Indonesia faces a dual challenge of rapidly growing waste volumes and persistent electricity supply constraints. The country generates around 65 million tonnes of waste annually, yet only about 20% is formally treated, and most cities rely heavily on landfills. In 2017, the government designated 12 priority cities for accelerated waste-to-energy (WTE) development, including Palembang, and introduced preferential feed-in tariffs and guaranteed waste-tipping fees to attract private investment. Despite this, only two WTE plants, Surabaya’s Benowo PLTSa and Surakarta’s Putri Cempo PLTSa, both on Java island, were operational before 2024, highlighting a significant gap between policy ambition and actual delivery.

The Palembang Waste-to-Energy Project is the city’s first planned large-scale WTE facility and among Indonesia’s most advanced PPP-based WTE developments to date. Initiated by Zheneng Jinjiang Environment Holding Company Limited, a Chinese SOE and leading WTE operator, the project will treat 1 000 tonnes of municipal waste per day and generate 20 MW of electricity. Over a year, it will process nearly 300 000 tonnes of waste, reducing the city’s reliance on landfill disposal, cutting methane emissions, and improving local environmental conditions. The project broke ground in September 2024 with China Power Engineering Consulting Group as the EPC contractor, with operations expected to start in 2026. It contributes directly to Indonesia’s plan to deploy 30 WTE plants nationwide by 2029 and support the country’s broader low-carbon and circular-economy goals.

The project is structured as a build–own–operate public–private partnership under a 30-year concession. The Palembang municipal government guarantees waste supply and pays a regulated waste-treatment fee – capped at IDR 500 000 per tonne (about USD 33) – which anchors a stable revenue stream alongside power sales. In December 2023, state-owned power company Perusahaan Listrik Negara (PLN) signed a long-term PPA to purchase all electricity generated at a feed-in tariff of USD 0.1335/kWh, one of the highest renewable tariffs in Indonesia and designed specifically to support WTE deployment.

The project’s total cost is about USD 300 million. Debt financing was arranged through a syndicate led by Singapore’s DBS Bank and Bank Negara Indonesia (BNI), which provided an eight-year non-recourse loan composed of USD 85 million and IDR 243 billion (about USD 15.3 million). The dual-currency structure reflects the project’s revenue profile: electricity sales under the PPA are denominated in USD, while waste-treatment fees from the municipal government are paid in IDR. Aligning part of the debt service with local-currency income reduces exposure to foreign-exchange risk, an important consideration for infrastructure projects in EMDE.

The remaining roughly USD 200 million was provided as equity by Zheneng Jinjiang Environment through its local subsidiary, PT Indo Green Power (IGP). The financing is fully project-based, with lenders relying on future cash flows and securing their position through pledges over project assets and revenue accounts, allowing the sponsor to proceed without a full corporate guarantee.

Sinosure provided medium- to long-term buyer’s credit insurance that covers up to 95% of political and commercial risks, marking its first “double-95%” insurance package in the WTE sector. This guarantee was crucial for enabling long-tenor bank financing in a market where regulatory risk, municipal payment risk and project-execution risks have historically constrained private capital. Chinese firms – including the EPC contractor (China Power Engineering Consulting Group) and equipment suppliers – also form part of the delivery chain.

The Palembang WTE project shows how China’s increasing domestic competition within the WTE industry is driving leading firms to seek opportunities overseas, especially in EMDE where waste and energy challenges intersect. Zhejiang Energy Jinjiang Environment alone operates 27 WTE plants in China and is among several SOEs now seeking opportunities abroad. A 2024 State Council directive encouraged domestic waste-treatment companies to “go global”, aligning industrial capabilities with green-development priorities in BRI countries.

By mid-2025, Chinese companies were involved in 43 overseas WTE projects across 13 countries – with 16 new projects launched in the first half of 2025 – demonstrating accelerating outbound interest. Southeast Asia is a key focus due to supportive tariff structures and urgent landfill constraints, while additional growth is emerging in Central Asia and the Middle East.

For EMDE, the Palembang project highlights how waste-to-energy can serve as a practical complement to renewables in markets where grids are constrained and landfill dependence is rising, offering both firm generation and improved waste management outcomes. It also demonstrates that combining long-tenor commercial bank lending with Sinosure-backed risk-mitigation can produce a bankable PPP structure in markets with limited precedent for large WTE assets. More broadly, the case reflects how integrated Chinese participation – spanning investment, EPC delivery, equipment supply and credit insurance – can reduce co-ordination challenges and enable complex, first-of-a-kind projects to move from planning to financial close, providing a replicable model for cities facing similar waste and energy pressures.