Govt drafts incentives to generate power from waste
Investment of Rp 66 trillion needed to develop waste-to-energy sector Incentives being formulated to make the sector more attractive
The government is preparing incentives to encourage the development of waste-to-energy plants as part of an effort to cope with the country’s mounting waste problem.
Indonesia requires Rp 66 trillion (US$5 billion) to grow the sector, according to an estimate from the Public Works and Public Housing Ministry.
Investment Coordinating Board (BKPM) infrastructure planning director Heldy Putera said that his office was coming up with several incentives to attract investors, including an easier permit application process for the construction of waste-based power plants (PLTSa).
“We are willing to give the investors certainty to start their business and an exemption from import duties on equipment,” Heldy said during a recent conference organized by the Office of the Coordinating Maritime Affairs Minister and Denmark, Sweden, Finland and Norway.
These Nordic countries boast the world’s most advanced waste management technology.
The BKPM would also coordinate with related government institutions to set competitive rates for tipping fees at waste processing facilities, Heldy added.
The attempt to find alternatives in managing surging domestic waste in Indonesia is now more important than ever as the government is running out of time and options.
It has included waste-to-energy development projects in its latest list of 245 national projects issued in May.
Tohari Hadiat, the renewable energy division head at stateowned electricity firm PLN, acknowledged that the high cost of building waste-based power plants is a burden to the firm as it has had to subsidize its electricity at 13.14 US cents at the cheapest, which is much higher than the firm’s electricity supply cost (BPP) of 7.39 cents.
“Additionally, there’s a problem related to how we can ensure people that this type of power plant technology can generate energy safely without harming the environment,” Tohari said.
In February, the Supreme Court revoked Presidential Decree No.18/2016, which aimed to accelerate the construction of wastebased power plants in cities across the country, after it was challenged by activists who argued that the incinerators used by these facilities would endanger the environment.
In addition to acknowledging the high investment needed to build such waste-based plants, Tohari conceded that they would also have a thin profit margin, making the sector’s investment climate even less attractive to investors.
Frank van Woerden, lead environmental engineer for the World Bank’s East Asia and Pacific Region, pointed out what he described as more fundamental issues to address.
“There are very good schemes for this [waste-to-energy sector]. But, unfortunately we are talking about messy, bulky, mixed trash in big cities,” van Woerden told The Jakarta Post on the sidelines of the conference.
“Therefore, it’s not very favorable for Indonesia to go for the newer technology, which requires assorted trash.”
The World Bank has discussed the matter with the government as it is ready to aid Indonesia in kick-starting the integrated development of waste-to-energy projects in the country, van Woerden further said.
“We can support the cities in choosing the technology, the contractors. To ensure they have the expertise to operate such a complex system, the government has to make a very clear arrangement and it takes a lot of time, and that we can help,” he said.
The environmental engineer added that the technical assistance would greater benefit Indonesia compared to loans.