MoEMR Reg. 1/2026: A New Era for Energy Efficiency in Indonesia
The issuance of Minister of Energy and Mineral Resources Regulation No. 1 of 2026 on Energy Conservation Services (MoEMR Reg. 1/2026) marks a decisive step in Indonesia’s energy efficiency agenda. Energy conservation services are now governed under a dedicated, operational regulatory framework, providing clearer legal certainty for Energy Conservation Service Company (Penyedia Usaha Jasa Konservasi Energi/ ESCO) as well as other key stakeholders across the energy efficiency and conservation sector.
MoEMR Reg. 1/2026 establishes clear rules on the scope of energy conservation services, recognized business models for energy efficiency projects, as well as reporting obligations and administrative sanctions—transforming the regime from policy guidance into enforceable compliance. This regulation was issued in response to the mandate under Government Regulation No. 33 of 2023 on Energy Conservation (GR 33/2023), which introduced energy conservation services as a strategic instrument in downstream energy management but deferred key implementation details to ministerial regulation.
Energy Conservation Services
Energy conservation services play a central role in strengthening downstream energy management by promoting efficient energy use and energy efficiency projects. MoEMR Reg. 1/2026 provides a clear and operational framework for the delivery of such services.
The regulation establishes a comprehensive regime for ESCOs by defining their institutional forms and business licensing obligations, while also setting out the activities in the delivery of energy conservation services, as summarized below:
- Implementation of Investment Grade Energy Audit (IGEA): An IGEA assesses the technical and financial feasibility of energy efficiency measures. At a minimum, it includes the planning or scope of work, pre-efficiency energy baseline, energy performance inspection and measurement, energy consumption and cost analysis, and detailed investment cost calculations, as further specified under the regulation.
- Financing for Energy Efficiency Project: Energy efficiency projects may be financed through Energy Saving Performance Contracts (ESPCs), which are based on measurable and verifiable energy performance outcomes. ESCOs may collaborate with third parties to meet project requirements, including the provision of risk guarantees and other necessary forms of support.
- Execution of installation and construction works, including the monitoring and supervision of energy efficiency projects: This activity must be carried out in accordance with applicable technical standards, including Indonesian National Standards (SNI) and relevant international standards.
- Operation, Maintenance, and Repair of Energy Installations: This activity must be carried out in accordance with applicable technical standards, including SNI, and/or relevant international standards.
- Measurement and Verification (M&V) on Energy Performance: This activity must be carried out by a certified M&V verifier or analyst. This regulation also prescribes the minimum M&V scope, including the preparation of an M&V implementation plan and an M&V report for implemented energy efficiency projects.
Business Model on Energy Efficiency Project
MoEMR Reg. 1/2026 introduces several business models that may be applied to the implementation of energy efficiency project, including:
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Activities
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Key Aspects
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Shared Saving
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Energy cost savings are shared between ESCOs and the Energy Conservation Service User (User) based on the agreed allocation throughout the remaining investment recovery period.
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Guaranteed Saving
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ESCOs are required to achieve the agreed level of energy savings throughout the remaining investment recovery period.
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Energy as a Service (EaaS)
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ESCOs deliver energy services, including cooling as a service, heating as a service, lighting as a service, steam as a service, and other forms of energy provision, in line with the applicable parameters for each energy type.
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Build-Operate-Transfer (BOT)
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ESCOs develop and operate the assets, with ownership transferred to the User upon expiry of the contract.
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Build-Operate-Own (BOO)
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ESCOs develop and operate the assets, without any transfer of ownership to the User upon expiry of the contract.
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Reporting Obligation
The regulation imposes reporting obligations on ESCOs, including the submission of an initial report within 14 days of business license issuance, a report within 14 days of any service expansion, and annual and periodic reports on the implementation of energy conservation services through the electronic system provided by the Minister of Energy and Mineral Resources (MoEMR).
Non-compliance with these reporting obligations may result in administrative sanctions in the form of written warnings imposed by the MoEMR, while the required technical documents and reporting formats are set out in the appendix to the regulation.
Key Considerations for Energy Efficiency Investments
Overall, the new regulatory framework clarifies the scope of energy conservation services and the role of ESCOs in Indonesia, strengthening the commercial and operational foundation of energy efficiency projects.
Key aspects to consider include:
- Clearer delineation of permissible ESCO activities, providing a stronger basis for project structuring, investment assessment, and legal due diligence;
- Mandatory compliance with technical standards, ensuring project quality, performance, and regulatory acceptance;
- More detailed and transparent IGEA requirements, strengthening project feasibility analysis and investor confidence; and
- Greater flexibility in energy efficiency business models, including the ability for ESCOs to engage third parties and financial institutions, enabling innovative financing and risk-sharing structures.
Together, these developments position energy conservation and energy efficiency projects as a viable and scalable investment opportunity for private investors in Indonesia’s energy transition.
Conclusion
With MoEMR 1/2026, Indonesia is strengthening the institutional foundation for energy conservation services. The regulation clarifies ESCO roles, standardizes business models, and reinforces compliance requirements, creating new opportunities for compliant and scalable energy efficiency projects.
Market participants are encouraged to align their business strategies, project structures, and compliance frameworks to capitalize on the opportunities under this new regulatory regime.
Tags: Regulation, waste to energy
