Key takeaways
Generated MSW
MSW for Energy recovery
MSW make business
opportunities
Participation of Private sector
in MSW
Most prevalent & Emerging
technologies in WTE
Inadequate and immature
Key success factors in WTE
• About 38.5 million tons of solid waste is generated per
year in the country (2006). This figure could be twice as
much by 2020.
• Municipal solid waste is a potential source for
recyclable and inert materials and can produce value
added products, in addition to energy recovery.
• Business opportunities in waste to energy exist in all
three stages of waste to energy – Waste
Transportation, Waste Management Facilities, and
Waste Processing for Energy Recovery.
• Indonesia government actively encourages private
sector participation in MSW value chain through a
variety of business and operational models.
• Currently, bio‐methanation and incineration are the
most prevalent and mature technologies for MSW to
energy in Indonesia. Gasification and pyrolysis are the
emerging technologies.
• Inadequate segregation at source, sub‐optimal
regulations and incentives, inadequate treatment
facilities and immature technologies are some of the
key challenges in this sector.
• Key success factors in waste to energy include optimal
technology, efficient operations, focus on costs, and
emphasis on environmental protection.
Prevalent Deficiencies in the
MSW Management System in
Indonesia
No Storage and Segregation of
Waste at Source
Operational Inefficiencies in Primary
Collection of Waste
Inappropriate System of Secondary
Storage of Waste
Irregular Transport of Waste in
Open Vehicles
Lack of Waste Treatment and
Inappropriate Disposal at Open
Dumping Grounds
Source storage and segregation of waste based on degradability and
hazards and recyclables separation is rarely done in Indonesia. Most
households, shops, and establishments throw their waste just outside
their premises, on streets, in drains, in open spaces, in water bodies,
and in other inappropriate places. Insufficient segregation at source
results in suboptimal performance of MSW to energy activities
Authorities consider themselves responsible only for waste collection
at street collection points and fail to provide doorstep collection
service. Even though such service is now mandated in the rules, lack of
standardized procedures and irregularity in sweeping accumulates the
waste to remain in streets. Such operational deficiencies will result in
high costs for energy recovery
Transfer station infrastructures (waste depot sites) are not spacious
and are constructed with a fore vision to store increasing loads of solid
waste. They are often very poorly designed and are not synchronized
with the primary collection system
Open trucks and tractors used to transport waste are loaded manually.
This time‐consuming activity results in loss of labor productivity and
increases the occupational health risk to workers.
The MSW generated in Indonesian cities is, by and large, not treated
but is directly taken to the open dumpsites. Indiscriminate mixing of
concrete debris with MSW makes landfill sites irreversibly unsuitable
for any energy recovery activity. Although Indonesia is known for its
age‐old technology of composting agricultural waste, composting of
municipal organic waste has been a rarity
Key Drivers Enhancing MSW
Management and MSW to
Energy

The laws and regulations in Indonesia at the municipal and city

Legal levels are becoming stringent than ever before. The consequent
threat of penalties could act as an important driver for MSW
management (MSWM)
The poorer sections of the society get affected most by the harmful
consequences of unmanaged waste. With Indonesian cities
Socio Economic
comprising large populations under poverty level, significant health
problems and societal trauma are encountered.
Though the ability of technology to support MSWM is still limited,
Technological development of new and more effective technologies will act as a
key driver to shape the progress of MSW management industry.
Competition between cities to provide a ‘clean city’ with good
municipal environmental infrastructure, in order to attract
Developmental and Competitives
investment can be a key driver. This appears to be particularly
important in Indonesia where competition for foreign information
technology investment is strong
The increasing awareness and concern among public and
Environmental government for protection of environment is one of the key drivers
for MSWM.
A number of current and emerging incentives – CDM or carbon
Incentives credits, capital subsidies, high feed in tariffs and other fiscal
incentives such as tax holidays‐ can accelerate adoption of waste to
energy
MSW Value Chain
Business Opportunities along the MSW Value Chain
MSW VALUE CHAIN
Primary collection and segregation of inerts
dry organic and other
Separation of wet organic wastes
Secondary collection and storage
Transportation and logistics
Recycling of wastes
MSW to energy recovery
Management of wastes at dumpsites
Organization/financing for service and value
chain enterprise
BUSINESS OPPORTUNITIES
Collection of resuble plastics and metals etc for safe market waste Processing
and sell RDF pellets to biomass plants
Waste Processing and sell RDF pellets to biomass plants
Mobilizing construction debris to make tiles and brick
Production and sale compost to bio fertilizer firms
Biogas based power generation from sludge for selling it to the grid
Maintenance of transfer stations
High troughput screening of materials for recycling energy recovery and land
fill disposals
Transportation solid waste from source to landfill or to the processing centers
for energy recovery
Revenue from automobile manufacturing and sales to corporate bodies and
contract holers etc
Recycle commodity transactions from transfer stations
Sale recycled plastic or metal granules
Conversions of processed wastes to Industrial commodities
Production of machineries and equipment for energy recovery technologies
Decentralized technology installations
Power generation and sale power
Production and sale of processed organic feedstocks from MSW
Income from certified Emission reductions (CERs)
Design and construction of secured landfills
Urban landscape development at abandoned landfills
Debt and Equity Financing
Companies that Could Benefit from the Waste to Energy Sector

Segregations of dry waste, Recycling companies

Rag Pickers/scavenger
reusable, inerst etc Other informal participant

Farmers
Segregations of wet waste
Fertilizer companies
and processing Other informal participant

EPCs
Locomotive manufacturing companies (Heavy & light)
Transport and Logistic Private vehicle service stations transport agencies
Part time worker under contract

EPCs
Storage & secondary
MSW junks shop owner
collection Logistic services

EPCs
Material Recovery facility operators
Recycling waste Intermediate material processing units
Environment engineering companies
Small and medium junk shop owners

EPCs
Technology providers and fabricators
IPP
WTE recovery O&M services
Producers and dealers RDF pellets
Producers and dealers “Bataco”

Management of Waste at Environment engineering companies

landfill Civils infrastructure developers
Owning and Operating Solid
Waste Management Facilities

Operations in MSW Business Model Average tenure of the project (years)

• Collection, transportation and MC/Service contract/BOOT* 3‐8

cleaning
• Development of transfer station and MRTS & BOOT/DBFOT 20
transportation
• Waste processing facility to derive BOOT/DBFOT/BOO* 20‐35
energy
• Development of sanitary landfills and MC/DBFOT* 3‐20
post closure maintenance
• Integrated MSW Management Mostly on BOOT 20‐ 30 (Some project tenures are linked
to the life of the assets)

*BOOT – Build Own Operate Transfer; BOO‐ Build Own Operate; DBFOT‐ Design Build Finance Operate Transfer; MC‐ Management
Contract; MRTS‐ Mechanized Refuse Transfer Station

Most interesting for investor

BUSINESS SCHEME CONTRACT STRUCTURE OPERATING MSW TO ENERGY

PLN
MSW
Authority PPA (Purchase Power Agreement)

Payments against sale of Power

Royalty/Tipping Fee per MT Feedstock MSW supply

Min assured MSW Quantity

LOCAL
PMDN
GOVERMENT
Supported regulation

Nominal Lease rental

Strategic and Financial
Benefits from Waste to Energy
Business
Profitability
Government Incentives
Related Opportunities
Emerging Opportunities
If the right technology is employed with optimal processes and all
components of waste are used to derive value, waste to energy could be a
profitable business. When government incentives are factored in, the
attractiveness of the business increases further
The government of Indonesia already provides significant incentives for
waste to energy projects, in the form of capital subsidies and feed in tariffs.
With concerns on climate change, waste management and sanitation on
the increase (a result of this increasing concern is the newly formed
ministry exclusively for Drinking Water and Sanitation), the government
incentives for this sector is only set to increase in future.
Success in municipal solid waste management could lead to opportunities
in other waste such as sewage waste, industrial waste and hazardous
waste. Depending on the technology/route used for energy recovery, eco‐
friendly and ‚green‛ co‐products such as charcoal, compost, nutrient rich
digestate (a fertilizer) or bio‐oil can be obtained. These co‐product
opportunities will enable the enterprise to expand into these related
products, demand for which are increasing all the time
With distributed waste management and waste to energy becoming
important priorities, opportunities exist for companies to provide support
services like turnkey solutions. In addition, waste to energy opportunities
exist not just in Indonesia but all over the world. Thus, there could be
significant international expansion possibilities for Indonesian companies,
especially expansion into other Asian countries
Potential Risks and Barriers in
the MSW to Energy Business (1)

Policy & Regulatory Lack of clarity of government policies and incentives

Barriers
While MSW management is an important aim for every state
government and municipal body in Indonesia, this goal has not translated
itself into clear policies on contracts, feed‐in‐tariffs and other incentives

Lack of initiatives from key stakeholders

While the roles of the various stakeholders – Urban Local Bodies, etc –
are clear on paper, there is lack of proactive measures and initiatives
from many of these stakeholders. This is a bottleneck for MSW projects
that depend so much on governmental approvals for many aspects.

Environmental & legal

Success in municipal solid waste management could lead to
opportunities Some MSW to energy plants in Indonesia, as well as
worldwide, have been the subject of litigation from environmentalists,
society activists . This has been especially true for incineration‐based
projects, which are still the dominant technology for MSW‐based power
plants
Potential Risks and Barriers in
the MSW to Energy Business (2)

Financial Barriers Most solid waste to energy projects are capital intensive. Raising significant
capital for an emerging sector is often difficult
Poor financial standing of the state utilities along, with lack of proper policy
back up from the government has resulted in uncertainties over timely
revenues from sale of power. Debt instruments don’t usually work when the
revenue stream is unattractive.
Availability of waste at zero or near‐zero cost which is a vital part of the
revenue model, but this is not achievable on a consistent basis
Waste to energy projects are considered as an unsafe investment by some due
to lack of short term returns

Technological Barriers Some of the emerging technology options – large scale gasification for instance
‐ are yet to be proven on a commercial scale.
The characteristics of waste vary with region, source and scale, resulting in
uncertainties over optimal designs and processes.
Lack of indigenously developed technology and skilled manpower for emerging
process routes such as gasification and pyrolysis.
Potential Risks and Barriers in
the MSW to Energy Business (3)

Other Barriers Long lead time for completing all the formalities/ documentation/Permit and
getting all the approvals.
Lack of expertise to understand, develop, appraise and put in place a
structured and viable business model for these projects.
Shifting priorities of the urban local bodies – from waste‐to‐energy to other
issues resulting in diversion of funds and other support.
Lack of clarity for investors in the roles and responsibilities of Urban Local
Bodies (ULBs) (Local Environment/pollution control Boards, Municipalities,
BUMD, Local government, etc). .
 BUSINESS SCHEME 1

LOCAL
FOREIGN MEMBER & EPC GOVERMENT
INVESTOR 10% EQUITY

PLN

LOCAL LEAD MEMBER , IPP APPLICANT

FACILITATOR, 20% EQUITY PMDN
COMPANY
COMMERCIAL LOAN 70%

COMMERCIAL ESDM
LOAN 70%
Pre FS & FS
CONSULTANT

BANK/FINANCE PPA
NON BANK

COMMERCIAL COMMISSIONING CONSTRUCTION &

OPERATION CERTIFICATE (SLO) COMMISIONING
Perjanjian Jual Beli = PPA (Purchase Power Agreement)
 ENERGI PERPRES No.5/2006
TERBARUKAN TARGET ET DALAM ENERGI NASIONAL :TAHUN 2016 17%,TAHUN 2025 25 %

PP No 14/2009 KEIKUTSERTAAN SWASTA DI SEKTOR KELISTRIKAN

:PENYEDIAN DAN T&D

UU No 30/2009 PENGEMBANGAN PROJECT PEMBANGKIT LISTRIK ET

Pemilihan KEPMEN (ESDM)
No.0074 K/21/MEM/2015
Pengesahan Rencana Usaha Penyediaan Tenaga Listrik PT.PLN
2015‐2024
Lokasi
KEPUTUSAN DIREKSI PT.PLN Rencana Usaha Penyediaan Tenaga Listrik (RUPTL) P T.PLN
No.0982 K/DIR/2014 (Persero) 2015‐2024

Kewenangan
Administrasi
Perjanjian Jual
Beli

PERMEN (ESDM) Pembelian Tenaga Listrik dari Pembangkit Tenaga Listrik Berbasis
No.19/2013 sampah kota oleh PT.PLN

PERMEN (ESDM) Pembelian Tenaga Listrik dari Pembangkit Tenaga Listrik Biomassa
No.27/2014 dan Pembangkit Tenaga L istrik Biogas oleh PT.PLN

PERMEN (ESDM) Pembelian Tenaga Listrik dari Pembangkit Tenaga Listrik Berbasis
No.44/2015 sampah kota oleh PT.PLN

Izin Usaha
Penyediaan TL

Pendanaan

Fiskal/Hukum
Perusahaan
 Perencanaan
dan
Keteknikan

Pembangunan
&
Commisioning

Operasi dan
Pemeliharaan
Key Success Factors and Competencies for Waste to Energy Business
Optimal technology
Efficiency in every aspect
of logistics and
transportation
Ensuring benefits for all
the stakeholders
Ensuring reliable supply
of feedstock at low or no
cost
Emphasis on
environmentally sound
practices along the entire
operational value chain
The most appropriate technology depends on multiple aspects such as
amount of waste generated, degree of segregation and ultimate end
product. It is critical for the users of technology to consider all these
aspects intensively before investing in a specific technology.
Even in developed countries, significant efficiencies can be incorporated
into the logistics/transportation stage of the waste management value
chain. In developing countries such as Indonesia, the scope for
improvement in efficiencies is significant, and such improvements could
have a significant impact on the financial sustainability of the entire project.
In Indonesia, waste management has diverse stakeholders, some of them in
the informal sector. Rag pickers represent one prominent category in this
context; another is the society in the vicinity of dump yards, landfills or
waste to energy power plants. Unless the business model is so structured
as to provide benefits to all the stakeholders, a number of operational and
legal problems could arise
It is critical for the waste to energy project developer to ensure that the
generator of the waste or the municipal corporation provides the waste at
no cost, and in addition provides a tipping fee. The processes for treatment
of waste and subsequent energy generation are costly, and these costs
need to be offset through zero cost feedstock
Some incineration‐based waste to energy plants in Indonesia as well as
worldwide have faced significant opposition from environmental regulators
and civil society, owing to allegations of pollutants being released to the
environment. Such social and legal concerns could severely affect the
sustainability of waste to energy power plants. Power project owners need
to undertake extensive analysis of all the aspects along the value chain that
could have adverse environmental impacts, and devise suitable remediation
plants.
Summary for Waste to Energy Business

• The business of generating energy from solid waste (especially municipal solid waste from urban areas) is
entering a period of rapid growth in Indonesia.
• WtE is very potential in Indonesia, given the urgency of waste problems and energy policy towards New and
Renewable Energy (NRE).
• The dual pressing needs of waste management and reliable renewable energy source are creating attractive
opportunities for investors and project developers. Early movers who have identified the right technologies are
poised to grow in this promising industry.
• At the same time, significant barriers exist. The ‘yet to be commercialized’ technologies, high capital
requirements, predominant dependence on government machineries for many parts of the business value chain
and a sub‐optimal regulatory environment present significant industry challenges. These challenges have
resulted in many critical questions regarding waste to energy/value project viability remaining unanswered.
• The complexity of navigating through these challenges calls for a clear understanding of the stakeholders and
their roles, business models, and technologies behind the waste‐to‐energy solutions. Given the need for critical
knowledge on the viability of waste to energy projects before venturing into this niche sector, assistance from an
advisory and research firm is imperative.
• Local governments’ mind set that realizing waste needs sufficient management cost rather than looking at
energy sales as source of income is crucial.
• In national level, synchronized regulation and synergized institution are also the keys.
• Transparency of procurement and sufficient‐neutral‐valid information on technology application are critical in
gaining public trust and social acceptance for implementation of WtE plant.