16/12/2011

RENEWABLE ENERGY DEVELOPMENT & FEED-IN TARIFF IN MALAYSIA

SEDA Malaysia

Disclaimer
The information contained in this PowerPoint slides is for general purposes only. While the Sustainable Energy Development Authority Malaysia (SEDA Malaysia) endeavours to keep the information up to date and correct, the information displayed herein is subject to changes and may no longer be accurate after the preparation date. SEDA Malaysia is not responsible for any errors or omissions, or for the results obtained from the use of this information, nor do we make any representation or warranty of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to this PowerPoint slides or the information contained in this PowerPoint slides for any purpose. Any reliance you place on such information is therefore strictly at your own risk. In no event will SEDA Malaysia, the Ministry of Energy, Green Technology and Water, the Government of Malaysia, or any of their related corporations, agents, employees or consultants be liable to you or anyone else for any decision made or action taken in reliance on the information in this PowerPoint slides or for any damages whatsoever, including without limitation, special, indirect, or consequential damages arising out of or related to the use or reliance of the information contained in this PowerPoint slides , whether by action in contract, tort or otherwise howsoever.

16/12/2011

Background

Definition of Renewable Energy

Renewable Energy (RE) is any form of primary energy from recurring and non-depleting indigenous resources. Renewable resources means the recurring and nondepleting indigenous resources or technology as set out in the first column of the Schedule of the RE Act 2011

16/12/2011

Renewable Malaysia: Energy Renewable Development Energy Policies in Malaysia

RE as the 5th Fuel Implied 5% RE in energy mix

8TH Malaysia Plan (2001 2005)

Targeted RE capacity to be connected to power utility grid:

300 MW Peninsular Malaysia; 50 MW - Sabah

Targeted power generation mix:

9th Malaysia Plan (2006 2010) 54.2% natural gas, 40.2% coal, 5.2% hydro, 0.2% oil, 0.2% Renewable Energy

Carbon intensity reduction target: 40% lower than 2005 levels by 2020

RE as of 31st December 2010

Connected to the utility grid (as of 2010): 61.2 MW (17.5% from 9th MP target) Off-grid: >1GW (private palm oil millers and solar hybrid)

National RE Policy & Action Plan

16/12/2011

Malaysian National Renewable Energy Policy and Action Plan

Approved by Cabinet on 2nd April 2010

Policy Statement: Enhancing the utilisation of indigenous renewable energy resources to contribute towards national electricity supply security and sustainable socio-economic development. Objectives: To increase RE contribution in the national power generation mix; To facilitate the growth of the RE industry; To ensure reasonable RE generation costs; To conserve the environment for future generation; and To enhance awareness on the role and importance of RE.
7

Strategic Thrusts of the National RE Policy

Strategic Thrust 2: Provide Conducive Business Environment for RE

Strategic Thrust 3: Intensify Human Capital Development

Strategic Thrust 1: Introduce Legal and Regulatory Framework

Strategic Thrust 5: Create Public Awareness & RE Policy Advocacy Programmes

Strategic Thrust 4: Enhance RE Research and Development

8

16/12/2011

National RE Goals (excl EPP-10)

25,000

20,000

Solar PV Solid Waste Mini Hydro

2030 3.5 GW 2020 2.1 GW

2050 21.4 GW (73%) 11.5 GW 44.2 GWh (24%)

2050:

15,000

Biogas Biomass

MW

10,000

5,000

2015: 985 MW (6%) 5.4 GWh (5%)

2020: 2,080 MW (11%) 11.3 GWh (9%)

2030: 4,000 MW (17%) 17.2 GWh (12%)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2011

Year

9 9

EPP 10 Solar Power Capacity Initiative

New Key Economic Areas : Entry Point Project (EPP) 10: Solar Power Capacity Initiative EPP 10 Target - 1.25GW solar power capacity connected to the grid by 2020
Year Solar Power Capacity (Cumulative) RE Capacity (Cumulative) RE Capacity Mix

2011 2015 2020 2030

20MW 295MW 1,250MW 3,100MW

219 MW 1,275 MW 3,140 MW 7,088MW

1% 7% 14% 25%

16/12/2011

FEED IN TARIFF MECHANISM

Feed-in Tariff: Government Policy

10th Jun 2010: 10th Malaysia Plan (chapter 6) 15th Oct 2010: National Budget 2011 (paragraph 34) 25th Oct 2010: Economic Transformation Programme (chapter 6)

12

16/12/2011

Feed-in Tariff (FiT)

A mechanism that allows electricity that is produced from indigenous RE resources to be sold to power utilities at a fixed premium price and for specific duration. Provides a conducive and secured investment environment which will make financial institutions to be comfortable in providing loan with longer period (>15 years). Provides fixed revenue stream for installed system Only pays for electricity produced: promotes system owner to install good quality and maintain the system With suitable degression rate, manufacturers and installers are promoted to reduce prices while enhancing quality
13

Basic Concept of the Feed-in Tariff for Household

There are 2 meters in each home. One to record how much renewable energy is generated by solar PV system Distribution licensee pays all the renewable energy exported to the grid. Another to record how much electricity the household consumes

16/12/2011

Critical Factors for an Effective FiT Implementation Malaysia: Renewable Energy Policies
FiT must be guaranteed via the RE Act, whereby: Access to the grid is guaranteed utilities legally obliged to accept all electricity generated by RE private producers Local approval procedures are streamlined and clear FiT rates high enough to produce ROI + reasonable profit (not excessively) to act as an incentive fixed for a period (typically 20 years) to give certainty & provide businesses with clear investment environment adequate "degression" to promote cost reduction to achieve grid parity Adequate fund is created to pay for the FiT rates & guarantee the payment for the whole FiT contract period Implementation by a competent agency for constant monitoring, 15 progress reporting and transparency

How is the FiT funded?

16/12/2011

FiT Mechanism for Malaysia

Step 1: Electricity consumers pay electricity bills to Distribution Licensees (e.g. Tenaga Nasional Berhad)

17

FiT Mechanism for Malaysia

Step 2: 1 % of electricity revenue is channelled from distribution licensees to RE Fund which is managed by SEDA Malaysia
18

16/12/2011

FiT Mechanism for Malaysia

Step 3: Distribution Licensees make FiT payment to FiAHs

19

FiT Mechanism for Malaysia

Step 4: Distribution Licensees claim from RE Fund, the positive sum of the differential between FiT payments and the prevailing displaced cost, including an administrative fee.

20

10

16/12/2011

Source of Fund for FiT

Source of Funding
2011 - additional tariffs collection from electricity bills Every RM100/Month - RM1 for RE
FiT Cost

Additional 1% (proposed in 2013)

The size of RE fund will determine the RE target for Malaysia

1%

Benefit
polluters pay concept will not affect 75% of electricity consumers ( 300 kWh/mth) encourages EE and DSM

21

FiT Financing in Germany

Germany contributes 15% of their electricity bills to finance the feed-in tariff. This amounts to 13 billion (2010) and half of this goes to solar PV. Germany decision to move to RE is as a result of peoples choice. 1% 70% of electricity is imported. Germany wants to achieve energy autonomy. Chernobyl disaster. Germany wants to reduce reliance on nuclear power. 15% of total electricity price for RE is a small price for the Germans to pay What about us? How much are we willing to pay?
22

Gerhard Stryi-Hipp, Head, Energy Policy, Fraunhofer Institute for Solar Energy Systems

11

16/12/2011

Impact of the FiT in Germany

- Germanys feed-in implemented in 2000 tariff was

- Created 400,000 green jobs - In 2000, RE forms 6 % of Germanys 1% energy mix and in 2011, RE forms 20 % of Germanys energy mix.

Source: BMU

- By 2020, RE will account for 35% of Germany's energy output, soaring to 80% by 2050. - By end of 2011, Germany will have 22.5 GW of solar PV and 75 GW of wind power
23

Renewable Energy Act 2011

12

16/12/2011

Renewable Energy Act 2011

RE Act: an Act to provide for the establishment and implementation of a special tariff system to catalyse the generation of renewable energy and to provide for related matters. Comprises of 9 Parts and 65 Clauses
Part I: Preliminary Part II: FiT System Part III: Connection, Purchase and Distribution of RE Part IV: Feed-in Tariff Part V: Renewable Energy Fund Part VI: Information Gathering Powers Part VII: Enforcement Part VIII: General Part IX: Savings and Transitional

Passed in Parliament: 27th April 2011

25

Subsidiary Legislations
1. Renewable Energy (Feed-in Approval and Feed-in Tariff Rate) Rules 2011 2. Renewable Energy (Technical and Operational Requirements) Rules 2011 3. Renewable Energy (REPPA) Rules 2011 4. Renewable Energy (Criteria for Renewable Resources) Regulations 2011 5. Renewable Energy (Allocation from Electricity Tariffs) Order 2011 6. Renewable Energy (Recovery of Moneys by Distribution Licensee) Rules 2011 7. Renewable Energy (Administrative Fees) Rules 2011
http://seda.gov.my/go-home.php?omaneg=00010100000001010101000100001000000000 000000000000&s=1207
26

13

16/12/2011

Feed-in Approval & Feed-in Tariff Rules 2011

1) Individuals ( 21 years) Malaysians Foreign individuals: limited to solar 72 kWp 2) Companies (ROC) All legally registered companies and businesses Direct ownership Shareholding limitations: 1)DL: 49% within its distribution area 2)Foreign companies: 49% 3) Other entities (body corporate, society, co-operative society, firm, local authority)
27

FiT Design

14

16/12/2011

1.80 1.70 1.60 1.50 1.40 1.30 1.20 1.10

Degression & Grid Parity (Projected)

RE-FiT Rate vs Displaced Cost

Upon grid parity: FIAH will be paid prevailing DC rate. DL cannot claim from RE Fund (SEDA)

Tarif Jualan Displaced Cost (LV) Displaced Cost (MV) Displaced Cost FiT Biomas FiT Biomas FiT Biogas FiT Biogas FiT Mini Hidro FiT Mini Hydro FiT FiT Solid Sisa Waste Pepejal FiT Solar PV PV FiT Solar

RM/kWh RM/kWh

1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00

Grid Parity

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 29

Tahun

FiT Degression: Promote cost reduction towards Grid Parity

Degression rate to commence on 1st January every year Revision: at least once every 3 years

30

15

16/12/2011

RE Law Schedule: Biogas

31

RE Law Schedule: Biomass

32

16

16/12/2011

RE Law Schedule: Small Hydropower

33

RE Law Schedule: Solar PV

34

17

16/12/2011

RE Law Schedule: Solar PV .. cont

35

Annual RE Quota
Biogas Biogas Sewage MW 10 10 10 Biomass SolidWaste MW 60 50 50 MW 20 30 30 Small Hydro MW 30 30 90 Solar PV < 1MW MW 10 10 10 Solar PV > 1MW MW 40 40 40 190 190 250 Total (MW)

Year 2011/ 2012 2013 2014

MW 20 20 20

36

18

16/12/2011

Getting started

To do list
1. Connection Confirmation Check (72 kW 180 kW) RM1000, 2 weeks. 2. Power System Study (> 180 kW)
Net Export Capacity or Rated kWp of RE Installation Up To 1 MW More Than 1 MW Up To 10 MW More Than 10 MW Up To 30 MW Additional For Insulation Coordination Studies If Required Additional for Solar PV - Dynamic Study (Voltage Fluctuations) If Required Cost (RM) 20,000 40,000 60,000 20,000 10,000 Completion Period 30 Days 30 Days 42 Days 10 Days -

Both to be conducted by the relevant Distribution Licensee.

38

19

16/12/2011

To do list
Secure legal rights to the site of the RE installation / letter of intent from the site owner Design RE installation (SLD, capacity, technical details, etc) Check relevant local authority and other governmental requirements Contact potential financier & obtain financing offer letters/term sheet Prepare work plan & major milestones Company info (e.g. certified true copies of audited accounts, Forms 8, 24, 49, memorandum & articles of association, boards reso authorizing representative to apply FiA on companys behalf)

39

Memorandum & Articles of Association

40

20

16/12/2011

Check out
FiT guidelines at http://seda.gov.my/gohome.php?omaneg=000101000000010101010001000010000000 00000000000000&s=1221 View standardized REPPAs at http://seda.gov.my/gohome.php?omaneg=000101000000010101010001000010000000 00000000000000&s=563 1. Biogas 10MW 2. Biogas > 10MW to 30MW 3. Biomass 10MW 4. Biomass > 10MW to 30MW 5. Small hydro 10MW 6. Small hydro > 10MW to 30MW 7. Solar PV 1MW 8. Solar PV > 1MW to 12MW 41 9. Solar PV > 12MW to 30MW

Giving False or Misleading Information

Para 26 (Feed-in Approval & Feed-in Tariff Rate Rules 2011) A person who fails to disclose or omit to give any relevant information or document to the Authority under these Rules, or provides to the Authority under these Rules any information or document that he knows or has reason to believe is false or misleading, commits an offence and shall, on conviction, be liable to a fine not exceeding RM300,000 or imprisonment for a term not exceeding 3 years or both.
42

21

16/12/2011

SEDAs Portal, www.seda.gov.my

43

e-FiT Online System

FiT quota approvals on first come, first served basis upon submission of complete application & document FiT quota is dynamic

44

22

16/12/2011

e-FiT Online System Tutorial

45

Potential Impact of National RE Policy by Year 2020

Minimum RM 2.1 billion savings of external cost to mitigate CO2 emissions (total 42 million tonnes avoided from 2011 to 2020, on the basis of RM 50 per tonne of external cost); Minimum RM 19 billion of loan values for RE projects, which will provide local banks with new sources of revenues (at 80% debt financing for RE projects); Minimum RM 70 billion of RE business revenues generated from RE power plants operation, which can generate tax income of minimum RM 1.75 billion to Government; > 50,000 jobs created to construct, operate and maintain RE power plants (on the basis of 15-30 job per MW).

46

23

16/12/2011

Penang One of the best spots under the Sun! Malaysia: Renewable Energy Policies

47

solar@ecosensa.com http://solar.ecosensa.com

48

24