A New Paradigm for Waste Management into Renewable Energy in Presidential Regulation Number 109 of 2025
Summary
Presidential Regulation Number 109 of 2025 on Urban Waste Handling Through Waste Processing into Renewable Energy Based on Environmentally Friendly Technology ("PR 109/2025") took effect on October 10, 2025. PR 109/2025 revokes and replaces Presidential Regulation Number 35 of 2018 on the Acceleration of the Development of Waste-to-Electrical Energy Processing Installations Based on Environmentally Friendly Technology (“PR 35/2018”). PR 109/2025 was issued to accelerate the handling of the urban waste emergency by shifting the paradigm of waste management from merely waste-to-energy to the broader waste-to-renewable-energy, and introducing a new, more centralized implementation model to ensure the effectiveness of projects that were previously not running optimally.
Background and Context
PR 109/2025 is based on the condition of national waste generation, which has reached an emergency level, where more than 60% of waste is not managed properly and still uses an open dumping system, which causes environmental pollution and health problems. The considerations of PR 109/2025 state that the implementation of PR 35/2018 was deemed ineffective. Therefore, a policy breakthrough is needed that not only addresses the waste problem quickly but also transforms waste into a resource to support national energy security. PR 109/2025 is present to expand the scope of energy output from waste (not only electricity, but also bioenergy and renewable fuels) and to completely overhaul the business model and its institutional implementation to make it more attractive to investors and to be realized effectively.
Comparison with the Previous Regulation
The following are the key comparisons between PR 109/2025 and PR 35/2018:
|
Aspect |
PR 35/2018 |
PR 109/2025 |
|
Energy Output Focus |
Limited only to the processing of waste into electrical energy. |
Expanded to Waste-to-Renewable Energy Processing Based on Environmentally Friendly Technology (“PSE”), which includes Waste-to-Electrical Energy Processing Based on Environmentally Friendly Technology (“PSEL”), bioenergy (biomass & biogas), and renewable fuels. |
|
Project Location |
Designates 12 provinces/cities as acceleration locations, namely DKI Jakarta Province, Surakarta City, Tangerang City, Manado City, Semarang City, Denpasar City, Palembang City, South Tangerang City, Bekasi City, Surabaya City, Bandung City, and Makassar City. |
Uses a criteria-based system, where any regency/city can be proposed as long as it meets the main requirements, such as the availability of a minimum waste volume of 1,000 tons/day. |
|
Implementation Model |
Regional Governments (Governor/Mayor) may assign a Regional-Owned Enterprise or conduct a competition with a Business Entity (private) to become the developer. |
Implementation and selection of the Developer and Operator Business Entity (“BUPP PSEL”) are carried out centrally through a State-Owned Enterprise / BUMN Subsidiary under the coordination of BPI Danantara. |
|
Electricity Selling Price |
Uses a tiered pricing scheme, namely USD 13.35 cents/kWh for capacities up to 20 MW, and uses a calculation formula for capacities above 20 MW, namely “Purchase Price (USD cent/kWh) = 14.54 - (0.076 x the capacity of the Waste-to-Energy Power Plant sold to PT PLN (Persero))”. |
A much higher single selling price (flat rate) is stipulated, namely USD 20 cents/kWh for all capacities, without negotiation and escalation. |
|
Central Government Funding Support |
The Central Government provides Waste Processing Service Fee or tipping fee assistance to the Regional Government, with a maximum value of IDR 500,000 per ton of waste. |
BLPS assistance from the Central Government is eliminated. The main incentive model is shifted to the high electricity selling price. The Regional Government's obligation is focused on land provision and waste transportation costs. |
Key Provisions
|
Regulatory Aspect |
Brief Description of Provisions |
Article Reference |
|
New Institutional Model |
The implementation of PSEL is carried out by a BUMN/BUMN Subsidiary through BPI Danantara, which is tasked with conducting studies up to the selection of the BUPP PSEL. |
Article 5 |
|
Location Criteria |
Regencies/cities wishing to become PSEL locations must meet the main criteria, namely the availability of a minimum waste volume of 1,000 tons per day, a commitment in the Regional Budget for transportation, and land provision. |
Article 4 |
|
Progressive Electricity Selling Price |
The purchase price of electricity by PT PLN (Persero) is set at USD 20 cents per kWh for all capacities, valid for 30 years without negotiation and escalation. |
Article 19 |
|
Role of Regional Government |
The main obligation of the Regional Government is to provide land for PSEL through a loan-for-use mechanism at no cost and to guarantee the availability of the waste supply by allocating a budget for collection and transportation. |
Article 4, Article 17 |
|
Accelerated Licensing |
The licensing process, including the environmental approval, is conducted through the OSS System and is given a clear timeline. The Environmental Impact Assessment (EIA) must be issued within a maximum of 2 months; otherwise, it will be issued automatically. |
Article 18 |
|
Renewable Energy Diversification |
In addition to electricity, the processing of waste into bioenergy (biomass & biogas) and renewable fuels is also accommodated and regulated. |
Article 27, Article 28 |
Transitional Provisions
PR 109/2025 stipulates that the implementation of PSEL that commenced before this Presidential Regulation came into force (for example, where a winner has been determined or a Power Purchase Agreement (PPA) has been signed) will continue to follow the provisions of PR 35/2018. However, if such projects are proven to be ineffective (for example, failing to process waste or generate significant electricity), the parties (Regional Government, developer, PLN) may terminate the old agreement and switch to following all new provisions stipulated in PR 109/2025, after such termination process is final and binding.
Conclusion
PR 109/2025 overhauls the waste management and renewable energy policy in Indonesia previously regulated under PR 35/2018. The three main points of PR 109/2025 are as follows:
- A shift in the business model from decentralization to centralization by assigning a BUMN through BPI Danantara as the main driver. This step aims to overcome capacity constraints and tender failures that frequently occurred at the regional level.
- A massive injection of financial incentives, wherein the increase in the electricity selling price to USD 20 cents/kWh shifts the subsidy burden from the State Budget (in the form of a tipping fee) to the energy market mechanism.
- An expansion of the vision from "waste-to-energy" to "waste as a source of renewable energy," which paves the way for the diversification of technology and end products, while positioning waste management as an important pillar in the national energy security agenda.
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