implementation requires coordination among Ministry of Environment and Forestry for waste management policy and environmental standards, Ministry of Energy and Mineral Resources for energy sector regulation and licensing, Ministry of Home Affairs for regional government implementation, Ministry of Finance for fiscal policy and payment mechanisms, regional governments for waste supply and local implementation, PLN for electricity purchase and grid integration, and project developers and investors providing financing, construction, and operations. The regulation introduces coordination mechanisms including inter-ministerial working groups, centralized approval processes, and standardized procedures reducing coordination challenges encountered under previous fragmented frameworks.

Ministry of Environment and Forestry assumes lead coordinating role for waste-to-energy program implementation under Presidential Regulation 109/2025. Responsibilities include overall policy direction and program coordination, technical guidance for waste management aspects, environmental standards and compliance oversight, facilitation of regional government implementation, monitoring of program progress and results, and reporting to President on implementation status. The Ministry establishes technical working groups supporting program implementation, develops implementing regulations and guidance documents, provides technical assistance to regional governments and project developers, and coordinates with other ministries ensuring integrated approach. Effective Ministry leadership proves essential for successful implementation given complexity of multi-stakeholder coordination and need for sustained focus on program advancement.⁵

Regional government implementation obligations under Presidential Regulation 109/2025 include conducting waste assessments verifying minimum volume thresholds, preparing waste-to-energy feasibility studies, securing regional parliamentary approval for program inclusion in development plans, allocating budget for regional financial contributions, procuring private sector participation through competitive processes, providing land for facility development, ensuring waste supply through collection system improvements, coordinating with affected communities addressing concerns, and monitoring facility operations ensuring compliance with performance standards. These obligations require substantial technical, financial, and administrative capacity potentially exceeding capabilities of smaller regional governments, emphasizing importance of technical assistance, capacity building, and potentially regional consolidation enabling efficient implementation.

Monitoring and evaluation framework established under regulation requires regular reporting on implementation progress, project development milestones, facility operations performance, environmental compliance, and achievement of waste reduction and renewable energy targets. Ministry of Environment and Forestry coordinates monitoring through standardized reporting formats, periodic reviews, and annual assessments of program results. Regional governments submit progress reports documenting local implementation activities, challenges encountered, and support needs. Project developers provide operational data on waste processed, energy generated, environmental performance, and compliance with contractual obligations. This monitoring framework enables identification of implementation barriers requiring policy adjustments, technical assistance needs, or regulatory clarifications supporting program success.

Capacity building and technical assistance provisions recognize that successful implementation requires development of technical, financial, and administrative capabilities at regional government level and within implementing agencies. Ministry of Environment and Forestry, potentially with support from multilateral development institutions, provides training programs, technical guidance documents, model contracts and procedures, and direct technical assistance for priority projects. Areas requiring capacity building include waste characterization and assessment methodologies, feasibility study preparation, procurement process management, contract negotiation, environmental and technical compliance, and facility operations oversight. International experience sharing and study tours expose Indonesian stakeholders to successful waste-to-energy implementations in other countries, adapting lessons to local contexts while avoiding common implementation pitfalls.

Legal Risks and Compliance Considerations

Waste-to-energy project development and implementation under Presidential Regulation 109/2025 involves multiple legal risks requiring identification, assessment, and mitigation through appropriate contractual, structural, and operational measures. Key legal risk categories include regulatory and policy risks from potential changes in legal framework affecting project economics or obligations, permitting and licensing risks from approval delays or denials, commercial and payment risks affecting revenue certainty, environmental compliance risks from potential violations triggering penalties or operational restrictions, and force majeure risks from events beyond parties' control disrupting performance. Comprehensive legal due diligence during project development, robust contract drafting allocating risks appropriately, and proactive compliance management during operations prove essential for risk mitigation.

Regulatory change risk encompasses potential modifications to applicable laws, regulations, or policies affecting project costs, revenues, or obligations after contract execution or financial close. Changes potentially affecting waste-to-energy projects include modifications to environmental standards requiring additional pollution control equipment, feed-in tariff reductions for future projects potentially affecting renewal terms, waste management policy changes altering waste supply arrangements, or new taxes or fees increasing operating costs. Concession agreements typically include change in law provisions allocating risks between government entities and project developers, often providing compensation or tariff adjustments for adverse changes in discriminatory regulations while requiring developers to absorb general regulatory changes affecting all businesses. Legal stability agreements or clauses in investment agreements may provide additional protection for major projects, though such provisions require negotiation and government approval at appropriate levels.

Waste supply risk represents critical commercial and operational risk for waste-to-energy projects given dependence on consistent waste feedstock meeting minimum quantity and quality specifications for efficient facility operations. Factors potentially affecting waste supply include economic downturns reducing waste generation, alternative waste management programs diverting waste from energy recovery, source separation requirements removing high-calorific fractions, or regional government failure to deliver committed waste volumes. Contracts typically include minimum waste supply commitments from regional governments with compensation for shortfalls, though enforcing such provisions against government entities presents practical challenges. Mitigation measures include conservative supply forecasting, contractual commitments with meaningful remedies, multi-jurisdiction supply agreements diversifying sources, and facility design accommodating waste composition variability while maintaining performance.

Dispute resolution mechanisms in waste-to-energy contracts balance need for efficient conflict resolution with respect for government sovereignty and Indonesian legal frameworks. Options include negotiation and escalation procedures requiring senior management engagement before formal disputes, mediation using neutral third parties facilitating settlement, arbitration providing binding resolution through specialized arbitration institutions, or litigation in Indonesian courts following standard judicial procedures. International investors often prefer international arbitration, potentially under UNCITRAL rules or through institutions like Singapore International Arbitration Centre, providing neutral forums and enforceable awards under New York Convention. However, government entities face restrictions on arbitration agreements requiring approvals and meeting specified criteria under Supreme Court regulations and Attorney General guidelines. Contract negotiations must address dispute resolution mechanisms acceptable to all parties while providing workable procedures for timely conflict resolution.

Compliance management systems prove essential for managing complex regulatory obligations across environmental, energy sector, waste management, and general business requirements. Effective compliance programs include designated compliance officers with appropriate authority and resources, regular compliance audits identifying gaps and corrective needs, training programs ensuring staff understand obligations, documentation systems evidencing compliance for regulatory reporting and potential enforcement proceedings, incident investigation and reporting procedures addressing non-compliance events, and continuous improvement processes updating practices as regulations evolve. Proactive compliance management reduces regulatory violations, associated penalties, operational disruptions from enforcement actions, and reputational damage from environmental or operational incidents. For projects financed through international institutions or involving international investors, compliance with equator principles or lender environmental and social requirements adds additional layers requiring integrated management approaches.

Strategic Implications and Market Outlook

Presidential Regulation 109/2025 creates improved regulatory environment potentially accelerating waste-to-energy project development in Indonesia compared to limited implementation under previous framework. Enhanced commercial terms, centralized payment mechanisms, streamlined approval processes, and increased policy focus create more favorable conditions for private investment and project advancement. However, practical implementation success depends on multiple factors including timely issuance of implementing ministerial regulations clarifying technical and procedural details, adequate budget allocation for centralized payment mechanisms, regional government capacity and commitment for local implementation, and sustained political support maintaining program priority through inevitable implementation challenges. Market outlook remains cautiously optimistic recognizing regulatory improvements while acknowledging execution risks inherent in complex infrastructure programs.

Regional prioritization for initial project development will likely focus on largest urban centers meeting minimum waste volume thresholds with single jurisdictions, including Jakarta metropolitan area, Surabaya, Bandung, Semarang, Medan, and other major cities generating well in excess of 1,000 tons daily. These locations offer advantages including adequate waste supply, existing waste management infrastructure providing collection systems, technical and administrative capacity, potential for grid connection to major electricity networks, and political visibility supporting project advancement. Secondary implementation phase may address mid-sized cities requiring regional cooperation establishing integrated waste management zones, presenting additional coordination complexity but expanding program geographic coverage and waste reduction impacts.⁶

Technology selection trends will likely favor proven waste-to-energy technologies with extensive international operating track records reducing technology risk for investors and lenders. Mass burn incineration with moving grate combustion represents most widely deployed technology globally with extensive reference plants demonstrating reliable performance, though higher capital costs compared to some alternatives. Gasification and pyrolysis technologies offer potential advantages including lower emissions and flexible energy outputs, though fewer commercial-scale references and higher perceived technology risk may limit initial adoption absent specific project circumstances favoring these approaches. Anaerobic digestion for organic waste fractions provides lower-cost option with simpler technology, though limited to biodegradable waste requiring source separation and potentially lower energy recovery than thermal processes. Market will likely see technology diversity with selections driven by local waste characteristics, available capital, risk tolerance, and specific project objectives balancing costs, performance, and environmental considerations.

Business model evolution may see emergence of specialized waste-to-energy developers and operators distinct from traditional waste management companies or power generators. These specialized entities combine waste management expertise, energy project development capabilities, complex project structuring and financing skills, and long-term operations excellence required for successful waste-to-energy implementation. International companies with global waste-to-energy portfolios bring technology expertise and project management capabilities, while local partners provide regulatory knowledge, stakeholder relationships, and operational presence. Joint ventures or strategic partnerships combining international technology and experience with local market knowledge and networks prove common structure enabling successful project implementation. Over time, development of domestic Indonesian capabilities through knowledge transfer and capacity building may see increasing local participation in project development and operations rather than purely international technology transfer models.

Policy sustainability and long-term commitment remain critical considerations given extended project development timelines and 20-30 year concession periods. Waste-to-energy program success requires sustained policy support through multiple political administrations, adequate budget appropriations over decades, regulatory stability maintaining commercial frameworks enabling project viability, and institutional capacity maintaining effective oversight and facilitation. International experience shows that waste-to-energy development proceeds slowly requiring patient capital, long-term policy commitment, and acceptance of inevitable implementation challenges. Indonesian stakeholders should maintain realistic expectations regarding implementation pace while building institutional frameworks and project pipelines supporting sustained long-term development. Regular program reviews, stakeholder consultations, and policy adjustments based on implementation experience will strengthen frameworks and address emerging issues improving program effectiveness over time.

Frequently Asked Questions

What is the official legal reference and where can Presidential Regulation 109/2025 be downloaded?

Presidential Regulation Number 109 of 2025 concerning Urban Waste Management Through Processing Waste into Renewable Energy Based on Environmentally Friendly Technology is available for download at: https://docs.paralegal.id/PERPRES/2025/PERPRES-109-2025.pdf. Official legal database reference: https://paralegal.id/peraturan/peraturan-presiden-nomor-109-tahun-2025/

What are the key legal changes compared to previous Presidential Regulation 35/2018?

Major legal changes include increased minimum waste volume requirement from 700 to 1,000 tons per day, expanded technology scope covering thermal, biological, biochemical and biofuel processes beyond previous thermal focus, introduction of centralized payment mechanism through national budget allocation improving payment security, enhanced feed-in tariff structure providing better project economics, and strengthened institutional coordination framework. These changes address implementation barriers under previous regulation including inadequate commercial viability and unclear payment mechanisms.

Which jurisdictions are legally obligated to implement waste-to-energy programs under this regulation?

Regional governments (municipalities or regencies) generating minimum 1,000 tons daily municipal solid waste are required to develop waste-to-energy programs. Jurisdictions below this threshold may participate through inter-regional cooperation establishing integrated waste management zones collectively meeting minimum requirement. Implementation obligations include waste assessment, feasibility studies, budget allocation, procurement of private sector participation, and facility operations oversight. Non-compliance may result in administrative sanctions though practical enforcement depends on ministerial implementation.

What environmental permits and approvals are legally required for waste-to-energy projects?

Required environmental approvals include Environmental Impact Assessment (AMDAL) under Law 32/2009 involving impact studies, environmental management plans, public consultation, and technical commission review. Additional permits include environmental permits (izin lingkungan), construction permits, electricity business licenses (IUPTL) from Ministry of Energy and Mineral Resources, operational feasibility certification, grid interconnection approvals, wastewater discharge permits, and air emissions permits. Environmental compliance monitoring and regular reporting to authorities constitute ongoing obligations.

How does the centralized payment mechanism work and what legal protections does it provide investors?

Presidential Regulation 109/2025 establishes centralized payment structure through national budget allocation managed by designated ministry, replacing previous regional government payment responsibility. This provides payment security backed by central government fiscal capacity improving project bankability. Specific implementation details including budget appropriation procedures, payment timing, default remedies, and coordination with project contracts require elaboration through ministerial regulations. Legal implications include potential sovereign immunity considerations and government budget cycle coordination requirements.

What procurement processes apply to selecting private sector waste-to-energy developers?

Private sector participation typically follows public-private partnership framework under Presidential Regulation 38/2015 requiring preliminary studies, feasibility assessment, government budget impact analysis, competitive tender, proposal evaluation, contract negotiation, and financial close. Ministry of Finance through KPBU unit provides oversight with major transactions requiring additional approvals. Alternative procurement through public procurement law applies for government-funded projects. Procurement must ensure competitive, transparent processes complying with applicable regulations while achieving value for money and risk allocation supporting project success.

What contractual structures govern waste-to-energy project implementation and operations?

Primary contracts include concession agreement or service agreement between regional government and project developer establishing waste supply, facility development, operations obligations, payment terms, and risk allocation; power purchase agreement with PLN governing electricity sales, tariffs, dispatch, and technical requirements; and potentially separate operations and maintenance agreements. Contracts typically span 20-30 year concession periods addressing performance standards, force majeure, regulatory changes, termination, and dispute resolution through arbitration or other mechanisms. Standard templates may emerge through ministerial guidance though projects adapt to specific circumstances.

What legal risks should project developers and investors evaluate before committing to waste-to-energy projects?

Key legal risks include regulatory change affecting project economics or obligations, permitting delays or approval denials, payment default by government entities, waste supply shortfalls from regional governments, environmental compliance violations triggering penalties or restrictions, community opposition affecting operations, and force majeure events disrupting performance. Mitigation approaches include change in law contract provisions, payment guarantees, waste supply commitments with remedies, comprehensive compliance systems, stakeholder engagement, and appropriate insurance coverage. Thorough legal due diligence and robust contract drafting prove essential for risk management.

Are there restrictions on foreign investment in Indonesian waste-to-energy projects?

Indonesia's investment regulations under Presidential Regulation 10/2021 (Negative Investment List) do not specifically restrict foreign investment in waste-to-energy or waste management services, though general infrastructure and public utility considerations apply. Foreign investors typically structure participation through Indonesian limited liability companies (PT) potentially requiring local partners depending on specific business activities. Investment registration with Indonesia Investment Coordinating Board (BKPM), corporate establishment, and various business licenses constitute standard requirements. Project-specific concession agreements may impose additional requirements regarding local content, technology transfer, or employment of Indonesian personnel.

How does Presidential Regulation 109/2025 align with Indonesia's climate commitments and renewable energy targets?

Waste-to-energy development supports Indonesia's Nationally Determined Contribution (NDC) under Paris Agreement targeting greenhouse gas emission reductions through avoided methane emissions from landfills and renewable energy generation displacing fossil fuels. The regulation aligns with national energy policy targeting increased renewable energy share in electricity generation and supports circular economy principles through resource recovery. Legal framework integration across environmental protection, renewable energy promotion, and climate change mitigation creates mutually reinforcing policy objectives, though specific quantified targets for waste-to-energy capacity or waste reduction require elaboration in national action plans and ministerial implementation programs.

What technical and legal support is available for regional governments implementing waste-to-energy programs?

Ministry of Environment and Forestry provides technical assistance including guidance documents, training programs, model contracts and procedures, and direct support for priority projects. Capacity building covers waste assessment methodologies, feasibility studies, procurement management, contract negotiation, and compliance oversight. Multilateral development banks including World Bank and Asian Development Bank offer technical advisory, transaction support, and financing participation for qualifying projects. Legal advisory from specialized firms proves valuable for complex regulatory compliance, contract structuring, and transaction execution given technical legal complexity and material financial commitments involved in waste-to-energy development.