Overview of Policy Instruments for the Promotion of Renewable Energy and Energy Efficiency in Malaysia

BACKGROUND REPORT

TABLE OF CONTENTS
1. 2. Malaysia Energy Sector: An Overview......................................................................... 4 Status of Renewable Energy Utilization ....................................................................... 7 2.1 Biomass energy ................................................................................................... 8 2.2 Biogas energy .................................................................................................... 12 2.3 Hydropower........................................................................................................ 14 2.4 Solar energy....................................................................................................... 15 2.5 Wind energy ....................................................................................................... 18 2.6 Geothermal energy ............................................................................................ 19 3. Renewable Energy and Energy Efficiency Policy and Programs ............................... 19 3.1 Malaysia’s energy policies ................................................................................. 19 3.2 Policy initiatives and programs........................................................................... 22 3.3 Key players ........................................................................................................ 24 4. Renewable Energy and Energy Efficiency Activities.................................................. 25 4.1 Renewable energy activities .............................................................................. 25 4.2 Energy efficiency activities ................................................................................. 26 5. Potential for Renewable Energy and Energy Efficiency in Malaysia .......................... 30 5.1 Biomass energy potential................................................................................... 30 5.2 Solar energy potential ........................................................................................ 31 5.3 Wind energy potential ........................................................................................ 33 5.4 Small hydropower potential................................................................................ 33 5.5 Geothermal energy potential.............................................................................. 34 6. Current Gap/Constraints and Market Barriers or RE and EE..................................... 37 6.1 Biomass energy ................................................................................................. 37 6.2 Solar energy....................................................................................................... 39 6.3 Wind energy ....................................................................................................... 40 6.4 Small hydropower .............................................................................................. 41 References ........................................................................................................................ 42

LIST OF FIGURES Figure 1: Malaysia’s electricity generation mix (1990-2003)................................................ 6 Figure 2: Malaysia’s electricity generation mix (2003)......................................................... 6 Figure 3: Malaysian renewable energy sources. ................................................................. 7 Figure 4: Malaysia renewable energy values. ..................................................................... 7 Figure 5: Potential power generation from wood residues. ............................................... 11 Figure 6: Composition of municipal solid waste in Malaysia.............................................. 12 Figure 7: TNB Jana Landfill Biogas Project in Malaysia (2 MW). ...................................... 13 Figure 8: Solar irradiance map of Malaysia. ...................................................................... 16 Figure 9: Cumulative BIPV Installed Capacity in Malaysia ................................................ 17 Figure 10: Examples of grid-connected PV installations in Malaysia. ............................... 17 Figure 11: Communities, sectors and clusters that belong to MIEEIP............................... 27 Figure 12: Basic guideline in energy benchmarking. ......................................................... 29 Figure 13: ‘Energy Use Index’ method of calculation. ....................................................... 29 Figure 14: Interactive e–benchmarking. ............................................................................ 29 Figure 15: Distribution of thermal springs in Peninsular of Malaysia. ................................ 34 Figure 16: Distribution of thermal springs in Sabah........................................................... 35 Figure 17: Distribution of thermal springs in Sarawak. ...................................................... 36

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LIST OF TABLES Table 1: Gross national product (at current price) (2004).................................................... 4 Table 2: Total primary energy supply (ktoe) ........................................................................ 4 Table 3: Total primary energy supply (2003) ....................................................................... 4 Table 4: Final commercial energy consumption .................................................................. 5 Table 5: Final commercial energy consumption (2003)....................................................... 5 Table 6: Major electricity producers in Malaysia.................................................................. 5 Table 7: Status of SREP projects approved by SCORE (August 2004) .............................. 8 Table 8: Residue product ratio and potential power generation from palm oil mill residues ................................................................................................................................... 10 Table 9: Solid residue resulted from processing FFB........................................................ 10 Table 10: Residue product ratio and potential power generation from rice mill residues (2000).........................................................................................................................11 Table 11: Characteristics of the biogas captured. ............................................................. 13 Table 12: Target BPIV ‘Suria 1000’ program..................................................................... 18 Table 13: RE System at Samusan, Tanjung Datu and Pulau Talang-talang National Parks ................................................................................................................................... 19 Table 14: History of main energy policy and events in Malaysia ....................................... 19 Table 15: List of approved SREP projects (December 2004)............................................ 25 Table 16: Different sector and projects under CDM. ......................................................... 28 Table 17: Summary of main elements in energy efficiency policies .................................. 28 Table 18: Biomass resource potential (1999). ................................................................... 30 Table 19: Monthly average daily global solar radiation in selected cities (Whr/m2). ......... 31 Table 20: Estimated market solar hot water system in Malaysia in 2020. ......................... 31

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1.

Malaysia Energy Sector: An Overview

Malaysia is divided into two major parts, i.e. the Peninsular Malaysia (which is surrounded by the South China Sea and the Strait of Malacca) in the west and the Malaysian part of the island of Borneo in the east. These two parts are separated by 640 km of sea. The East Malaysia consists of the states of Sabah and Sarawak. The total land area is around 330,200 km2, with Peninsular Malaysia accounting 40% of the total.
Table 1: Gross national product (at current price) (2004) Economic Indicator Value (US$) million Sectoral GDP Components (estimated) GNP growth (%) Inflation CPI (%) Exports (US$ million) Current account balance (US$ million) Amount 31,085 5.6 2.4 19,896 3,404

Source: RE in ASEAN website: www.aseanenergy.org (December 2005)

Malaysia is a net energy exporter until today. It is predicted that this beneficial situation remains only until 2010 due to the limitation of the resources like coal and gas (Jaafar, 2005). In 2002, the primary energy supply was 52,995 ktoe (Table 2) or approximately five times larger than in 1980. Compared to the supply in 1980, the crude oil contribution to the total supply is significantly declining while the natural gas and coal are increasing. Shown in Table 3 is the total primary energy supply in year 2003.
Table 2: Total primary energy supply (ktoe) Primary Energy Supply Indigenous Production Import Export Stock Change TOTAL PES * Coal * Crude oil & Petroleum * Natural Gas * Hydro Power 1998 73,655 13,060 -43,714 -648 41,905 1,660 20,727 19,101 417 1999 72,439 13,122 -41,829 -1,427 41,893 1,376 18,364 21,506 647 2000 79,473 16,271 -43,637 -396 51,492 2,308 22,215 26,370 599 2001 77,264 18,692 -44,766 183 51,220 2,911 22,054 25,648 607 2002 80,519 17,979 -45,199 -214 52,995 4,133 22,308 26,101 456

Source: Energy Data and Modeling Center, IEEJ (2004)

Table 3: Total primary energy supply (2003) Primary Energy Supply Crude oil (ktoe) Natural gas (ktoe) Coal & coke (ktoe) Electricity (GWh) GDP energy intensity (TOE/ US$'000) Domestic energy conversion losses (%) Amount 25,344 20,878 5,316 83,300 0.88 36.1

Source: RE in ASEAN website: www.aseanenergy.org (December 2005)

The final commercial energy demand in 2002 was 30,775 ktoe, the main contribution came from the industrial and transportation sector and the remaining is shared by the residential and agricultural sector (Table 4). The same trend can be observed in year 2003; further, energy consumption indicators are also shown (Table 5).
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9 1.726 4.e.239 3.535 767 17.577 1999 106 10.8 1.862 5.880 % 47.643 5.175 5. Sabah Electricity Sdn.3 The electricity generation is dominated by three integrated utilities.853 4.782 3.399 14.9 1. Other power generators are the Northern Utility Resource (NUR).397 2.638 5.867 12.8 2.423 787 552 301 301 485 836 16. Tenaga Nasional Berhad (TNB) for Peninsular Malaysia.050 5.6 0.922 Source: Energy Data and Modeling Center.313 13.4 4.815 2000 104 11.138 29. Table 6: Major electricity producers in Malaysia Major Power Producers Tenaga Nasional Berhad (TNB ) Independent Power Producer (IPP) (Peninsular) Cogen Sarawak Electricity Supply Company (SESCO) IPP(Sarawak) IPP(Sabah) Sabah Electricity Sdn Bhd (SESB) Private Generation TOTAL Source: EC-ASEAN COGEN III (December 2004) Electricity Generation (GWh) 38.401 3.853 4.393 25.294 728 80.212 6.086 20.594 2002 95 12.887 1.9 4.660 31.023 4.263 2001 98 11. i.2 2.7 3.653 11.488 2.122 3.793 23.1 32.3 1.621 5.386 13.aseanenergy.462 3.0 100 5 .271 2.9 100 Installed Capacity (MW) 8.8 38.324 4.org (December 2005) Amount 21.391 608 18.581 3.9 5.070 27. IEEJ (2004) Table 5: Final commercial energy consumption (2003) Final Energy Consumption (ktoe) Petroleum products Natural gas Coal & lignite Electricity Net Domestic Consumption Per Sector (ktoe) Industry Residential/commercial Transport Non-energy and others Energy Consumption Indicators Per capita final energy consumption (TOE) Per capita electricity consumption (kWh) Electrification of households (%) Source: RE in ASEAN website: www..381 2.136 977 20.265 1. Bhd (SESB) for Sabah area and Sarawak Electricity Supply Corp (SESCo) for Sarawak area.537 1.537 1.Table 4: Final commercial energy consumption Final Energy Consumption Agricultural Sector Industrial Sector Residential and Commercial Sector Transportation Sector TOTAL FEC * Coal Products and Coal * Petroleum Products and Crude Oil * Gas * Electricity 1998 307 10.313 9.737 % 48.472 4.441 30.047 13. Independent Power Producer (IPPs) and cogenerators.442 991 19.345 1.8 1.775 1.840 83.

2% gas turbine and combined cycle.3% Hydro. 6.570 MW of new electricity generation capacity will be planted between 2002 and 2007 in the Peninsular Malaysia to meet future electricity demand (Shigeoka.500 GWh of electricity. 4.900 GWh produced by the utilities and IPPs.6% was contributed by IPPs (Statistic of Electricity Supply Industry in Malaysia. Figure 1: Malaysia’s electricity generation mix (1990-2003).8% was contributed by gas. 11. the total electricity generated in the country was 83. 16.2% Oil.450 GWh or 57.4% diesel and the remaining others. it was in the average of 3.7% Oil Biomass & Others Gas Gas.7% by biomass and other fuels (Figure 2). Out of the 78.In 2003. The country’s electricity generation mix from 1990 to 2003 is shown in Figure 1. At the end of 2003. Power Generation Mix (%) 100% 80% Coal 60% Hydro Natural Gas 40% Fuel Oil Diesel 20% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Pusat Tenaga Malaysia (7 Sept 2005) Figure 2: Malaysia’s electricity generation mix (2003). The total capacity of cogeneration in operation was 800 MW producing 3.300 GWh of which 72.800 MW with a plant mix of 58. Coal.9% per year for the next 20 years.5% oil. 0. It is also estimated that the total final energy demand will grow in the range of 5% to 7.3% coal. As a comparison in the period from 1980 until 1998.8% Coal Hydro Source: Statistic of Electricity Supply Industry in Malaysia (2004) The Malaysian government expects that investment of $9. the total installed generation capacity of the utilities and IPPs in the country was 18. 19. 6.2% hydropower. 3.0% Biomass & Others.0% oil products and 0. 7. 16. 4. 2004). 45.7 billion will be required in the power utility sector through 2010 dominated by coal-fired plants shifting away from the natural gas resources.3% coal.3% hydropower. 6 .6% to 10%. 72. A total of 9. 2005).

Status of Renewable Energy Utilization RE resources available in Malaysia are biomass. The overall available renewable energy sources in Malaysia can be seen in Figure 3 while the estimation of the annual renewable energy value in Malaysia is depicted in Figure 4. solar.2. Source: Pusat Tenaga Malaysia (2003) 7 . mini-hydropower. municipal waste and biogas. The Ministry of Energy. Almost 60% of the land area of the country is dominated by natural forest and 15% is shared by agricultural cultivation which means that there is a great potential the development of biomass energy. Renewable Energy Sources Biomass Palm Oil EFB Fibre Shell POM E Trunks/Frond s Source: Pusat Tenaga Malaysia (2003) Others Rice Rice Husk Straws Hydro Small Hydro Solar Thermal PV Wood Forest Sawmill M unicipal M SW Landfil Gas Figure 4: Malaysia renewable energy values. Water and Communications (MECW) stated that the most important renewable energy sources in Malaysia are biomass and solar. Figure 3: Malaysian renewable energy sources.

especially biomass residues from oil palm industries as Malaysia produces huge amount of wastes from the palm oil industries. biogas.2 99.70 Grid Connected Capacity MW) 165. of which 22 of them use palm oil wastes and the other seven projects use rice husk.1 2 3 4 Landfill Gas Mini-hydropower Wind and Solar Total Source: RE in ASEAN website: www.0 19.0 97. wood waste. including biomass. due to the lack of financial support and other difficulties. Out of these approved projects. demonstrate and even commercialize several initiatives arising from a number of RE feasibility studies and awareness programs undertaken in the last three years. 60 SREP projects have been approved.aseanenergy.0 316. However.2 0 352. municipal waste. 1 Type Biomass Energy Resource Empty Fruit Bunches Wood Residues Rice Husk Municipal Solid Waste Mix Fuels Approved Application 22 1 2 1 3 5 26 0 60 Generation Capacity (MW) 200.5 6. Under this Small Renewable Energy Power Program. The status of the SREP projects approved by SCORE. 29 projects use biomass as the fuel source.0 19. as of August 2004. which are used to produce steam for processing activities and also for generating electricity. namely oil palm waste and wood waste. Small power generation plants which utilize RE can apply to sell electricity to the Utility through the Distribution Grid System.0 5. SREP's primary objective is to facilitate the expeditious implementation of grid-connected renewable energy resource-based small power plants.6 12. This program particularly focuses on biomass wastes as the key renewable energy resources.org (December 2005) To date. municipal waste and bagasse.1 Biomass energy A large portion of renewable resources are contributed by biomass. Table 7: Status of SREP projects approved by SCORE (August 2004) No. are allowed. The launch of the Small Renewable Energy Power Program (SREP) in May 2001 is another manifestation of the government to achieve the Eight Malaysia Plan objectives in enhancing the utilization of renewable energy resources for power generation.2 10. there are five landfill gas projects and 26 minihydropower projects.The 8th Malaysia Plan is a period to test. 2. In addition to the above biomass-fuelled projects.2 10. Maximum capacity of small RE plant designed for sale of power to the grid must be 10 MW. is given in Table 7. solar. A Special Committee on Renewable Energy (SCORE) has been set up under the then Ministry of Energy. out of which 51 percent comes from palm oil biomass waste 8 . Biomass fuels contribute to about 16 percent of the energy consumption in the country. only six SREP developers have requested for and given licenses to proceed with the implementation of their projects. being world's biggest exporter of oil palm products.0 5.9 6.6 12. Communications and Multimedia to coordinate the program and a secretariat functioning as a One-Stop Center at the Energy Commission facilitates industry participation in the program. mini-hydropower and wind.4 0. the utilization of all types of Renewable Energy.

the approval of the phase 2 depends on availability of resources from financing sources and successful implementation of Phase 1. represents collaborative efforts of the global community in the form of United Nations Development Program (UNDP) and Global Environment Facility (GEF) together with the Malaysian Government and private organisations. The oil palm industry generates residues during the harvesting. Oil palm residues The palm oil industry has been operating biomass cogeneration systems for more than 40 years. which self generates electricity from oil palm wastes not only for their internal consumption but also for surrounding remote areas. the total potential of biomass-based power generation can be in excess about 2000 MW. will involve the implementation of an innovative loan/grant mechanism that will be worked through the Malaysian banking sector. The strategy involves the implementation of barrier-removal activities. palm oil waste and rubber waste located in ASEAN countries. The BIOGEN Project. wood waste (Pusat Tenaga Malaysia. there are eight ongoing Full Scale Demonstration Projects (FSDPs) implemented the biomass fuel systems which are in the areas of rice husk. Phase2. a three-year activity. However. the first phase being a 2-year project with 2003 as the start of the first year. including the implementation of biomass-based grid connected power generation and CHP in Malaysia. The residue that comes from the milling 9 . Three of these are in Malaysia. has been set up. This fuel is not easy to handle due to low calorific value. This project will facilitate the maximum utilization of the excess wastes from palm oil mills for power generation in reducing the Greenhouse Gas emissions in Malaysia. Other biomass energy contributors are from plant cultivations. which will be carried out over a five year period. The project was expected to launch its first FSM and three more are expected during the Second Phase of the project (2005-2008). Currently. 2002). The excess power from this combined and heat power plant can be connected to the national grid system. The utilization should be improved through an efficient biomass technology. There are currently more than 300 palm oil mills in operation. For the year 2003. and seasonal supply. animal and urban wastes. inconsistence quality. This 5-year project consists of 2-phases. To further catalyse the development of the SREP programs the government had implemented a national project called the “Biomass-based Power Generation and Cogeneration in the Malaysian Palm Oil Industry” (BIOGEN) project in 2001. A simple pre-treatment of biomass is required for the effective use of biomass such as shredding machine to reduce the size and dryer to reduce the moisture content. low density. Studies also found that 75. especially using palm waste. Under the EC-ASEAN COGEN Program Phase III. The value of biomass in Malaysia is estimated to be more than RM 500 billions over the next 20 years (based on oil price RM 95/barrel). A Renewable Energy Business Facility (REBF).5 percent of the potential biomass that can be harnessed in Malaysia is not utilized and wasted and according to studies conducted by BIOGEN (2001). two are using palm oil waste as a fuel while the other one is using rice-husk. which will serve as the financial support mechanism for the FSM's development. the project has prepared the groundwork to develop the first Full Scale Model (FSM) project. The resource is widely used in Malaysia for heat and power generation through combustion process. Phase 1 will begin with activities that are considered technical assistance focusing on the removal of primary barriers that hinder the widespread application of biomass-based power generation and cogeneration using both biomass and biogas generated from biomass resources. the total generation capacity from oil palm residues for internal consumption is about 211 MW.and 27 percent. replanting and milling processes. wood waste.

which is 80% owned by TNB. The solid residue resulting from further processing of FFB is given in Table 9. it has a value of as much as RM 49. Other residues include trunks and fronds are available at the plantation area. Using palm oil residues for power generation is more beneficial in terms of financial gain and reducing the dependency on conventional energy resources. The Malaysian government has given a high priority for further development of the current application and utilization of biomass renewable energy sources due to the annually abundant supply.67 Residue Generated (‘000 Ton) 12. 360 palm oil mills processing 63 million tons of fresh fruit bunches (FFB) and producing 11.25 RM cents (Euro cents 4.aseanenergy.6 3.81. or rot as massive piles. clean technology utilization and many domestic practical experiences especially in cogeneration utilization.processes are fruit fibres. while as fuel.5 million tons of fibre and 4. Fibers/Shell which provide an effective avenue to dispose the processing residues from palm oil milling activities while generating 10 .72 5. August 2003). fibres.6 38.670. Table 8: Residue product ratio and potential power generation from palm oil mill residues Production (‘000 Ton) 59.5m3/ton of CPO/65% of FFB) Source: RE in ASEAN website: www.390. put as landfills. This company will sell up to 10MWe at 21.800 Residue EFB at 65%MC Fibre Shell Residue Product Ratio (%) 21.40 as mulch.7 16.7 7. TSHRB expects its 14 MWe renewable energy biomass power plant at Kunak.641.2 millions) through the sales of power to SESB.75 – 2.606. shell and empty fruit bunches which are all have great potential energy resources. In 2001.8 million tons of Crude Palm Oil (CPO) generate waste residues as follows: 14 million tons of EFB. Palm oil mill effluent (POME) from the wastewater discharged from the sterilization process is another potential fuel sources.098 320 Total Solid POME(3. This abundant supply of oil palm waste provides the strong reason for selecting biomass as the first of the renewable energy sources to be developed for large-scale application. Sabah to be commissioned in October 2004 to generate an annual profit of 8-10 millions RM (Euro 1.032 545 2. One ton of EFB has an economical value of only RM14.org (December 2005) Wastes and residues from palm oil mills which can be used for heat and power generation are in the forms of empty fruit bunches (EFB).66) per KWh through a 21 years renewable energy power purchase agreement (REPPA) to SESB. shells. This plant will use the palm oil residues such as Empty Fruit Bunches (EFB). palm trunks and fronds. Table 9: Solid residue resulted from processing FFB Residue from Processing FFB Mesocarp Fiber Empty Fruit Bunches Shells Source: Malaysia Palm Oil Board (2004) Percentage (%) 15 23 7 TSH Bio-Energy (TSHRB) is the first local company to sell renewable energy from oil palm waste to Sabah Electricity Sdn Bhd (SESB).14 12.3 million of shell (Bumibiopower. These residues caused many environmental problems as they were burned through incinerator/ open-burning system.870 Potential Energy (PJ) 57 108 55 220 Potential Electricity Generation ( MW) 521 1. 8.

org (December 2005) Wood residues Figure 5: Potential power generation from wood residues. Paddy straws and rice husks are the main residues from rice paddy cultivation. saw milling industry. Currently only a small quantity of rice husk is used for energy generation and other application such as silica production and composting.327 Potential Energy (PJ) 7. generated during the harvesting and milling processes. Only 1. The middle portions of the log from the plywood and veneer mills are used as boiler fuels. 66. produces abundant residues potential for energy generation. The total paddy planted areas for Malaysia in the year 2000 was about 600.86 155. It is also the first EFB-Fired Boiler employing the Well-Proven Vibrating Membrane Grate in South East Asia.additional income.140 2. being the staple food for Malaysians.306 tons of paddy.536 8.93 Source: RE in ASEAN website: www. Table 10: Residue product ratio and potential power generation from rice mill residues (2000) Production (‘000 Ton) 2. Wood industries are mainly referred to the logging industry. it is assumed that only 2% of the rice husk is used for energy production as the balance is deposited in landfill.769 16. This project is the first Palm-EFB-Fired Grid Connected Cogeneration Plant with a high-pressure modern boiler of 80 ton/hour.287 hectares and producing 2. the panel product industry (plywood.305 Potential Power (MW) 72.07 83. off-cuts and wood barks. and medium density fibreboard). the current utilization still limited due to the difficulty in handling the paddy wastes. particleboard. Source: RE in ASEAN website: www.140 Residue Rice Husk Paddy Straw Residue product Ratio (%) 22 40 Residue Generated (‘000 Ton) 471 856 1.9 million hectares. Paddy residues Rice. Although the potential is relatively high. The residues such as offcuts from the sawmills are used as fuel for the kiln drying or sold as boiler fuels.29% of the total area is allowed for logging industry due to concerns for environmental conservation.org (December 2005) Total forest areas in Malaysia are about 5.5 bar (g) and 402oC in the world. These industries generate different type of biomass residues namely sawdust. In all.aseanenergy. the moulding industry and the furniture industry. The 11 .aseanenergy.050. veneer.

However.aseanenergy. The composition of MSW in Malaysia is shown in Figure 6. So far. There are a lot of resources and potential for generating power with this technology. due to rapid development and lack of new space for it.500 tons of solid waste a day completed with recovery energy system. Biomass energy sources can be converted into modern energy through power generation and cogeneration which several of them are available in Malaysia. off course.000 per annum since 1994 and current total population of 26 million. Source: RE in ASEAN website: www. 1997). Unfortunately.650 tons. In the isolated areas they are burned in the incinerator or boiler to produce heat.2 Biogas energy With a population growth of 2. only few applications of anaerobic technologies could be identified in Malaysia. These are installed in integrated wood complexes and generate heat and power from various types of wood waste. which makes MSW management crucial. Pyrolysis and gasification technologies are still at the experimental stage (RWEDP No. the potential amount of energy to be generated using the backpressure turbine system is about 500 MW. The generation of biomass residues from the wood-based industry has declined due to limited supply of logs and maximization of residues into value added product. The following figure show the estimated potential energy and electricity from the waste generated from sawmills. Figure 6: Composition of municipal solid waste in Malaysia. are the main assets for biomass-wood based energy. From that figure. which has a capacity to treat 1. the big cities and islands are considering incineration to tackle this problem. there is only 12 . Natural tropical forests cover about 19.remaining wastes are mainly the bark and the sawdust.5% of the country’s total land area which.4 % per annum or about 600. 2. the MSW is managed mainly through open landfill.54 million hectares or 59. plywood and moulding plants. Thus.36. the average amount of solid MSW generated per day is 24. Selangor. the municipal solid waste (MSW) generation also increases. Currently. The latest development concerning the waste management in Malaysia is the plan to build a multi-billion Ringgit incinerator in Broga. Malaysia has successfully implemented a project in which biogas derived from Palm Oil Mill Effluent (POME) is used for heat and electricity generation.org (December 2005) It is estimated that the amount of solid MSW by the year 2020 is about 9 million tons per year. The biomass from the processing plants is used as fuel for their CHP plant or sell to the potential users such as brick manufactures.

Source: Malaysia Energy Center (2005) 13 . there were four biogas plants built in Sibu – Sarawak which is funded by the German Appropriate Technology Exchange (GATE) involved technical expertise from Sri Lanka and Chinese design. the price of the generated energy is not competitive with the conventional fossil fuel which makes the implementation is still limited until today. using municipal waste. The power plant has two gas engines rated at the capacity of 1048 kW.aseanenergy. In 1996. The characteristics of the captured biogas are given in Table 11. Each well can produce biogas for 20 years. JLSB extracted biogas from the wells. Figure 7: TNB Jana Landfill Biogas Project in Malaysia (2 MW). The expected pay back period is 4 years after commissioning.32 kWh / m 3 40m / hr Direct extraction from gas field. Figure 7 shows the location of the power plant. The concession period for this power plant is 15 years. Among the benefits gained from this project are the reduction in odour level to the surrounding area and mitigation of green house gasses emission. This plant was constructed in November 2003. The first grid connected Renewable Energy project implemented in Malaysia with a total generation capacity of 2 MW. Table 11: Characteristics of the biogas captured.one plant for biogas capture and recovery operating in a palm oil mill6. excluding civil works and building foundations. which were built at the landfill site. NOx < 500 mg / m3 Source: RE in ASEAN website: www. However. Puchong. Fuel Composition Moisture Level of the Biogas Temperature Calorific Value Biogas Production Rate Biogas Feeding System Monitored emission More than 55% are methane gas Maximum at 80% moisture level 240C 3 5. was the Landfill Gas (LFG) Power Generation Project located at Air Hitam Sanitary Landfill. whereby previously they have to face the higher level of odour problem everyday. These benefits are also shared by the surrounding community.org (December 2005) The total investment costs amount to Euro 9 millions.

2 MW with a total installed capacity of 38. There are currently 50 mini-hydropower plants with installed capacities ranging from 200 kW to 2. 5 in Sabah and 9 in Sarawak). These are mini-hydropower schemes which are based on run-of-river systems ranging from 500 kW to 1000 kW capacity. Malaysia's hydropower capacity is estimated at 25 GW with a total electricity output of 107 TWH/year. seven units of total capacity of 2. In 1994.185 MW have been commissioned in Peninsular Malaysia. five units with a total capacity of 5 MW have been commissioned.3 Hydropower Hydropower has been utilized for electricity generation since 1900s. only 9 out of 42 were in operational. electromechanical equipment and the transmission lines up to the transfer point. operation and maintenance of 35 mini-hydropower in Peninsular Malaysia. 1985). Bakun project is one example of large-scale hydropower projects in Malaysia with a total generating capacity of 2. These are based on run-of-the-river systems ranging from 500kW to 1000kW capacity.500 MW source of energy from hydropower (Asian and Pacific Development Center. In peninsular Malaysia.35MW in Sabah and five units of total capacity 5MW in Sarawak.85 MW in operation. The mini-hydropower potential of the country has been assessed and viable sites have been identified. there are thirty nine units with total capacity of 16. TNB awarded a contract to Projass for a period of “10+10” years for rehabilitation. thirty-nine units with a total generating capacity of 16. these units are owned by the power utility company. This plant is still operating until today (Windows to Malaysia. The responsibilities covered the operation and maintenance of the intake structure. Seven units with a total capacity of 2. water conveyance systems. As the country progressed. 2005). Currently. A feasibility study conducted by Projass Engineering Sdn Bhd in 1991 found that seven schemes were not viable to operate and the remaining 35 have potential to generate double their current generating capacity. Mini-hydropower in Malaysia was built in the 80's as part of the government's Rural Electrification Program. A total of 42 mini-hydropower schemes were implemented and their capacity range from 50kW to 2 MW and the total installed capacity was 17 MW.185 MW in Peninsular Malaysia. Currently. the mini-hydropower schemes were redundant as the rural areas were provided with electricity by the national grid systems. 1 plant in Sabah and 1 plant in Sarawak) and 50 mini-scale hydropower stations (36 in Peninsular. The plants were neglected and by 1994. By the end of 2001.2. Tenaga Nasional Berhad (TNB). Most of the mini-hydropower systems that are in operation are public-funded under Malaysia's rural electrification program. the main utility. it has social and environment impacts due to the flooding of large area (RESLAB. Some of these sites have been implemented with government funding under rural electrification program. there were 12 large-scale hydropower stations (10 plants in the Peninsular Malaysia. Pahang in 1900 by the Raub-Australian mining company. It is recorded that the first hydroelectric plant was constructed on Sempam River near Raub.4GW. However.35 MW have been commissioned in Sarawak. The situation in the states of Sabah and Sarawak (northern Borneo) offers better opportunities for the application of renewable energy since electrification level is relatively low. It is estimated that Malaysia has 28. This source of energy has been utilized as on grid power generation by Tenaga National Berhad (TNB) which accounts for 20% from its total generation capacity. 2005). 14 . In Sabah.

They could be either isolated or connected to the grid system. over 2. • Standards and quality are not to be jeopardized in order to safeguard reliability of the mini-hydropower stations and the safety of its operation. A solar PV installation in Malaysia would produce energy of about 900 to 1400 kWh/kWp per year depending on the locations. • Implementation of the project is to be done in the most economical approach where the methodologies adopted are cost saving oriented. Because of the status of rural electrification in east Malaysia. the monthly returns of the end-users do not even cover the operational costs.000 SHSs had been installed in Malaysia by the year 2000. around 320 kWp) for rural telecommunications. north-west coast) and Kota Kinabalu (East Malaysia) have the highest values measured. lighthouses. 2. (i. An installation in Kuala Lumpur would yield around 1000 1200 kWh/kWp per year (Figure 8).e. lighthouses or sea buoys. Usage and development of local resources and technology are to be maximized. further electrification by conventional grid extension will remain problematic. The dispersed human settlement pattern results in extremely low load densities. Petaling Jaya) has the lowest irradiance value. 15 .) with the largest proportion. solar home system for Malaysia will mainly focus on Sabah and Sarawak. whereas around Penang (Georgetown. For Sabah and Sarawak (east Malaysia). About 2.1 MWp of PV systems have been installed (for buoys. repeater stations etc. such as remote telecommunications (relays). no matter how much (centralised) power plant capacity is made available. Examples are present in Sabah where. with total disregard for the costs associated with the grid extension. beacons. The Klang Valley (Kuala Lumpur.4 Solar energy The whole of Peninsular Malaysia has been provided with electricity through the grid.The mini-hydropower department of TNB was adhered to several guidelines to implement the projects: • Schemes are run-off the river type with capacities ranging between 25kW5000kW. Altogether. the application of photovoltaics (PV) power supply is focused to some special applications. As a result. The application of solar PV technology is currently focused in east Malaysia namely. Areas located at the northern and middle part of the Peninsula and the coastal part of Sabah and Sarawak would yield higher performance. the states of Sabah and Sarawak. remote villages.

especially for rural electrification where the technology costs are highly subsidized. 2004).Figure 8: Solar irradiance map of Malaysia. Only recently. Despite the abundant resource. for powering parking ticket dispensing machines. 70 houses in Tembeling. Rural electrification projects particularly in Sabah and Sarawak have also incorporated PV systems in places where supply from the grid may not be possible for sometime to come. Ambient temperature remains uniformly high throughout the year with the average ranges between 27 to 33°C. Malaysia is located entirely at the equatorial region with an average daily solar radiation of 4. which was launched in April 2000. street and garden lighting and recently. the annual production of the plant was approximately 500 kWp. Hybrid systems based on PV and diesel generators have been used for the electrification of remote islands where grid connection is a costly option. After that.aseanenergy. rising to nearly 90% in the highland areas and never falling below 60% (UNDP.org (December 2005) The favourable environment for rural PV application in Malaysia has prompted the giant PV manufacturer BP Solar (49% ownership) together with Projass Sdn Bhd (51% ownership) to set up PV module fabrication plant in this country. Malaysia demonstrated several pilot grid-connected solar PV technologies. is capable of producing 5 MWp per year when operating at full capacity. and 50 houses in Pulau Sibu). including Sabah and 16 . two rural pilot projects (10 kW and 100 kW) were implemented in Sabah with the support from the NEDO. Most locations have a relative humidity of 80 – 88%. Source: RE in ASEAN website: www. solar PV applications in Malaysia are limited to mainly stand-alone PV systems. In the past 3 years. Japan.500 kWh/m2. with sunshine duration of about 12 hours. It is estimated that the total capacity for stand-alone systems in Malaysia. The plant. The TNB started the use of PV system in rural area in early 1980s as a pioneer project -installation of stand-alone PV systems for houses (37 houses in Langkawi. Other minor applications being promoted include telecommunication.

Sarawak. The bidding will start at a quarter of the current cost of a 4kWp PV system typically needed for a house.aseanenergy. Such an installation now costs about RM 100.000. The establishment of Technology Park Malaysia with a generating capacity of 362 kW considerably increased the total installed capacity in 2001.org (December 2005) Malaysia is moving forward to promote solar energy so that a small group of homeowners will get the rare opportunity to have PV systems installed in their homes at reduced costs. Under the Suria 1000 component of the five-year Malaysian Building Integrated Photovoltaic (BIPV) project which will kick off soon this year. MBIPV (2004) Figure 10: Examples of grid-connected PV installations in Malaysia. Source: RE in ASEAN website: www. Another implementation is the Grid-connected Rooftop Solar Photovoltaic Systemexperimental project cosponsored by the Malaysian Electricity Supply Industry Trust Account (MESITA) and TNB Research (Figure 10). in the year 2000 was 1. National BIPV program ‘Suria 1000’ which targets the residential (500 kW) and commercial sector (500 kW) has an opportunity to establish new BIPV market and provide direct opportunities to the public and industry to be involved in renewable energy initiatives 17 . Figure 9: Cumulative BIPV Installed Capacity in Malaysia Source: UNDP.000 or US$ 40.5 MW (some are dismantled). homeowners could bid to have PV systems installed in their homes. The effect of gridconnected PV can be seen in Figure 9.

Meanwhile. In 1997. it is expected than the BIPV cost will be reduced in each subsequent year (Pusat Tenaga Malaysia. a TNB subsidiary (Renewable Energy in Malaysia. “Suria 1000”. A Wind Turbine Generator (WTG) hybrid system has been installed and constructed in November 1995 by TNB Research Sdn.e. the 1st UTM's LWSWT had been fabricated and installed. Table 12: Target BPIV ‘Suria 1000’ program Years Year 1 Year 2 Year 3 Year 4 TOTAL Target BIPV Capacity 100 kWp 300 kWp 300 kWp 300 kWp 1.5 Wind energy The current utilization of wind energy sources is still limited due to low average wind velocity in the whole country. blade design and manufacturing. the technology development and the implementation.5-4 m/s due to the Northeast monsoon. The current wind energy potential of Malaysia is estimated between 350 and 500 PJ. the utilization of RE in Sarawak national parks were to reduce the environmental impacts to the protected surrounding and to overcome fuel transportation problem. chalets (with 80 rooms). it was found that Malaysia experiences a great amount of wind throughout the year. Studies thus far conducted have found that there is positive potential for harnessing wind for energy especially for areas at the east coast since these areas can experience rather strong winds of between 3. wind flow patterns and seasonal variation and provide a basis for the selection of sites for successful installation of commercial scale wind projects. In 1994.and environmental protection. The technology development encompassed of four parts i.000 kWp Min Target Cost Reduction 5% 5% 5% 5% 20% Reserve Bidding Price 25% 35% 40% 50% Co-financiers (RM) Total Cost = RM27. fresh water supply and security. Bhd. i. There are some facilities in this island such as airstrip. more than 75% of the year time with wind blows of 2. After completing the feasibility study. the wind conditions monitoring. the wind energy used was only 1260 MJ.5 Million • Min 40% by public • Max 50% by ST • 10% by industry Source: Pusat Tenaga Malaysia “Suria 1000” (2005) 2.e. A number of feasibility study had been done by researchers on the potential of wind energy in Malaysia.. Through a more detail study conducted by Universiti Teknologi Malaysia (UTM) researchers in 1989. as most national parks in Sarawak are not viable for the state electricity grid 18 . jetty station. It is expected that PV players will finally offer BIPV system prices equivalent to Europe and Japan. Total population at one time is about 80-120. Sabah. By end of the year 1995. a project had taken off the ground and composed 2 main parts i. Today. The first wind energy facility in Malaysia is located in Pulau Layang-Layang. 2003).e. It can be concluded that wind energy utilization is still at a pilot project stage and more studies are needed to establish the wind speed. a new goal in research was set up to develop low wind speed wind turbine (LWSWT) for electricity generation from wind energy in Malaysia. 2003). Through this program. The technology development had been done in UTM while the implementation was in Pulau Tioman. the cost of a 5kW BIPV turn-key roof-top system in Malaysia is about RM25/W (less than USD7/W)..5 m/s and above. tower design and fabrication and electricity generation and storage system determination.

served as a state-owned enterprise. In Peninsular Malaysia thermal springs are mainly found along the eastern part of the Main Range batholith though some are found scattered in other areas while in Sabah high concentration are found within young volcanics area of the Semporna Peninsular.aseanenergy.5 m/s Diesel 10 kW and 7 kW Pulau Talang-talang 2° 03' N 109° 50' E Single Crystalline 40 768 32 South 18° - Source: RE in ASEAN website: www. The potential of these geothermal resources is yet to be investigated and assessed in detail. Table 14: History of main energy policy and events in Malaysia Year 1949 1974 Events CEB was formed The Petroleum Development Act The National Petroleum Policy Description Central Electricity Board (CEB) is the government body which changed its name to National Electricity Board (NEB) in 1965.6 Geothermal energy Hot springs. Tanjung Datu and Pulau Talang-talang National Parks Latitude Longitude Photovoltaic Type Peak watt Total Peak Watt Quantity Orientation (Facing) Tilted Angle Wind Turbine Output Min Wind Speed Generator Type Output (kW) Samusan 1° 56' N 109° 37' E Polycrystalline 77 2078 27 North 45° 20 kWh/day 4. occur in abundance in Malaysia and to date. A number of these hot springs are already developed into public baths with complete facilities. there are 79 reported localities. one of the most common manifestations of geothermal activities. 3. given exclusive rights of ownership. All these national parks are isolated and accessible primarily by an hour boat ride from Sematan. few occurrences of thermal springs have been recorded.connection. At present.5 m/s Diesel 20kW Tanjung Datu 2° 05' N 109° 38' E Polycrystalline 77 1308 16 North 25° 5 kWh/day 4. In Sarawak . exploration and production was created under this Petroleum Development Act The policy aims at regulating the oil and gas industry to achieve the country's 1975 19 .1 Renewable Energy and Energy Efficiency Policy and Programs Malaysia’s energy policies The history of main energy policy and events in Malaysia can be seen in the following Table 14. which are constricted at the most westernmost area of the state.org (December 2005) 2. thermal areas are being preserved in their natural state for the purposes of recreational activities. Table 13: RE System at Samusan. The Sarawak state government had introduced RE power systems to this area in order to address the issue. 3. The description of the system installation at all 3 national parks is given in Table 13. PETRONAS.

Utilization and Environment Objectives were set The strategy is incorporated into the National Petroleum Policy. replacing fossil fuel with renewable energy which will contribute to preservation of the environment. the Government has adopted the following as part of Malaysia energy policy (ASEAN RE-SSN and UNEP. greater utilization and adequate electricity generating capacity of gas and renewable energy and supporting industries that produce energy related products and services. The Center of Education and Training in Renewable Energy and Energy Efficiency (CETREEE) was established at the Universiti Sains. i. 2004): • Greater utilization of natural gas in power and non-power sectors • The development of renewable energy as the fifth fuel. to increase the public awareness on RE and EE measures. regulatory and financial framework of renewable energy in order to encourage the utilization of renewable resources. energy professional and general public. gas. Renewable energy database has been established at the PTM. This project is taken to consider the legal. The use of RE sources especially oil palm residues and other agricultural wastes is strongly 20 . The aim is to encourage and intensify the utilization of Renewable Energy in power generation. Hitoshi (2005) National Energy Policy The national energy policy under Eighth Malaysia Plan (2001-2005) focuses on: sustainable development of energy resources.Year 1979 1980 1981 1990 1999 1999 2001 2002 Events The National Energy Policy The National Depletion Policy The Four-Fuel Diversification Strategy Electricity Supply Act TNB is established Pusat Tenaga Malaysia was launched The Five-Fuel Diversification Strategy Small Renewable Energy Program (SREP) was launched Dept of Electricity and Gas Supply (JBEG) was transformed into the Energy Commission (EC) Description economic development needs is set Supply. oil. The Four-Fuel Diversification Policy and the Fifth-Fuel Policy During the Eighth Malaysia Plan. Under the current Eight Malaysia Plan (2001-2005) and the Third Outline Perspective Plan (2001-2010). The objective is to extend the life of domestic depletable energy resources. which include designing of RE and EE modules for secondary schools. This policy supersedes the Four-Fuel Diversification Policy. The role of PTM in the Development of Energy Efficiency & Renewable Energy in Malaysia Renewable Energy was recognized as the fifth fuel in the energy supply mix. The strategy aims for a supply mix of four fuels.e. particularly in the power generation • Efficient utilization of energy through the introduction of new regulations and amendments to present laws • Adequacy of electricity generating capacity. hydropower and coal in energy use TNB was established through a corporatization and privatization exercise by the NEB. CETREEE conducts training and dissemination activities. EC is a regulatory agency responsible for energy matters Source: Shigeoka. TNB is the Malaysia's national electricity utility company. Malaysian Government officially announced the Development of a Strategy for Renewable Energy as the Fifth Fuel project to assess the use of indigenous renewable energy (RE) potential in Malaysia. universities.

lighting illumination control. The RE database has been established at the PTM. RE sources that will be promoted in terms of priority. chaired by the Ministry of Energy. • In promoting greater utilization of RE. 2005). In this respect. as they are abundant in the country. Malaysia is able to utilize the Clean Development Mechanism (CDM) as a means to reduce domestic CO2 emissions as well as for technology transfer from developed countries. are biomass.recommended by the government. biomass resources. depending on its technical and commercial viability. the government has ratified the Kyoto Protocol in September 2002. The price is not fixed and it determined based on the agreement between the utility (e. Communications and Multimedia appointed Pusat Tenaga Malaysia as the Secretariat to the Committee on 12 September 2002. There are no regulatory frameworks used for on grid RE utilization which are globally known as are feed-in / pricing law and quota system. • Cooperation between government agencies and private institutions in the development of RE resources will also be promoted. The Eighth Malaysia Plan (2001-2005) The strategies to intensify the development of renewable energy as stipulated in the Eighth Malaysia Plan (2001-2005) are as follows: • Utilization of RE as the fifth fuel will be intensified during the Plan period to supplement the supply from conventional energy sources. air conditioning and mechanical ventilation and energy management system (Malaysian Standard. such as oil palm and work residues as well as rice husks. the Ministry of Energy admitted that this target still is too optimistic hence it is still in the voluntary stage. solar and mini-hydro. 21 . MS 1525:2001 has been introduced and approved on 14 August 2001 which includes architectural and passive design. The supply of excess energy generated by the biomass-based generating system to the local community and to the grid will be considered. However. The Technical Committee for Energy. electric power and distribution. The main tasks of this Committee are assisting CDM proposal. initiatives that will be considered include demonstration projects and commercialization of research findings as well as extension of financial and fiscal incentives for RE-related activities. Code of Practice on Energy Efficiency and Use of Renewable Energy for Nonresidential Buildings. the generation of energy mainly for in-house consumption will be promoted. building envelope. biogas. Of these.g. Code of Practice on Energy Efficiency and Use of Renewable Energy for Nonresidential Buildings As a new Malaysian standard. As a non-Annex 1 country.: REPPA). the government has set up a minimum RE share of 5% by the end of 2005 and 20% by 2010 as depicted in the Eight Malaysian Plan. This will create investment opportunities in the greenhouse gas emission reduction projects. providing advisory services of potential CDM project developers and conducting outreach activities targeting energy stakeholders. In term of quota system. Greenhouse Gas Mitigation Policy In addition to the Eighth Malaysian plan. will be used on a wider basis for the purpose of heat and electricity generation • Biomass-based cogeneration system for the production of electricity and usable energy will be encouraged. municipal waste. A number of outreach activities have also been conducted with the funding from the DANIDA.: TNB) and the developers (ex.

However. the fuel diversification policy which comprises oil. Efforts will continue to be undertaken to manage both depletable and renewable energy resources to cater for the demands of a rapidly growing economy. the Government has implemented the tax and duty exemptions aimed at increasing use of RE. The main thrust will be to ensure adequate. promote its efficient utilization and minimise the negative impact on the environment. municipal waste. SREP projects are defined as power generating projects that are capable of converting renewable energy resources into electricity. the government of Malaysia has launched the Small Renewable Energy Power (SREP) Program to encourage and intensify the utilization of renewable energy (oil palm wastes. • The OPP3 states that Malaysia may become an oil importer by the year 2008. The Budget for 2001 & 2003 outlined the following incentives for SREP project proponents: • Pioneer status with income tax exemption of 70 percent on statuary income for 5 years or an Investment Tax Allowance of 60 percent of capital expenditure incurred within a period of 5 years and to be utilized against 70 percent of the statuary income. biogas. municipal waste.The Third Outline Perspective Plan (OPP3) for 2001-2010 In the Third Outline Perspective Plan (OPP3) covering the period 2001-2010. transportation and commercial sectors. the small power generators connection are allowed to sell to the grid at selling rates defined by the Renewable Energy Power Purchase Agreement (REPPA). Hence. high financing cost and tariff has been identified as major stumbling blocks for development. gas. new sources such as renewable energy will be encouraged. Selling price is capped at a ceiling of RM 0. Via this program. The project strategy involves the implementation of barrier-removal activities (2002-2004) and the implementation of innovative loan/grant mechanism (2005-2008). 3. solar and mini-hydro. gas.045 cent/kWh). hydro and coal will be extended to include renewable energy as the fifth fuel. Of these. since the program was launched 4 years ago. but timely as well. In this regard. hydro. MEWC has instituted an administrative policy target of 5% of grid-connected electricity generation or 500 MW from RE by the end year 2005. Fiscal Incentives In order to encourage energy generation using biomass. coal. wood residues and rice husks) for grid-connected electricity. biogas. particularly biomass. • To supplement the conventional supply of energy. solar and mini-hydro) is not only necessary. the emphasis on the development of renewable energy resources are as stated below: • Sustainable development of the energy sector is important in ensuring the competitiveness of the economy. biomass resources such as oil palm and wood waste as well as rice husks will be used on a wider basis mainly for electricity generation. particularly the industrial. As part of the effort to realize the target of 500 MW of installed RE capacity. the 5 year Biomass-based Power Generation for the Malaysian Palm Oil Industry project funded by GEF-UNDP which is expected to end by end of the year could do their bit in realizing the target. the achievement is rather disappointing where less than 4 % now has been captured where various issues such as fuel supply. and 22 . comprising oil. taking on the cue of the government's fifth fuel policy. Therefore. and renewable energy (particularly biomass. Other potential sources of energy will include palm diesel and hydrogen fuel.17 sen/kWh (USD 0. secure. the Government's “Five Fuel” policy.2 Policy initiatives and programs Small Renewable Energy Power (SREP) Program In 2001. quality and cost-effective supply of energy.

The changes are as follows: 1. timber/sawmill waste. • Increasing the rate of Investment Tax Allowance from 60% to 100% for 5 years. paper recycling mill waste. Sarawak and the eastern corridor of Peninsular Malaysia as follows: • Increasing the rate of income tax exemption under the Pioneer Status from 85% to 100%. Companies must implement their projects within one year from the date of approval (ASEAN-India Business Portal. • 23 . municipal waste and biogas (from landfill. Enhancing incentives for companies producing goods using oil palm biomass as follows: • Increasing the rate of income tax exemption under Pioneer Status from 70% for 5 years to 100% for 10 years. animal waste and others). As mentioned above. 3. companies undertaking such activities are eligible for Pioneer Status (PA) or Income Tax Allowance (ITA). 'biomass sources' refer to palm oil mill/estate waste. which make them be eligible for higher exemptions mentioned below. In the area of power generation using RE (biomass.Import duty and sales tax exemption on machinery and equipment that are not produced locally. chilled water and heat. as presently enjoyed by companies. Sales tax exemptions are given for machinery and equipment that are produced locally. • Increasing the rate of Investment Tax Allowance from 80% to 100%. • Investment Tax Allowance of 100% for 5 years on additional investment. Providing existing companies using oil palm biomass with the following incentives: • Pioneer Status with tax exemption of 100% for 10 years on the increased income from reinvestment. Tax exemption was introduced in 2001 to encourage the use of renewable energy and energy efficiency measures. For the purpose of this incentive. has been providing financial assistance to renewable energy projects. 2005). these financial incentives were revised in 2004. photovoltaic systems and palm oil residues. Financial incentives The main financial incentives in Malaysia are in terms of tax exemption. long term low-interest loans and loan guarantees and reduction of subsidies for conventional energy (Shigeoka. IPPs and TNB Generation voluntarily contribute 1% of their annual audited revenue to the trust account. steam. rice mill waste. a Special Committee on Renewable Energy (SCORE) was set up under MEWC. to coordinate the implementation of the Government's strategy to intensify the development of RE as the fifth fuel resource. Improving tax incentives for companies in Sabah. hydro and solar) which does not exceed 10 MW. In addition. These fiscal incentives elevate RE initiatives to the status of other promoted sectors in the country such as IT and High Technology industries. The Government also through the Malaysia Electricity Supply Industry Trust Account (MESITA). sugar cane mill waste. Under this fund. palm oil mill effluent (POME). rebates-payment. This allowance can be fully deducted and not limited to 85% of the statutory income. 2004). investment tax allowance and import-sales tax exemption. It covers accelerated capital allowance. • Exempting tax on income remitted from abroad by individuals. while energy forms refer to electricity. 2. Projects funded by MESITA include grid-connected electricity generation from landfill gas.

specifically energy planning and research. and technological research. development and demonstration (R. The Ministry launched the Small Renewable Energy Power (SREP) Program in May 2001 to encourage and intensify the utilization of renewable energy (oil palm wastes. SREP projects are defined as power generating projects that are capable of converting renewable energy resources into electricity. Malaysia. Together with the MEWC. it has issued 3 licenses under that program. energy efficiency. 4. It was formally a department under MEWC. The EC is also responsible for issuing licenses to prospective renewable energy producers under the SREP program. wood residues and rice husks) for grid-connected electricity. Economic Planning Unit (EPU) EPU is the agency responsible for policy design for the government. Petroleum Nasional Berhad (PETRONAS) PETRONAS is a government controlled company with a mandate to manage the oil and gas resources in Malaysia. 2. Tenaga Nasional Berhad Tenaga Nasional Berhad is the major power generator (60 percent of generation) in Peninsular Malaysia and has a monopoly on the transmission and distribution of electricity. 3. 6. This program is part of the Government's effort to promote distributed power generating plant as well as energy efficiency. industries and other various national and international organisations on energy matters. Energy Commission (EC) The Energy Commission was set up in May 2001 as a regulatory body for both gas and electricity supply. Water and Communications (MEWC) which is formerly known as Ministry of Energy. D&D) undertaken in the energy sector due to the long lead time for energy projects to come on stream. research institutions.3 Key players A number of government organizations have input into energy planning and supply in Malaysia including: 1. The rationale behind PTM's establishment is to fulfill the need for a national energy research center that will co-ordinate various activities. among the outcomes of their efforts are the incorporation of renewable energy in both the Eight Malaysia Plan and the Third Outline Perspective Plan. Communications and Multimedia (MECM). PTM was registered on 12th May 1998 as a not-for-profit company and administered by MEWC. Pusat Tenaga Malaysia (PTM) PTM is the responsible agency for the promotion of RE & EE in Malaysia.3. is the responsible agency for implementing energy policy. Water and Communication (MEWC) The Ministry of Energy. Its main responsibility is to act as the regulatory body for the energy sector. 24 . PTM will eventually become a one-stop focal point for linkages with the universities. 5. Its major impact with respect to the energy sector is the introduction of the Fifth Fuel Policy that superseded the previous Four Fuel Policy. Ministry of Energy. To date.

Table 15: List of approved SREP projects (December 2004) Energy Source Applications Approved 27 1 2 1 3 5 26 0 65 Generation Capacity (MW) 214. At the end of phase 1. CETREE Center for Education and Training in Renewable Energy and Energy Efficiency (CETREE) under University of Science Malaysia was established for training.2 101.2 10.9 3. The Electricity Supply Industry Trust Fund The Electricity Supply Industry Trust Fund was officially launched in July 1997. 2004).5 5.2 10.2 0 368. Basically. educating and creating awareness in RE and EE activities.0 5. Global Environment Facility (GEF) and the Malaysian private sector (PTM.1 Renewable Energy and Energy Efficiency Activities Renewable energy activities SREP The Small Renewable Electricity Plants or SREP will provide valuable experience that can be utilized to develop and fine-tune RE strategies to achieve a significant share of RE in the fuel mix of the power generation industry in the long-term. the BIOGEN program was introduced as a compliment to SREP in terms of awareness enhancement.0 3. SREP's primary focus will be to facilitate the expeditious implementation of grid-connected renewable energy resource-based small power plants. Table 15 shows the approved SREP projects as of December 2004.9 2.4 0 325.6 12.0 5.1 29.8% by the end of the fifth year. policy issues.8 % Biomass: i) Oil Palm Residue ii) Wood Waste iii) Rice Husk iv) Municipal Waste v) Combination Landfill gas Mini-hydropower Wind & Solar TOTAL Source: Suruhanjaya Tenaga (2005) 53. At the end of phase 2. GHG emissions from power generation in Malaysia are reduced by 3.0 19.90 Grid Connected Capacity (MW) 175.7 6. fifty palm oil mills (15% of palm oil mills) have initiated plans to implement biomass power generation and cogeneration. The contributors to the fund are the power generating companies TNB and the IPPs in Peninsular Malaysia by voluntarily contributing 1% of their electricity sales to the Peninsular Grid or the transmission network to the fund. COGEN. 4. financial assistance. United Nation Development Program (UNDP). demonstration schemes and technology development and the SREP programs are involved in the awareness and knowledge. A special committee called the 25 .7 1. This project is jointly funded by the Government of Malaysia.9 0 100 BIOGEN Project The BIOGEN Project was introduced on 18 October 2002 with the main objective to reduce the growth rate of GHG emissions from fossil fuel fired combustion processes and to develop and exploit the energy potentials of biomass waste and realised through the successful implementation of component programs. financial issues and fuel issues (PTM.0 97.6 6.0 19. policy studies.6 12. 2003).4.

many energy efficiency programs have been implemented to moderate the increasing energy intensity trend. regulatory and financial framework with the aim of promoting the efficient utilization of energy. the Energy Efficiency Unit was established in late 1990s within the Electricity and Gas Supply Department (Suruhanjaya Tenaga. The community. glass. MIEEIP The Malaysian Industrial Energy Efficiency Improvement Project or MIEEIP was launched on 30 July 1999. pulp and paper. This project aims to reduce the barriers and encourage implementation of EE improvements in the 8 energy intensive manufacturing sectors: cement. food. pulp & paper and rubber. these programs were not implemented effectively. In the Eighth Plan period (2001-2005). iron and steel. rubber. 4. 26 . In that period. For promoting EE activities. the energy efficiency activities in Malaysia has started around 1970s during the oil crisis by the use of more efficient lamps and air-conditioning plants in public building. reduce impacts to the environment and avoid wasteful energy usage. sectors and clusters which belong to this program is outlined in Figure 11.JAAIBE) manages this trust account (KTMK. ceramic and food.2 Energy efficiency activities Historically. Until recently.Electricity Supply Industries Trust Account Committee (Jawatankuasa Akaun Amanah Industri Bekalan Elektrik . A project on the Development of an Energy Efficiency Strategy was carried out to evaluate the legal. 2005). In addition. So far. energy intensity and GHG emissions. namely wood. regulations were drafted. an industrial energy efficiency improvement program was implemented to encourage EE measures in eight manufacturing sub-sectors. 2005). 48 companies have been audited and demonstration projects have been identified such as: • Fuel replacement using wood waste (ESCO-EPC) • Boiler heat recovery for food industry • Gob image analyzer / forming machine for glass industry • Tunnel kiln upgrading for ceramic industry • Establish e-benchmarking facility for any industry An indication of successful implementation of this project is the 10% reduction in: energy consumption. The promotion of the Energy Efficiency was renewed around 1990s by the Electricity and Gas Supply Department (now undertaken by the Energy Commission) and the Ministry of Energy. but they were not implemented due to legal issue. However. glass. wood. cement. iron & steel. energy efficiency measures have been carried out including energy audits in selected industries and commercial complexes as well as the utilization of more energy efficient processes and technologies. Around 60 Companies from different sectors have participated. ceramic.

sectors and clusters that belong to MIEEIP. increased industrial efficiency and fuel switching from natural gas to coal. In the future. 27 . -Chipboard -Medium Density Fibreboard -Tyres -Gloves -Cocoa Sauce -Food Oil -Paper box -Specialty -Paper board -Sheet -Newsprint -Container -Billets -Tiles & -Bars & Rods Bricks -Iron Casting -Sanitary ware -Clay Pipes -Integrated plant Rubber Food Pulp & Paper Glass Iron & Steel Ceramic Cement Source: PTM (September 2005) EE/DSM in Capacity Building Project The Energy Efficiency and Demand Side Management or EE/DSM in Capacity Building Project has an objective to enhance the existing capacity of commission in managing and coordinating initiatives in order to achieve the energy efficiency target by cooperation among government institutions and implementing agencies. three conditional letters of approval from the DNA have been issued in September 2003 two are for on gridconnected biomass combined heat and power plant (CHP) projects and one for on off-grid biomass CHP project. ZEO building concept Zero Energy Office (ZEO) Building concept which means that buildings must not consume more electricity than what can be produced in the building using renewable energy sources (PTM. The total power generated is 27 MWe. The example of this implementation program is the comparative and endorsement of energy labeling No. A summary of main elements in energy efficiency policies in Malaysia is shown in Table 17.5. A list of possible types of projects from different sectors is shown in Table 16. Community INDUSTRIAL ENERGY EFFICIENCY Sector Wood Clusters -Plyboard. The Low Energy Office (LEO) building for the Ministry of Energy. the target of this program is zero energy status through the use of RE. PARM The Policy Analysis and Research Management (PARM) Division of PTM was involved in a regional training in the use of a computer tool by IAEA and Energy and Power Evaluation Program (ENPEP) in order to conduct greenhouse gases (GHGs) mitigation analyses in June 2001. ENPEP-BALANCE is one of the useful planning tools that could be used to evaluate the evolution of the energy supply/demand balance as well as the GHGs mitigation option in the energy sector. With Malaysia’s participation in the Clean Development Mechanism.Figure 11: Communities. Communications and Multimedia (MECM) in Putrajaya is able to save of up to 50% of energy consumption compared to other office buildings. The study included examining cogeneration from RE resources for power generation. 2005).

Figure 14 is flowchart for the interactive ebenchmarking. learning. Note that ccompetitiveness is a very crucial factor that must be addressed in this scenario. Source: PTM (2005) Table 17: Summary of main elements in energy efficiency policies EFFICIENCY MEASURES ON THE DEMAND SIDE Types of measures : • Reduction in unnecessary consumption • (i.Figure 12 presents the basic guidelines in doing about energy benchmarking. Energy use benchmarking is one option to facilitate our industry to improve by reducing energy cost factor.e.Table 16: Different sector and projects under CDM. turn off airconditioner when the room is not occupied) • Insulation • Efficient appliances Types of policies • Awareness raising • Labeling of energy consumption • Standards for energy consumption • Economic Incentives Including taxes Source: Energy Smart (September 2003) EFFICIENCY MEASURES ON THE SUPPLY SIDE Types of measures : • Combined generation of electricity and heat/cooling • Increase conversion efficiency of power production • Reduce transmission and distribution losses Types of policies • Performance standards • (Best Available Technology) • Economic incentives including taxes Energy benchmarking Benchmarking is a systematic and continuous process of searching. 28 . adapting and implementing the best practices from within own organization or from other organizations towards attaining superior performance. Figure 13 shows the Energy Use Index method of calculation.

Figure 12: Basic guideline in energy benchmarking. Electricity Index Electricity 10.000 l Raw Material Production Process Good Product 5.00 10.00 25. 40.5 GJ/t Source: PTM (2005) Figure 14: Interactive e–benchmarking.00 Energy Use Index (EUI) GJ/t 35.00 30.00 15.39 12.00 35.50 23.84 29.6 GJ/t Fuel Index 5.484 t 912 l/t @ 32.000.06 Benchmark Where? Where are you now? How good are you? Why are you at this position Vs others? How good can you be? What can be improved? How do you get better? Why? What? Campany A Campany B Average Campany C Campany D Source: PTM (2005) Figure 13: ‘Energy Use Index’ method of calculation.00 0.824 kWh/t @ 6.00 20.95 18.000.000 kWh Fuel 1. Source: PTM (2005) 29 .9 GJ/t 6.00 5.000 t Energy Use Index (Overall) 39.

catchment protection and carbon storage (MST. the available energy potential is about 210. equal to 1.528 million tons of these are being used for fuel in rural villages.994 mboe and 1.5 dry tons of wood and leaves and 0. it may come from effluents produced after processing latex which by utilizing biogas technology.500 72. Rubber cultivation based biomass energy potential is extracted from wastes and residues.980 300 31. 2002). Table 18: Biomass resource potential (1999).75 million ha and cocoa over 0. Sector Rice Mills Wood Industries Palm Oil Mills Bagasse POME Total Source: PTM.: fronds and debris that are shed throughout the year which is estimated (based on 1995 data) to be 0. but also because of their important non-timber forest products. it may come from fallen leaves.45 million ha are the primary export earners. husk and copra waste is generated from the processing and consumption of coconut fruits which is approximated that 0. 2003).374 million tons of husks were produced annually (approx.000 ha of rice in Peninsular Malaysia are irrigated and double-cropped.1 million ha. About two-thirds of the 4. with a total installed capacity of 68 MW. As the first source.: logging residues. About 0.3 million dry tons annually. most of the 1500000 ha in Sarawak are rain fed and upland (BERNAS.000 ha in Sabah are fully irrigated. Second.6 boe per ha (extracted from the leaves and trunks).587 5863 Potential Capacity (MW) 30 68 365 25 177 665 Forests cover about 60% of the country’s total land area which are significant not only for their contribution of revenue from the exploitation of timber. the main wood based biomass energy potential comes from wood residues which have no other commercial values. The copra produced was 0.5.e. twigs and rubber seeds. branches.583 million tons of fronds with a potential energy of 1.18 mboe which has an estimated potential energy of 207. Forests also provide valuable ecological services such as flood control.197 218 1.67 boe. i. The overall biomass potential is depicted in the following Table 18. plywood and veneer residues and secondary processing residues.35 million tons annually with an energy potential of 1. with the potential to generate 598 GWh. According to the national statistics. The total energy potential available is 20.e. As energy sources. Out of these 1.000.177.1 Biomass energy potential As stated before. it may come also from the rubber wood from replanting activities.47 million dry tons is used as fuel which has an energy content of 4. Malaysia generates 2. Alternatively. 2004). BIOGEN (2005) Quantity kton / year 424 2.122 mboe respectively). Potential for Renewable Energy and Energy Efficiency in Malaysia 5. saw milling residues.177 17.036 dry tons of seed per ha per year. Shell. It is estimated that the amount of dry rubber wood available from 1999 until 2007 is in an average of 3. Not much of the 50. rubber on 1.000 boe per year. It is estimated that there are an available of 6. Waste from coconut cultivation can be divided into three main categories. Oil palm from a little over 2.962 Potential Annual Generation (GWh) 263 598 3.747 million tons of shells and 0. Malaysia has an abundant biomass sources which are mainly from palm oil mill residues. i. 30 .747 mboe is produced annually.967 mboe per year (Renewable Energy in Malaysia.000 tons of wood waste per year.

657.5 5.708.823.1 3.9 5.2 4.7 4.5 4.7 4.5 4.490.8 4.188.943.395.796.335.7 5.521. The average daily global solar radiation in selected cities can be seen in Table 19.8 Bandar Baru Bangi 3.024.862.6 4.033.2 Petaling Jaya 4.3 4.5 4.7 5.011.9 Senai 4.484.483.2 4.248.0 4.6 4.9 4.5 4.749.9 4.392.055.7 4.409.6 4.0 Kota Kinabalu 4.0 4. Month Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Kuching 3.063.6 4. Type of Establishment Recreational Center & Restaurants Food & Food Products Hotels Animal Food Household (Medium & Upper) Source: Renewable Energy in Malaysia (2003) Number of Establishments 553 175 250 43 500.000 Whr/m2 of solar radiation and a daily sunshine duration are ranging from 4-8 hours.037.5 3.634.9 4. it is predicted that the application of PV on grid potential system will be a new business opportunity in Malaysia (TNB.9 Kuala Lumpur 4. Water and Communications is co-funded by the UNDP and the GEF.7 4.2 4.3 4.4 4.0 3.665.299.398.305.628.5 5.9 4.419. Table 19: Monthly average daily global solar radiation in selected cities (Whr/m2).920.000.0 3.3 5.603.244.442.398.479.3 5.284.000 As one among the world’s main producer of computer chips.1 4.401.363.270.815.1 4.919.885.124.144.9 4.9 5.5.3 4.6 5.516.464.571.1 5.416.730.230.749.000-5.386.4 4.1 5.378.4 4.7 4.1 4.145.516.434.374.692. This project which will be executed by the Ministry of Energy.994.525. 31 .6 4.5 4.663.748.0 4.7 3.407.8 4.5 Source: PTM (205) Solar heating technology has been widely used by residential and industrial sectors.3 3.288.6 4.441. In addition.461.7 4.9 5.912.570.5 3.2 4.4 4.6 3. 2002). The primary objective of the MBIPV project is to create the enabling environment that will lead to a sustainable BIPV market in the country and technology cost reduction. the PV-grid inverter has been locally produced which is cheap and easy to purchase in the local market.386.5 4. One of the most attractive applications of PV technology is the use of PV in buildings or commonly known as Building Integrated Photovoltaic or BIPV.0 3.768.047.7 4.4 4.630.5 4.4 4.6 5.727.0 4.4 4.3 4.656. Table 20: Estimated market solar hot water system in Malaysia in 2020.8 3.210.2 4.9 6. Malaysia has a big potential for PV cells chips production through its silicon wafers technology.035.4 5.340.5 4.8 4.416.8 5.478.0 4. Therefore.599.9 5.7 4.021.432.718.4 Kota Bahru 4.6 3.307. With this.990.507.0 4.838.4 5.276.8 Bayan Lepas 5. Malaysia has an approximate of 4.466.2 Solar energy potential Located at the equator.337.453.206.690.794.9 5.2 4. the scope of PV applications is expected to increase in the country in the near future especially with the implementation of the Malaysian Building Integrated Photovoltaic or MBIPV Project.3 4.8 4. The prediction of the potential estimated market solar heating system in 2020 is depicted in the following table.

A variety of roof tiles and sheet materials are also available in the international market. frames for the modules made of extruded aluminum can be easily produced. A solar PV module manufacturing unit can be established with an investment of around US$ 40 million for a 25 MWp output. When integrated into the fabric of a building. and automated machinery and equipment. which could provide more than 12. then potential investors will be able to establish a manufacturing line within 4 years. offering several advantages. as well as making the installation process easier. alternative energy sources like the development and production of fuel cells. it can displace purchase of electricity. Nevertheless. Most of the BIPV applications are grid-connected systems that are applied in urban areas. Malaysia is now encouraging high-tech electronic products for which attractive incentives are being offered to promote investments and reinvestments in technology and capital intensive projects. The electronics cluster would be built around the semiconductor sector (cell production) and the industrial equipment sector (module and inverter manufacturing). Malaysia is currently promoting the continued diversification of industrial base towards high-end manufacturing and the development of the value-added services sector as part of the move towards a knowledge-based economy. in short to mid-term. thus reducing electricity transmission losses. it can displace other material and replace conventionally building material. Thus. In the Malaysian Investments Act 1986. The technical potentials of BIPV in the residential and commercial sectors are huge. a local production of inverter is possible. metals and plastics. The industry is well established and produces high quality materials. is classified as a BIPV system whenever the PV is aesthetically integrated into the building architecture and envelope. The local PV manufacturing facilities can benefit from the existing infrastructure and well established manufacturing sector in Malaysia such as the precision machining and the production of electronic assemblies and sub-assemblies. Thus. like SMA. A 32 . polymer batteries. Supply for the mounting structure or any metal part is readily available. Considering only the lower PV capacity value of 1 kWp for every 10 m2 of available building roof surfaces in these sectors. and there are purpose-designed mounting and integration systems available to improve appearance and weather proofing. either a stand-alone or a grid-connected. If a market is established or the forecast is positive. Custom-made products can be ordered without problems. Tax reductions for new companies provide attractive incentives for start-up. components.A PV system. Companies.000 GWh solar-generated electricity. thus off-setting the PV cost. moulds. State-of-the-art materials are available without inherent restriction to the supply chain.000 MWp or 11 GWp. The utilization of solar energy through PV has a huge potential. The well-established local electronic industry can supply components to the inverter manufacturers. and it generates electricity at the point of use. or Sputnik cover the worldwide market with approximately 50% of all sales and can be very strong partners for the local industry. they are interested to expand their businesses in the Asia region and hence. When BIPV capacity is appropriately sized. PV components and solar cells are specifically mentioned. BIPV needs no extra land. In addition to providing technical and business know-how to the Malaysian venture. this would cover 20% of the national energy demand. Today. the incentives have to be reviewed when considering a local production of either PV inverters or modules. tools and dies. The climate for business opportunities in the field of PV is encouraging. joint ventures may be possible. with possibility to export the surplus to the grid. Possible suitable partners for joint venture on inverter manufacturing can be from Europe. the technical potential is around 11.

33 . Preliminary analysis indicated that applications involving small wind machines could be used to provide electricity (Renewable Energy in Malaysia. Labuan and Kuching. TNB submitted its working papers to the government to seek concurrence for the development of the selected projects. Kota Kinabalu.3 Wind energy potential The climate of Malaysia is dictated by the Northeast and Southwest Monsoon. RWE Schott is currently reviewing its strategy. Melaka.4 Small hydropower potential As the government provided bulk finance allocation for the implementation of small hydropower development below 3 MW. Kuala Trengganu. The sites are located at Mersing. The usual condition of the bank requiring the implementing agency to engage overseas Consultant may also result in a high cost of mini-hydropower program. Indigenous methodology and construction methods together with local manufacture would contribute to minihydropower being a viable and economic solution to low cost rural energy supply. There is a need to establish regional centers in the country to implement mini-hydropower since its potential in the country is large. The site data obtained were then fitted into the various standard designs that the Implementing Agency had prepared. The installed capacity should be sufficient to meet the power demand in the affected area for the next 5 years. Sharp) or Germany (e.g. this is greatly dependent on efforts made by both TNB and government to harvest energy for both the grid and rural sector. which may include a stronger presence and involvement in the ASEAN market. The data has been collected from the Malaysian Meteorological Services stations located at these cities. Alor Star. The energy available from such small streams has been proven to provide considerable contribution to the supply of electricity both in the rural and urban areas. 5. There was a wind feasibility assessment program in Malaysia and ten sites had been chosen to study wind energy potential. These companies are closely watching the policy direction of the government in BIPV and are expected to review their strategy in tandem with developing the BIPV sector. Detailed site surveys were then carried out after the various Ministries committed to provide financial allocation. The study concluded that Mersing and Kuala Trengganu have the greatest wind power potential in Malaysia. • The State Government Area Development committee was informed about the possibility. Cameron Highlands. Other potential investors are from Japan (e. Tawau. The Government and TNB should encourage the development of local expertise in the field of construction and local manufacture. As its location is at the equator.significant manufacturer. the wind speed over the region is generally low. To establish and operate a solar PV module manufacturing unit economically (where wafers are imported) requires a long-term market perspective of about 6 MWp per year. Loans from International Banks should not impose conditions that restrict the use of local materials. Petaling Jaya. 2003). However. viability and the benefits of the proposed projects.g. The following steps of action were taken prior to the design works: • The approximate capacity of the plant to be installed was carefully selected. It is observed that the strongest wind occurs on the East Coast of Peninsular Malaysia during the Northeast Monsoon. The current program provides significant information on the future economy of minihydropower development and the possible introduction of further low cost techniques. 5. IBC Solar).

Figure 15: Distribution of thermal springs in Peninsular of Malaysia. Perak. most of the springs are located along the Main Range Granite batholiths especially within major fault and shear zones. Others are found within the sedimentary rocks which are also in close contact with the granite intrusions. As shown in Figure 15. A number of thermal springs have been partially or fully developed with hot water and spa bathing facilities. The rest yielded water with low to moderate dissolved mineral contents.5.5 Geothermal energy potential Peninsular Malaysia Thermal springs in the Peninsular of Malaysia are known to be related to the major tectonic trend of North-Northwest – South-Southeast. which are of 34 .0 l/sec except one in Tambun. Source: RE in ASEAN website: www. One location in Kelantan is in the process of being gazetted as Geotourism Site by the State Authorities.org (December 2005) There are 3 out of 61 thermal springs in Peninsular Malaysia were found to be discharging brackish to saline water.aseanenergy. Discharge rate are mostly <6.

High concentration of sodium. Geothermal manifestations in the Semporna Peninsula include many hot springs. Sabah Geothermal activities could be found in two major areas in Sabah namely Poring-Ranau and Semporna Peninsula (Figure 16).20 l/sec.7-0. chloride and bicarbonate were recorded.org (December 2005) 35 .9 l/sec. it was found that the values of Tritium (T. mud pools and old steaming grounds.) are > 0.2ºC with flow of 0. These springs generally are located to the major faults and lineaments. located in the western part of the Semporna Peninsula with the highest surface water temperature of 75.aseanenergy. Source: RE in ASEAN website: www. The chemistry of the spring waters is of bicarbonate type with low sodium and chloride.6 o C and nearneutral pH. Figure 16: Distribution of thermal springs in Sabah. The site has been developed into a tourist destination equipped with bathing and spa facilities. which shows high potential for harnessing of geothermal energy. Subsurface temperature of the Apas Kiri area estimated using Na/K geothermometers to be between 189-236 o C. Results of analysis done under the IAEA program on the geothermal waters of Poring and Apas. which indicate mixing with younger or shallower waters. The Poring hot springs are situated within the Sabah National Park. The highest concentrations of young volcanic rocks are found in the Semporna Peninsula. The Poring-Ranau thermal springs are believed to be related to the Kinabalu batholiths.1-9. The geology of the area with active geothermal activities consists of Quaternary dacitic to basaltic lava and tuff. The most active area of the geothermal activities is Apas Kiri.U.3. Surface water temperatures range from 34-57. Those newly discovered thermal springs show pH ranges from 8. Tawau area. All except 8 recently discovered thermal springs in the northern area of the Peninsular are of neutral pH.

Water temperatures at the surface range from 32-69ºC.7 l/sec.Sarawak Very little information is known about the existence of thermal springs in the Sarawak. if any. They are also closely associated with faults and folds of the Mesozoic rocks. their presence has been reported at only one area in the western-most part of the state near Kuching. Discharge is from < 1-26. which also housed an accredited geochemical laboratory. footpath and boat. Eight thermal springs were accessible by road. MGD is taking the every step to enhance its capacity in terms of co-ordination. it is hoped that the aspiration of utilizing geothermal as one of the sources of RE could be realized. 36 .org (December 2005) Further assessments of the promising areas are required to evaluate the potential either for electric power generation or heating and its possible impact. In line with the identification of geothermal as a potential alternative source of renewable energy. of the geothermal development to the local environment. Source: RE in ASEAN website: www. MGD. estimation for subsurface temperature of the thermal waters in Sarawak was not done. Figure 17: Distribution of thermal springs in Sarawak. sodium-chloride and sodium-bicarbonate types. The chemical compositions of the spring reflect to a considerable extent. The springs emerged at a relatively low elevation and are found in the Mesozoic sedimentary sequence adjacent to igneous rocks.aseanenergy. So far. The thermal springs’ locations are shown in Figure 17. The fact that geothermal resource is clean and cost effective. Due to the limited available chemical analysis results. knowledge and expertise in this particular field. The waters are of calciumbicarbonate. collaborates aggressively with MINT in using nuclear techniques in the field of environmental and hydrological studies. their association with the country rocks.

Investment problem because the banks have no experience of providing loan to small and medium sized renewable energy projects in Malaysia. the Renewable Energy Power Purchase Agreement or REPPA which is between the national utility and the RE project developers also plays a significant effect to 37 . Financial problem becomes the major barrier since financial institutions in Malaysia are not comfortable with the fuel security of the projects. • • Current Gap/Constraints and Market Barriers or RE and EE Absence of an effective government policy on renewable energy. The general constraints of the application of RE and EE are (UNDP. Electricity sales price Another issue that makes the RE developers not interested to invest in the RE power projects is the sales price of RE electricity. 2004): • • 6. Such competitive utilization may not be healthy for developers of power generation as it creates uncertainty in the supply of the fuel resources. The present recommended sales price of RE electricity at 17 cent per kWh that is based on a study done by DANIDA is obviously unacceptable to investors. power purchase price does not take into account of inflation and the limitation of 10MW. these are relatively recent initiatives and in the case of the CDM national procedures are not yet in place. This is due to the other non-energy uses of the palm oil residues. pegging the sales price at 17 cents per kWh is close or below the unit cost of production. composting for fertilizer and mulching. This is exacerbated by a restriction on foreign companies owning a maximum of 30% of any Malaysian company. The reliability of fuel supply is an issue since the fuel suppliers are not committed to have a long term agreement with the RE projects developers. static costs of production over the long-term of the sales contract. medium density fiberboard (MDF).1 Biomass energy Fuel security One of the major challenges to the success in the development of the RE projects in Malaysia is the lack of financial support. seasonal nature of the palm oil mill operations and absence of the standard contract procedures concerning the supply and pricing of waste/EFB. besides assuming.6. and etc. REPPA In Malaysia. to determine the sales price for RE generated electricity involves a bargain between potential investors in RE power plants. and the national utility that is concerned with the magnitude of subsidy it has to burden in order to support the Government's fuel diversification policy. While SREP and the Clean Development Mechanism (CDM) offer significant levels of financial support. who are looking for acceptable level of profit. This happened due to the reliability of the fuel is dependent on the mills capacity and operation. Absence of an established and well funded institutional framework for promoting renewable energy. At the moment. unrealistically. Some issues exist regarding legislation enabling the connection of renewable energy generated electricity to the national grid such as: 17 cents/kWh power purchase rate in Peninsular Malaysia is too low for many projects. there is a competitive use of biomass for the products and processes such as pulp and paper. In Malaysia. The suppliers also have the “wait and see” attitude to get better financial gains. As indicated in the study. Among the reasons cited for this concern are the uncertainty in the actual volume and quality of the waste/EFBs from the nearby mills.

Even though.the RE project developers. whereas sourcing fuel for RE has many constraints like 38 . and etc. Another REPPA barrier is the long negotiation period before the sign-up of the agreement. But in the case of RE developers. biomass-based power generation/CHP in the palm oil industry has long been practiced but power sales to the grid has not been done due to poor economics arising mainly from the inability to sell to the grid and to sell at favorable rates. the transaction of an RE projects is not any different from the IPPs with the similar processes involved to arrive at a “bankable” project. there is the common notion that the industry lacks the technical capability and experience in this particular field of biomass energy technology. it will simply abandon their initiative. Conventional versus RE power plant Generally. the longer the transaction takes place the more cost the development will occur. the core business of the palm oil industry. The potential biomass energy project developers do not know where to obtain sufficient information as well as competent advise in matters related to the choice of technology. such schemes usually require a long application and approval process. these institutions are cautious in providing financial assistance for such kind of projects. biomass-based power generation/CHP will not be an attractive business venture. it is difficult to obtain financing for biomass-based power generation/CHP projects in Malaysia. the non-inflatory fixed tariff for the concession period. Unless a “level playing field” price is mutually arrived at between the relevant stakeholders (including Energy Service Industries (ESIs)). the palm oil mills and potential investors usually do not have enough information related to the implementation of such kind of projects. The conventional power plants have no difficulty in sourcing fuel and its fuel is usually subsidized by the Government. The RE power plants are not proven yet. Nonetheless. and not within. there are no such favours. preparation of agreements/contracts. some of the conditions imposed do not provide the confidence for the Bankers to make a needed investment. they are guaranteed payment irrespective of the demand for power. it becomes a hindrance to their initiative due to the difficulty in getting financing as REPPA does not provide a robust cash flow for Bankers to be comfortable with. Financial barrier In Malaysia. The enthusiasm for the projects is based on the capability to fund the development at the minimal cost compared to the gigantic IPP projects. Only a few of the existing technology financing schemes in the country include renewable energy in their portfolios. legal issues. and that the use of biomass fuels goes against the industrialization goals of the country. aside from the pertinent government support policies and regulations. With reference to the palm oil industry. financing. Due to the perceived high risks. Some of the obvious conditions are “take and pay” payment structure. Since biomassbased power generation and sales is new to. Based on past experience. the Banks are more than willing to finance the conventional power stations as they are proven to be successful. If such company does not have the staying power. Negotiations have been ongoing amongst concerned stakeholders to arrive at a final level playing field. At the moment. This is further aggravated by the fact that financial/banking institutions in the country are not familiar with the financing of such business ventures. Therefore. In the case of IPPs. They're maybe other “non-bankable” conditions that will not permit the project to secure the funding from the Banks. while it accounts for the biggest potential for biomass-based power generation/CHP. Furthermore. Lack of information There is a general misconception that biomass-based grid connected power generation and CHP is an unproven technology and business venture. The developers of the RE projects are generally from small companies with limited resources.

Pre-treatment needs energy and in the small RE plants the high intake of energy for auxiliaries will deprive the power plant much of the energy they produce for sale. such subsidies for fossil fuel have to be removed or made transparent in order to create level the playing field. This REBF is expected to act as a successful model in financing RE Project in Malaysia in order to give better perspective to other developers and financial institutions towards developing and financing the same mechanism of RE project in the country. PTM as the owner of the project engineers will evaluate and endorse the technical aspect of the FSM project before qualified project being finance by REBF. while the remaining 20% will be contributes by the project promoter contribution. In term of site selection. it is important that renewable energy receives the same treatment as fossil fuels. There is still massive support to conventional energy sources. Otherwise. The conventional power stations can be located in the most suitable site. Subsidy for conventional energy system Every type of energy has benefited from assistance in its start-up phase. If renewable energy is to be competent economically.2 Solar energy The challenges associated to PV application in Malaysia are: • Local awareness • Capacity of local service providers is weak • Suitable policy. The fund will give up to 80% margin of financing of the project cost. The fund from PTM portion is a contribution from Global Environment Facility (GEF) of RM 9. In the case of RE power plant. fiscal and financial framework is absent 39 . whereas an evaluation on project commercial viability will be undertake by BITMB. The financing of the FSM under BIOGEN project is on sharing basis between PTM and BITMB. Biomass has multiple uses and as such the suppliers are not willing to commit long term contractual agreement. Shortage of water could force the project to fail. whilst each entity contributes 40% of total financing. 6. BITMB which has been appointed as a fund manager will set up a special account and solely monitor all transaction involving the fund such as disbursement and repayment.fuel supply agreement. The total size of the fund is RM 28. which is in the forms of subsidies and export credits. its location is in isolated places.0 million. where sea or river water supply is easily available for condenser cooling.0 million which is equally contributed by Pusat Tenaga Malaysia (PTM) and Bank Industri dan Teknologi Malaysia Berhad (BITMB).2 million and Malaysian Electricity Supply Industry Trust Account (MESITA) of RM 5. and renewable energy should be no exception. Renewable Energy Business Facility (REBF) The setting up of this initial financial assistance program for RE project is especially to support the financial requirement of Full Scale Model Biomass Power Project (FSM) that will be established under the BIOGEN implementation program. Expected after the tenure period of 15 years. The RE fuel needs pre-treatment as biomass like EFB contains more than 65% moisture. BITMB has an absolute discretion to decline any project application that is not commercially viable. which is difficult to secure. the fund shall be on a revolving basis to enable other RE project to access the fund.

The fiscal incentive is an effective tool to create awareness amongst the stakeholders. RE has been given fiscal incentives in terms of tax relief and waiver of import duties since National Budget 2000. Current BIPV application suggests that commercial and domestic market segments have the most economic potential for BIPV. BIPV requires specially designed fiscal incentives that have an impact in the implementation chain especially in the retail end of the market. does not provide specific incentives to encourage and increase the take up rate of BIPV. willing buyer" and "take and pay" basis. mini-hydro and wind. municipal waste. solar. Institution Set up and Finance In the Fifth-Fuel Policy. Solar energy is not really considered as one of the RE resources referred to as the 5th fuel. there is a need to structure incentives to tap the potential of these two markets. the utilization of all types of renewable energy. Small power generation plants (less than 10 MW) that utilize renewable energy can apply to sell electricity to the utility through the distribution grid system. In order to coordinate the implementation of the government's strategy to intensify the development of renewable energy as the country's fifth fuel resource. the immediate exposure given by analyst will spread the message and taken seriously. 40 . Capital Allowance and Import Duties and Tax waiver. which is embodied in the Malaysian budget. spare parts availability. Water and Communications. Because many parties analyze the tax incentives. Incentives for PV are integrated in the Renewable Energy fiscal incentives covering the following areas: Tax Break. Therefore. 6. biogas. solar energy is classified as one of the components for RE and therefore receives the same tax benefits to the other RE fuels. including the selling price on a "willing-seller. The renewable energy electricity producers will be given a license for a period of 21 years. Project developers are required to negotiate directly with the relevant utility on all aspects relating to the renewable electricity purchase agreement. The features of tax breaks and financial mechanism should be designed to encourage the individual domestic owner to consider PV as part of their overall budget as well as encourage the small commercial enterprises to evaluate the potential of installing such a system. including biomass. The current institutional and policy support regards biomass as the most viable RE option. BIPV is much smaller and applicable to different market segments such as commercial complexes and domestic consumers. SCORE is responsible in driving the Small Renewable Energy Power Program (SREP). the government announced the launching of the SREP Program. Nevertheless. transportation and inefficient energy management. The incentives are part of the Government effort to encourage the implementation of RE projects as part of the fifth fuel policy. are allowed.3 Wind energy Among the major problems associated to wind energy system are lack of local expertise.• High cost of PV system. Energy Audit in Government Buildings (EAGB) and Malaysian Industrial Energy Efficiency Improvement Project (MIEEIP). a Special Committee on Renewable Energy (SCORE) has been set up under the Ministry of Energy. it is important to structure a good tax incentive for BIPV in the effort to create awareness and enhance its attractiveness. The fiscal incentives for PV are applicable until 2005. Hence the current fiscal regime. It gives the technology the status of preferred industry. In May 2001. which will be effective from the date of commissioning of the plant. Unlike Biomass. Under this Small Renewable Energy Power Program. much emphasis is on Energy Efficiency (EE) with programs like Demand Side Management (DSM). Starting from National Budget 2002.

The deteriorated condition of the plants and poor accessibility worsened the task. Inadequate drainage systems and sometimes landslides cause difficulties to them. transmission line faults. The damages and faults of the electromechanical equipment and the transmission line were repaired and some modifications were made to improve generation efficiency. Deteriorated condition of the plant Mini-hydropower plants were generally unattended prior to the new management. The main problems faced by the stations were associated with electromechanical equipment. damaged pipes and blocked intake inlets. The amount of debris in the rivers of Malaysia makes the cooling pipes clogged easily and this will cause the bearing oil. gearbox and hydraulic oil to overheat.6. which are dangerous and unsafe for commuting using smaller vehicles. Due to the scattered location and remoteness of the plants. The remoteness of the stations makes communications relatively impossible by either conventional or cellular and in some areas communications are virtually non-existent. Logistic and communication The distance between the Headquarters and the plants range from 40 km to 400 km resulting in substantial loss of time in attending to breakdowns. Accessibility Access to most of the plants is through existing or abandoned logging tracks. 41 .4 Small hydropower There are some barriers and issues in the development of mini-hydropower in Malaysia. logistic and communication posed problems.

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