Energy Conservation as a Business Imperative: Key Takeaways from MEMR Regulation 1/2026 
Marinza Savanthy
Marinza Savanthy
Minister of Energy and Mineral Resources Regulation No. 1 of 2026 on Energy Conservation Service Businesses (“MEMR Regulation 1/2026”) establishes a comprehensive regulatory framework governing the operation of energy conservation service businesses in Indonesia. The regulation sets out licensing requirements, scope of permitted activities, applicable business models, and ongoing reporting obligations for service providers.
The regulation clarifies the respective roles and responsibilities of service providers and energy users, mandates compliance with technical standards, and formalizes measurement and verification (M&V) mechanism to ensure the credibility and accountability of energy savings. Importantly, the regulation allows flexibility in structuring energy efficiency projects through various commercial models, including performance-based models.
By providing greater regulatory certainty and clearer risk allocation, this framework is expected to support the scale-up of energy efficiency projects (“EE Projects”) and facilitate their financing and commercialization in Indonesia.
Background and Objectives of MEMR Regulation 1/2026
In 2023, the Government of Indonesia reaffirmed its commitment to advancing energy conservation through the issuance of Government Regulation No. 33 of 2023 on Energy Conservation (“GR 33/2023”). This regulation emphasizes the implementation of energy conservation measures across sectors, including the development and promotion of energy conservation service business as a key supporting sector. 1
To operationalize this mandate and provide a practical regulatory framework for the conduct of these efforts, the Government of Indonesia, through the Minister of Energy and Mineral Resources (“Minister”), enacted MEMR Regulation 1/2026. This regulation primarily introduces a more structured legal framework governing the energy conservation service business in Indonesia, including clearer definitions of the roles and responsibilities of the parties involved, as well as the applicable operational mechanisms.
Parties Involved in the Energy Conservation Service Business
Under MEMR Regulation 1/2026, the energy conservation service business involves two key parties, namely:
- Energy conservation services providers, which may take the form of:2
- business entities;
- public service agencies; or
- technical implementing units.
- Energy conservation services users, which are intended for:3
- energy suppliers;
- energy resource users; and/or
- energy end-users.
MEMR Regulation 1/2026 further stipulates that prior to providing its energy conservation services, energy conservation service providers must obtain the relevant business license in accordance with prevailing laws and regulations as a prerequisite for conducting their business activities.4
Understanding Energy Conservation Service Business
Under MEMR Regulation 1/2026, energy conservation service business generally covers a range of activities aimed at improving energy efficiency, from identifying the potential and financing of energy efficiency to implementation and verification of energy performance. These activities include energy audits, project financing, project implementation, and measurement and verification of energy performance.5
Set out below is an overview of the scope of services recognised under MEMR Regulation 1/2026:
| Scope of Service | Descriptions |
| Investment-Grade Energy Audit | This service focuses on identifying energy efficiency opportunities that are both technically and economically feasible. It involves defining the scope of work and establishing an energy baseline based on historical data and relevant variables, which serves as the reference point for assessing energy performance before and after the implementation of efficiency measures.6 |
| Financing of EE Projects | Energy conservation service projects may be financed through Energy Saving Performance Contracts.7 Under this scheme, financing is directly linked to the energy savings achieved.
To support this scheme, the regulation requires measurement and verification (M&V) of energy performance, with the applicable methodology to be agreed upon by the parties.8 The measurement and verification process may be carried out by:9
The regulation also allows for the involvement of third parties, in the form of risk guarantees or other forms of support, depending on the project’s needs.10
|
|
Installation and/or Construction, as well as Monitoring and Supervision of EE Projects |
This service covers the initial implementation stage of an energy efficiency project, including installation, construction, as well as project monitoring and supervision.
MEMR Regulation 1/2026 emphasizes that all activities under this scope of services must comply with applicable technical standards, including those stipulated under prevailing laws and regulations, Indonesian National Standards (SNI), and/or relevant international standards. |
| Operation, Maintenance, and Repair of Energy Installations; | This service relates to the implementation stage, which includes operational, maintenance, and repair activities aimed at ensuring that EE performance is sustained throughout the project lifecycle.
MEMR Regulation 1/2026 emphasizes that all activities under this scope of services must comply with applicable technical standards, including those stipulated under prevailing laws and regulations, Indonesian National Standards (SNI), and/or relevant international standards. |
| Measurement and Verification | This service focuses on ensuring that claimed energy savings are real, measurable, and accountable.11
The regulation requires that measurement and verification activities be carried out by certified verifiers or analysts who have obtained competency certification through a formal competency assessment in accordance with applicable regulations.12 At a minimum, measurement and verification activities include:
|
Business Models in Energy Efficiency Projects
MEMR Regulation 1/2026 provides flexibility for parties to determine the appropriate business model for EE Projects based on mutual agreement.
The regulation accommodates several business models, including:
- Guaranteed savings, where the service provider guarantees the achievement of a specified level of energy savings;
- Shared savings, under which the resulting energy savings are shared between the service provider and the service user;
- Build, Operate, and Transfer and Build, Operate, and Own, which govern the ownership and management of project assets;
- Energy as a Service, where the service user pays based on the services rendered or the energy savings delivered; or
- Other business models as may be agreed by the parties.
This flexibility enables business actors to structure energy efficiency transactions in a manner that aligns with project-specific requirements, including the allocation of risks, responsibilities, and economic benefits among the parties.
Reporting Obligations
MEMR Regulation 1/2026 also requires energy conservations service business providers to submit certain reports to the Minister via an information system provided by the Ministry of Energy and Mineral Resources.
These reporting obligations are summarised as follows:
| Type of Report | Related Information | Period |
| Initial Report |
|
Within 14 (fourteen) business days from the issuance of the Business License for energy conservation service activities. |
| Energy Conservation Service Business Expansion Report | Within 14 (fourteen) business days from the approval of the business expansion. | |
| Energy Conservation Service Implementation Report |
|
Annually, no later than 31 December, and at any time if required. |
Energy conservation service business providers should note that any failure to comply with the above reporting obligations may result in the imposition of administrative sanctions in the form of written reprimands from the Minister.
What Does This Mean for Businesses?
With the introduction of a more integrated and structured regulatory framework in place, businesses now have greater clarity in developing and implementing EE Projects, including in determining the most suitable business models. In this regard, businesses should also proactively review and align their licensing positions and compliance strategies in light of MEMR Regulation 1/2026.
Looking ahead, strengthening technical standards and formalizing performance-based financing schemes are expected to drive broader, more measurable implementation of energy conservation across sectors.
ADCO Law will continue to closely monitor the implementation of this regulation, including market developments and evolving industry practices. Should you wish to explore how this regulation may impact your projects, our Project Development Practice Group Team would be pleased to assist.
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