• Danantara Indonesia plans eight waste-to-power projects by October, part of a 33-city program.
• Indonesia generates 35 million metric tons of waste annually, with 61% improperly managed.
• Government targets 453 MW of waste-to-energy capacity by 2034, requiring $2.7 billion investment.

Jakarta’s Waste Crisis Spurs New Energy Push

Indonesia’s sovereign wealth fund, Danantara Indonesia, will roll out at least eight waste-to-energy plants by the end of October as part of a national strategy to confront mounting waste volumes and expand renewable generation.

The program, announced Tuesday by Chief Executive Rosan Roeslani, will begin in Jakarta with four to five facilities before extending to other cities in Java and Bali. Over the next decade, 33 municipalities are expected to host similar projects.

Indonesia’s cities generate more than 35 million metric tons of waste each year, of which 61% is mismanaged. The result is widespread water, soil, and air contamination that has become both a health and political concern. “This waste-to-energy programme will be conducted in 33 cities, but the priority is in Jakarta,” Roeslani said.

Financing and Scale

Danantara is leading the investment effort alongside international technology providers, while state utility Perusahaan Listrik Negara (PLN) will purchase the electricity produced. Each 1,000 tons of waste processed daily is projected to yield about 15 megawatts of capacity, executives said.

Plant development will require significant capital. “Power plants typically require 2 trillion to 3 trillion rupiah [$120 million–$180 million] for every 1,000-ton processing capacity,” said Managing Director Stefanus Ade Hadiwidjaja. Danantara is currently reviewing the financing structure, which may include blended public and private capital.

The government’s 2025–2034 electricity supply plan calls for 453 MW of waste-to-power capacity, requiring an estimated $2.72 billion. That figure reflects both rising costs for urban waste management and Indonesia’s commitment to diversifying its energy mix away from coal.

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Policy Backdrop

Jakarta has taken steps to reduce the financial burden on local governments, eliminating the tipping fee that municipalities were previously charged to access waste-to-energy facilities. Danantara will fund feasibility and technical studies to ease participation and attract investment.

Indonesia has struggled to advance waste-to-power projects in the past. High upfront costs, permitting delays, and community opposition have slowed progress. This new initiative, anchored by the sovereign wealth fund and supported by PLN’s guaranteed offtake, is intended to de-risk projects and align them with national decarbonization and public health goals.

Investor and ESG Implications

For investors, the projects combine two critical ESG themes: waste reduction and renewable energy expansion. They also highlight the role of sovereign wealth funds in backing infrastructure where private capital has been hesitant.

The waste-to-energy strategy feeds directly into Indonesia’s climate commitments, which include cutting emissions 31.9% below business-as-usual levels by 2030, or 43.2% with international support. By integrating waste management into power generation, the program aims to reduce methane emissions from landfills while providing new capacity for a grid still heavily dependent on coal.

Yet financing remains a central challenge. The cost profile of waste-to-energy projects is higher than solar or wind, making long-term bankability dependent on government support and predictable offtake agreements. Multilateral banks and climate funds are expected to assess participation once feasibility studies are complete.

Global Context

Southeast Asia has become a testing ground for waste-to-energy solutions as urban populations grow and landfill space runs out. Indonesia’s scale—over 270 million people and the world’s second-largest marine plastic polluter—makes its progress critical for regional climate and waste policy.

If executed as planned, the 33-city program could provide a replicable model for emerging economies grappling with both energy security and waste management. For global investors, it offers a window into how sovereign funds are repositioning as climate finance actors, not only capital allocators.

As October approaches, attention will focus on Jakarta’s pilot projects. Their performance will determine whether Indonesia can shift from landfill dependency to integrated waste-to-energy systems, a transition that carries both domestic political weight and international climate significance.

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