Indonesia’s sovereign wealth fund to lead the next big push in waste-to-energy

Danantara’s Managing Director, Investment, Stefanus Ade Hadiwidjaja, said the fund’s waste-to-energy (WTE) initiative was a strategic solution for Indonesia, and not just an investment or construction project. 

Speaking at the Bloomberg Technoz Ecoverse event on November 20 in Jakarta, Hadiwidjaja stressed that it would tackle Indonesia’s severe waste crisis. 

“This is the key to resolving an environmental crisis that has reached an emergency level,” said Hadiwidjaja during his keynote speech 

Hadiwidjaja emphasised that as Indonesia’s sovereign wealth fund, Danantara carried a dual mandate: to pursue commercial returns while delivering social benefits. 

“This isn’t just about profit. It’s about intergenerational wealth. What we build today must protect future generations,” he said.  

In his address to hundreds of government officials and sustainability leaders, Hadiwidjaja pointed out that Indonesia’s waste crisis can no longer be addressed with conventional approaches. 

He presented alarming figures, noting that while Indonesia generates nearly one kilogram of waste per person daily, only about 40 per cent of it is properly managed.  

This results in most of the waste accumulating overflowing landfills, polluting rivers, or being openly burned. This, in turn, produces methane emissions, toxic leachate, poses public health risks, and the threat of landslides.  

For Hadiwidjaja, the current system merely delays a burden that will eventually become impossible to bear. 

Citing successful models from countries such as Japan, Singapore, China, and those in Europe where WTE was a backbone of modern waste management, he argued that Indonesia must now follow suit. 

“This is no longer a choice, but a national necessity,” he added. 

Against this backdrop, Hadiwidjaja explained why Danantara’s involvement was essential to unlock the potential of WTE development in the country.

To subscribe to the GovInsider bulletin, click here. 

Why Danantara’s role is crucial 

Indonesia has long struggled to advance WTE projects because stakeholders work in silos, said Hadiwidjaja. 

Fragmented authority among central and regional governments, regulators and operators, service providers, and landowners has resulted in projects progressing slowly or not moving at all.   

With its cross-sector mandate and ability to mobilise international capital, Danantara was expected to fill this coordination gap, he said.   

“We will act as an integrator across ministries, local governments, state-owned enterprises, and investors, ensuring collaboration works effectively.”  

He added that successful WTE projects require improved governance, strong financing structures, and a stable supply chain to ensure consistent facility operations.  

Currently, Danantara has shortlisted 24 technology candidates from more than 200 potential partners.  

To strengthen domestic industrial capacity, all technology providers were required to collaborate with local entities, whether state-owned enterprises (SOEs) or private companies. 

Through this approach, Indonesia was not only purchasing technologies, but also building the expertise needed to design, operate and maintain the systems according to global standards. 

“We want this industry to build domestic capacity, not just physical facilities,” Hadiwidjaja said. 

A new scheme of partnership 

Hadiwidjaja highlighted the key regulatory changes designed to eliminate financial hurdles. 

Specifically, local governments were no longer obligated to pay tipping fees to WTE providers, which was a requirement that previously stalled many projects at the feasibility-study stage. 

Instead, the new policy mandates the State Electricity Company (PT PLN) to purchase electricity from WTE providers at a tariff of US$0.20 kWh (S$0.26), with the central government covering the cost difference. 

“With this model, local governments do not need to pay anything. They only need to provide land and ensure waste supply,” he explained.  

This scheme is currently being piloted in four cities, including Bogor, Bekasi, Yogyakarta, and Denpasar, with each processing around 1,000 tons of waste per day.  

Following the pilot phase, tenders for around 30 new cities are expected to start next year.  

He said the scheme provides investors with reliable revenue streams while simultaneously reducing the financial pressure on local authorities. 

Ultimately, this scheme would transform WTE projects into appealing infrastructure assets with acceptable risk profiles for the financing sector. 

Danantara to build sustainable economic system  

Hadiwidjaja explained that WTE was only one part of the broader sustainable economic system Danantara aims to develop.   

The institution has also been designing the national clean energy framework with PLN, covering investments in renewable power plants, off-grid electricity supply for industry, green energy provision for data centres, transmission and smart-grid development, and smart-meter implementation.   

“Green energy is not a slogan. It is a long-term economic and investment strategy,” he noted. 

Hadiwidjaja concluded his speech quoting the President Prabowo, who stated that “a nation’s civilisation can be seen from how it manages its waste”.  

Hadiwidjaja noted that this is the foundational principle driving the country toward a more modern and sustainable waste management future.