B UILDING S ECTOR E NERGY E FFICIENCY

Summary of Government Policies

( 1 6 th N o v e m b e r 2 0 1 6 )
 2 EVOLUTION OF GOVERNMENT POLICIES

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3 EPU (PM DEPT.) RMK11 AT A GLANCE

TARGET 2020
Source: Yg Bhg Datin Badriyah, EPU public presentation Feb 2016
 4 EPU (PM DEPT.) RMK11 AT A GLANCE

(146) Local
? KPKT
Governments

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 5

Minimum Energy Performance Standards (MEP) for

appliances

Conditional Grants for Energy Audits and

Management for Private and Public Sectors.

Other agenda (require input from other agencies):

Tariff remodeling EoT, removing subsidy etc
On line metering / Smart Meters

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 6 ENERGY AUDITS (GRANTS)

Conditional Grants for Energy Audits and

Management for Industry; Grants are conditional,
i.e. recipient must implement E.E. retrofit of
matching amount recommended in the subsequent
Audit or management report.
Major fiscal incentive to promote ESCO business and E.E. practice in
Buildings;

Grants allocated:
RM7million to Industry
RM3.8 million commercial buildings (private sector)
RM12.3 million (federal buildings)

Comment:

It is anticipated that this fiscal stimulus will fuel a small boom in the
Energy Service Industry from 2017
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 7 MIN. ENERGY PERFORMANCE STANDARDS
MEPS FOR APPLIANCES
MEPS are controlled item under the Electricity Supply Regulations.
They are mandatory requirement in law:

5 items now
under MEPS

MEPS
Washing
Machine ??

HEM Motor
Added

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 8 MEPS THE CONTEXT

? ?

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 9 DEMAND SIDE MANAGEMENT

Gradual phasing out of Special Industrial Tariff

(SIT).
ETOU (enhanced time of use) Tariff Scheme.
Smart Metering

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 10 SPECIAL INDUSTRIAL TARIFF

Gradual phasing out of Special Industrial Tariff (SIT), SIT allows special
discount on tariff for industry where energy cost is > 5% of operating cost.
5 identified industries:
Ice Factories Comment:
Iron and Steel Why is Cement industry in the list?
Glass Major energy use in cement plant is medium
oil (primary energy) to fire their furnaces. One
Industrial Gas manufacturer uses up to 30% biomass.
Cement
Gradual removal of discount yearly from Jan 2016 until Jan 2020
Comment:
From the authors perspective, high tech industries for the new Comment:
economy are ENERGY INTENSIVE: (anecdotal):
Why are NEW AGE
Data Centers Industries NOT IN
Wafer Foundries (the new wave are sub micron ... and they THE LIST?:
are power and water hungry) Refer comments on
Semi conductor plants e.g. in optoelectronics District Energy
One case of contract manufacturer (Johor 2015) requires Plants.
an astonishing 18MW demand.
16th November 2016
 11 ETOU

ETOU (enhanced time of use) Tariff Scheme.

ETOU is extension to EXISTING Time of Use TOU) tariff (C2 and E2).
Lower tariff at off peak and mid peak hours.

hippeulooi@gmail.com Source: TNB Public Presentation March 2016 16th November 2016
 12 ETOU AND TOU

ETOU is extension to existing TOU tariff.

EXISTING TOU tariffs (C2 and E2) are peak/off peak tariffs.
Critique:
The Existing TOU is SERIOUSLY .dysfunctional. It is supposed to encourage
industry to move their load to off peak hours. Due to unrealistic peak demand
charges under C2 and E2 IT HAS NOT BEEN attractive to industries
Why C2 and E2 are not attractive? This is possibly a legacy of OVER Generation
(mid 1990s to early 2000) with as much as 40% spinning reserve. TOU policies
were at best perfunctory.
A BIG difference between base-load and peak load is NOT good for E.E.
management in the national context. Off peak tariff aims to even the difference
between peak load and base load.
If Existing TOU IS NOT EXACTLY working to flatten demand then ETOU as an
extension to TOU will suffer the same fate..
Continue next ... 2 Slides case studies of TOU
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 13 ETOU AND TOU

Case Study of a
manufacturing Plant
shows the marginal
advantage of existing
TOU (E2) tariff

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 14 ETOU AND TOU

Monthly Charges

Monthly Charges
Pre 2006 Post 2006

kWh consumption kWh consumption

The attractiveness of TOU (C2 and E2
tariffs) has DETERIORATED since 2006.
An expert study on C2 and E2
rationalisation should be commissioned
to enhance TOU DSM. Study should
include Macro Economic Impact on
Markets

Peak & Base load

approx. 2 GW ?
Note: Author has more than 3 decades in the electrical industry in
Malaysia designing, planning and supervising electrical works.
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 15 SMART METER

TNB rolling out smart meters for households and industry.

Smart meters are an essential first step in implementing flexible time of
use tariff.

Critique:

Policy fragmentation an issue. Online metering is carried out under

SEDA and TNB.

However ST who by law monitors facility energy use under EMEER

DO NOT HAVE access to online meter and only compile energy use
manually .Policy STILL EVOLVING.

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 16 REVISION TO UBBL

Revision to Uniform Building By Law (2014)

(a) OTTV Calculation compliance
(b) Installation of Energy Management Device
mandatory for all air conditioned space >
4,000 m.

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 17 REVISION TO UBBL

38A (1) Bangunan baru atau diubah suai dengan ruangan hawa dingin melebehi
4,000 meter persegi hendaklah
(a) direka agar dapat mencapai spesifikasi PM1525 dari segi Overall
Thermal Transfer Value (OTTV) dan Roof thermal Transfer Value
(RTTV); dan
(b) disediakan dengan Sistem Pengurusan Tenaga
(2) Bumbing bagi semua bangunan (kediaman dan bukan kediaman)
hendaklah mempunyai kadar peralihan arus udara panas (thermal
transmittance) (U value) yang melebihi
(a) 0.4 W/m K bagi bumbing yang ringan (kurang daripada 50kg/m);
dan
(b) 0.6 W/m K bagi bumbing yang berat (lebih daripada 50kg/m);
melainkan jika dilengkapi dengan elemen teduhan atau penyejukan.

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 18 REVISION TO UBBL

(a) OTTV Calculation and compliance

(b) EnMS Device

UBBL Revision can be implemented

irrespective of gazette of UBBL
Local authorities can impose in
Syarat Bangunan without having
to wait for gazette of State UBBL.
Simple implementation by building
control in C.C.C. via G Form
Declaration by Submitting
Architect for OTTV calculation and
EMS installation by Engineer.

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 19 REVISION TO UBBL

(a) OTTV Calculation and compliance NOW MANDATORY

(b) Installation of Energy Management Device mandatory for all
air conditioned space > 4,000 m.
UBBL Revision Gazette in 3 States:

Terengganu

Johor

Selangor

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 20 RAIN WATER HARVESTING
MANDATORY IN 3 STATES

Terengganu

Perak

Selangor

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 21 MYCREST ENERGY EFFICIENT DESIGN

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 22 MYCREST ENERGY EFFICIENT DESIGN

All new Government Buildings

>RM 50million shall be certified to
MyCrest rating tool from 2017.
Carbon reduction and
environmental sustainability tool.
Carbon calculator
State government encouraged to
adopt MyCrest for their building
programme.

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 23 ENERGY SECTORS

HP Looi, illustrative Scheme of Energy Plant

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 24 ENERGY SECTOR STRATEGIC THRUSTS

B2
Increase share of 2,080 (a) Explore new RE Source (wind, geothermal, ocean etc)
R.E. in energy mix MW (b) Enhance capacity of RE personnel (capacity building, training)
(c) Implement Net Energy Meter

B3
Enhance Demand (a) Formulate comprehensive DSM Master Plan
DSM
Side Management (b) Expand DSM for all sectors (REEM, EPC, ISO50001, ETOU,
Smart Grid, Co-Gen)

Comment
Policies on Net Energy, Smart Grid and Co Gen suffers from policy
fragmentation (SEDA, TNB, ST, GreenTech)
Lack of Energy Omnibus Act (a proposal since the tenure of Datuk Samy Vellu
(2002?) is a major barrier to strategic energy planning nationally.
Cooling is a major need not only for commercial BUT increasingly for the NEW
high tech industry. Cooling energy is NOT ONLY about electricity BUT
encompass natural gas. Thus a MAJOR programme in DSM should consider
district energy plant where Gas as primary energy source will be critical.
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 25 ENERGY SECTOR STRATEGIC THRUSTS

E1
(a) Foster greater institutional collaboration in energy planning
Increase share of
(b) Engage end users on efficient energy consumption (public awareness,
R.E. in energy mix
communications etc)
E2
Security and (a) Ensure security of Gas Supply (Peninsular Gas pipeline; PGU, Pengerang
Reliability of O&G Johor, LNG Sabah/Sarawak)
Market (b) Reduce market distortion (gas pricing structure, Incentive based
regulations for gas, Expand CNG retail infrastructure)
E3
Enabling growth in (a) Support development of Pengerang Integrated Petroleum Complex (add
the O&G 300K bpd oil refining capacity, 1.2GW co-gen)
subsector (b) Move towards 3rd party access for gas supply (revise Gas Supply Act)
(c) Implement Clean Fuel in the Transport Sector

Policy fragmentation:
Housing, Local Authorities Housing and Building Sector
Electricity Suruhanjaya Tenaga ; SEDA
Renewables SEDA
Natural Gas PMs Dept. (Petroleum Development Act) for upstream and
Suruhanjaya Tenaga (Gas Supply Act) for downstream retail.
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 26 ENERGY SECTOR STRATEGIC THRUSTS

Enabling growth in (a) Support development of Pengerang Integrated Petroleum

the O&G Complex (add 300K bpd oil refining capacity, 1.2GW co-gen)
subsector (b) Move towards 3rd party access for gas supply (revise Gas
Supply Act)
E3
(c) Implement Clean Fuel in the Transport Sector

Comment: (Natural Gas Market):

Petroleum Development Act for upstream (PMs
Department, Petronas, Gas Malaysia
Gas Supply Act for downstream (Suruhanjaya Tenaga).
Because of market structure defined by law the retail end of Gas
Supply is VERTICALLY INTEGRATED.
Due to above, DESPITE abundance of natural gas resources our Up to 40% energy
development of CNG (Compressed Natural Gas) and down-stream need from transport.
co-gen are STUNTED.
It would be intriguing to see HOW the Ministry can LIBERALISE the
NG market. This will fuel a market in down stream Co Gen
Technology (see next slide for further explanation).

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 27 ENERGY SECTOR CASE STUDY

New Generation Industries are Energy Intensive.

Malaysia should leverage and husband her abundance
in this resources to leap up the technology ladder.
Semi Conductor PV Cell Manufacturer Melaka (2008) Co Gen ; Chilled
(a) Electricity Requirement (FULL): 64MW Water & Electricity

(b) Cooling Need (FULL) 32,000 RT: assuming chiller CoP of 5 this will
require about 22MW energy which can be supplied by electricity or co-
gen energy plant supplied with natural gas.

Data Centre, Nilai, N.Sembilan (2010) Ice Storage District

(a) TOTAL Electricity Need (FULL): 25MW Energy Plant

(b) Cooling Need (FULL) 7,000 RT: assuming chiller CoP of 5.5 this will
require about 4.5 MW energy which can be supplied by electricity or co-
gen energy plant supplied with natural gas.

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 28 ENERGY SECTOR DISTRICT ENERGY

Conventional
Energy
Delivery

District Energy
Plant (80% - 40%
reduction in
CO2)

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 29 DISTRICT ENERGY CO GEN : BARRIERS

Barriers (Technical and Market)

Lack of access to NG, despite being a
resource abundant nation.
Access to Primary Fuel O&G locked
by Petroleum Development Act.
HP Looi (2016)
Illustrative ONLY
Market instability (prices of NG).
Unrealistic energy tariff (high standby charges principally TNB stymie
many projects)
Strategic Targets:
High Tech Industries (wafer fab/semi cond, data centres etc) require
large energy need. Energy planning (instead of more electricity tariff
concession) should be the right strategy.
Energy resources are STRATEGIC and should NOT just be exported
BUT used as leverage to the NEW ECONOMY.
District Energy Plant and Co-Gen by liberalizing the NG market.
Note: The Author, though a Electrical Engineer by qualification, also has expertise in the O&G sector, having first worked
for Shlumberger S.A. (1979 1980) and is certified as a Jurutera Gas by Energy Commission (2001).
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 30 ENERGY SECTOR TRANSPORT SECTOR
(c) Implement Clean Fuel in the Transport Sector

Up to 40% energy
need from transport.
Ministry of Transport (Licensing and control)

National Land Public Transport Master Plan

National Automotive Policy (2014)

Ministry of Natural
Resources and
Environment
Thrust 1 Biofuel for Transport
Thrust 2 Biofuel for Industry
Thrust 3 Biofuel Technology
Thrust 4 Biofuel for Export
Thrust 5 Biofuel for Cleaner
Environment.

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 hippeulooi@gmail.com 16th November 2016
 32 INCENTIVES

ITA Eligibility: Companies undertaking investments in specific projects

Investment
promoting sustainability and green environment EITHER for own use or
Tax business purposes.
Allowance
Incentives: ITA of 100% qualifying capital expenditure incurred YA 2013
until YA 2020. ITA can be utilised to offset against 70% of statutory income.

ITE
Eligibility: Companies provide green services that support investment in
Income Tax green projects.
Exemption Incentives: ITE of up to 100% of statutory income from year of assessment
2013 until year of assessment 2020.

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 33 INCENTIVES

ITA Eligibility: Companies undertaking investments in specific projects

Investment
promoting sustainability and green environment EITHER for own use or
Tax business purposes.
Allowance
Incentives: ITA of 100% qualifying capital expenditure incurred YA 2013
until YA 2020. ITA can be utilised to offset against 70% of statutory income.

ITE
Eligibility: Companies provide green services that support investment in
Income Tax green projects.
Exemption Incentives: ITE of up to 100% of statutory income from year of assessment
2013 until year of assessment 2020.

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 34 INCENTIVES

Source: MIDA

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 35 INCENTIVES CRITIQUE

ITE is too heavily centered around GBI certification.

It is NOT CLEAR, WHO and HOW Q.E. in ITE can be certified /verified for
acceptance by LHDN for E.E. projects.
The next policy push (2017) will result in bigger investment and
activities purely in E.E. projects (NOT GBI or purely green related), ITE
in its current format will be difficult to incentivize for E.E. projects.
Currently the E.E. industry is posed between the cusp of rising energy
cost (but still relatively low) and a more competitive business
environment leading to possibly
a surge in the ESCO industry.
Stimulus policy is therefore
necessary to tunnel through
Kuznet Curve.
Comparatively in Asia, the Malaysia
ESCO industry is relatively
underdeveloped.
Note: Simon Kuznet is commonly attributed the popular
aphorism that ONLY the RICH can afford sustainability.
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 hippeulooi@gmail.com 16th November 2016
 37 BUILDING SECTOR ENERGY EFFICIENCY PROJECT

BSEEP is programme managed by the UNDP and

(FULLY) funded by a G.E.F. BSEEP in Malaysia is
managed by the Public Works Department, Malaysia.

Financer

Implementing
Partner

Implementing
Agency

Government & Private Sectors

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 38 BUILDING SECTOR ENERGY EFFICIENCY PROJECT

B UILDING S ECTOR E NERGY E FFICIENCY P ROJECT

Global Environmental Facility International
cooperation to address global environmental
issues. Funded by donors and financiers. Serves as
the financial frame work for the United Nations
Framework on Climate Change (UNFCC)
United Nations Development Programme is the
United Nations global development network.
UNDP focuses on 3 main areas; (1) Sustainable
development, (2) Democratic governance and
peacebuilding, and (3) Climate and disaster
resilience.
Public Works Department, Ministry of Works, Malaysia

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 39 BUILDING SECTOR ENERGY EFFICIENCY PROJECT

B S E E P H A S B E E N R U N N I N G S I N C E 2 0 11 A N D W IL L E N D I N M I D 2 0 1 7

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 40 UNIDO ENERGY MANAGEMENT IN INDUSTRY

The UNIDO Programme on

Energy Management System
Implementation in Industry
CAPACITY BUILDING FOR ISO50001, INDUSTRY PROMOTION

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 41 ABOUT THE AUTHOR 16th November 2016

Ir. Looi Hip Peu (Ir. H.P. Looi)

B.Eng (Hons), P.Eng with Practice License (PE 5226),
Jurutera Gas (JBE(JG)26, Fellow IEM (2625)
Past President, Malaysian Green Building Confederation
C5 Manager, Building Sector Energy Efficiency Project
hippeulooi@gmail.com; mektricon@gmail.com
Ir. H.P. Looi is a practicing engineer in the firm of Mektricon Sdn Bhd (since 1983), a firm with a
wide and diverse portfolio of projects, accumulated through more than 30 years service in
industry (large industrial plants, townships and housing, commercial developments and small
bungalows). The firm has also commissioned projects within the ASEAN / ASIAN region.
Ir. H.P. Looi is an active member of the engineering community having served as:
(a) Hon Secretary of the Association of Consulting Engineers Malaysia 2003 2006 and again
from 2009 to 2012,
(b) A founding member of the GBI Accreditation Panel (2008 2013);
(c) A founding member and Past President of the Malaysia Green Building Confederation
Ir. H.P. Looi has more than 15 years experience in standards development; being member /
contributing author at national level to various technical committees and workgroups (MS1525,
Embedded Generation, Electrical Safety, MEPS etc).
Ir. H.P. Looi is currently Component 5 Manager under UNDP Building Sector Energy Efficiency
Project (BSEEP).