Renewable energy Environmental Policy Research Centre

support and overcoming
barriers

Original version presented by Dr. David Jacobs
Distinguished Visitor under Brain Gain Malaysia
TNBR Intellectual Discourse session, 29 October 2010, UNITEN
Edited 2017 for MEHB503

Overview of presentation

• International market development of RE
• RE financial support in Malaysia
• Power purchase agreement (PPA)
• Feed-in Tariff (FiT)
• Net Energy Metering (NEM)
• Non-economic barriers

International market
development of
renewables

The share of renewables world-wide .

The share of renewables world-wide .

Renewable energy capacity growth • Increase in RE capacity despite higher kWh/$ when compared to fossil power generation .

Annual additions of solar PV capacity .

Annual additions of wind capacity .

Investment in renewables .

Targets and policies worldwide .

RE financial support .

Traditional power purchase agreement (PPA) • REPPA during SREP period (2001 – 2010) • Based on conventional power supply Local consumption Grid supply RE generated • Highlights uncompetitiveness of RE against conventional • Relying on large scale but resources are relatively small .

Feed-in tariff (FiT) • Purchase obligation • Fixed tariff • Fixed payment duration Local consumption Grid supply RE generated .

fuels costs (biomass and biogas) Source: Mendonca et al. Operation and maintenance costs. 2009 . costs for licensing procedure). Grid-related and administrative costs (including grid connection. Tariff calculation methodology • Today’s international best practice: • Generation cost + “reasonable” rates of return • Benchmark: cost for renewable electricity • Transparent tariff calculation methodology should be published Cost factors: • Investment costs (material and capital costs).

Tariff calculation methodology Source: Kettha 2010 .

193. 162 .FIT rates in comparison – RM-Sen/kWh Malaysia Taiwan Germany Kenya Ontario Ecuador (2011) (2009) (2010) (2008) (2008) (2007) Biogas 28-35 21 34-50 22 30-59 30 Biomass 27-35 21 34-50 22 39-42 30 Small 23-24 21 27-54 25-37 37-40 16-18 hydro Solar PV 85-178 112-130 103-142 --.

Eligible RE Sources / Technology • 5 eligible resources (4 in 2011) Biogas Biomass Small hydropower Solar PV • List can be expanded later to include other sources / technology Geothermal (2015) • Export capacity up to 30 MWe (or higher if approved by Minister) • Maximum share of TNB: 49% .

0 kW < Tariff/Price ≤ 30 kW 30 kW < Tariff/Price ≤ 100 kW 100 kW < Tariff/Price < 2 MW 2 MW and above .g. e. Size specific tariffs • Tariff differentiation according to size • Economies of scale • Market entrance for small producers • According to typical installation sizes.

72kW 1. 30MW 0. & up to & incl. & up to & incl. 1MW 1.24 Installed capacity > 10MW. 24kW 1.18 Installed capacity > 72kW. 4kW 1.23 Installed capacity > 4kW. & up to & incl. 10MW 0.20 Installed capacity > 24kW.14 Installed capacity > 1MW.23 Class/category of PV installation FIT rate (in RM per kWh) Installed capacity up to & incl. & up to & incl. & up to & incl.85 . & up to & incl. 30MW 0. 10MW 0.95 Installed capacity > 10MW. Size specific tariffs in Malaysia • Tariff differentiation according to size for small hydro and solar PV in 2012 Class/category of Hydro installation FIT rate (in RM per kWh) Installed capacity up to & incl.

Size specific tariffs in Malaysia • Tariff differentiation according to size for biomass and biogas in 2012 Class/category of Biomass installation FIT rate (in RM per kWh) Installed capacity up to & incl. 30MW 0. 10MW 0. 10MW 0.29 Installed capacity > 20MW.30 Installed capacity > 10MW. & up to & incl. 4MW 0.31 Installed capacity > 10MW. & up to & incl.28 . & up to & incl. 20MW 0. 30MW 0.32 Installed capacity > 4MW.27 Class/category of Biogas installation FIT rate (in RM per kWh) Installed capacity up to & incl. & up to & incl.

23 use of locally manufactured or assembled solar PV modules 0. Bonus additional tariffs in Malaysia • Subject to bi-annual revision • Bonus additional tariffs for solar PV in 2012 Solar PV bonus (RM per kWh) use as installation in buildings or building structures 0.03 use of locally manufactured or assembled solar inverters 0.01 .25 use as building materials 0.

Bonus additional tariffs in Malaysia • Bonus additional tariffs for biomass and biogas in 2012 Biomass bonus (RM per kWh) use of gasification technology 0.01 use of municipal solid waste as fuel source 0.02 use of steam-based electricity generating systems with overall efficiency of 0.01 above 14% use of locally manufactured or assembled gasification technology 0.02 use of locally manufactured or assembled gas engine technology 0.10 Biogas bonus (RM per kWh) use of gas engine technology with electrical efficiency of above 40% 0.08 .01 use of landfill or sewage gas as fuel source 0.

Tariff payment duration • Formerly: short periods (logic of conventional electricity sector) • Nowadays: long payment durations (usually 15-25 years ~ lifetime of power plant) • Malaysia: 16-21 years • Necessary because of special investment structure Source: Mendonca et al. 2009 .

e. annual reduction). rationalization. Spain) Source: Klein et al. economies of scale. i. tariff for “old” plants remains stable over long period of time • Most countries only use it for solar PV (Italy. because of technological learning. innovation pressure • Effects only new capacity. Tariff degression • Tariff degression (automatic. 2008 .

0% Biomass 0.gov.my/ .5 % Biogas 0. Tariff degression in Malaysia Technology annual degression rate* Solar PV 8.5 % Small hydro 0% *applies to basic tariffs and additional bonuses (subject to annual revision) Latest FiT rates listed at SEDA’s website: http://seda.

FiT financing mechanism in Malaysia Source: Kettha 2010 .

Net Energy Metering (NEM) • Priority for local consumption • Excess power sell to grid at real market price • Single bidirectional metering of electricity Local consumption Grid supply RE generated .

Net Energy Metering (NEM) • Introduced for solar PV in November 2016 as FiT quota is exhausted • Complements FiT for the other RE sources • 500 MWe allocated until 2020 • Future smart-grid integration: • Allows for multi-tiered pricing of electrify according to peak / off-peak periods • Enable energy storage to connect to grid .

Costs and benefits of renewable energy support .

75 billion • 52.1 billion savings for avoided external costs (42 million tonnes of CO2) • RM 19 billion of loan value • Tax: RM 1.000 jobs Source: Kettha 2010 . Costs and benefits of RE in Malaysia Costs: • RM 6.2 billion by 2020 for 2080 MWe Benefits: • RM 2.

Overcoming Non-economic barriers .

Administrative Barriers • High number of institutions (France: 27 for wind) • High number of rejections Institution A Institution B • High administrative costs Institution C • Long lead times RES-e Institution D developer Institution E Institution G Institution F .

Administrative Barriers Solution: One-stop-shop institution Institution A Institution B Institution C One-stop Institution D institution RE developer (SEDA) • Co-ordinate all authorities that are involved Institution E • Provides assistance to applications • Lighter licensing procedures for small projects Institution G Institution F • Enforcement of offences .

Grid related Barriers • Uncertainties in grid access and availability • Insufficient grid capacity Solution: • Fair and transparent grid connection procedures (Grid Code) • Data need to be verifiable and disclosed by grid operator • Clear connection approach. deep vs shallow vs super shallow • National grid expansion plans has to be prepared well in advance .

Grid related Barriers • Cost sharing methodologies for grid connection charging Source: Auer et al. 2007 .

Grid related Barriers Cost sharing methodologies for grid connection charging • Deep • Shallow • Super Shallow Source: Auer et al. 2007 .

g co-ownership . Social Barriers • NIMBY effect • Lack of awareness on positive attributes of RE Solution: • Clear information and early participation in decision making process • National tax/levy schemes can increase social acceptance • Local taxes to benefit local community • Inclusion of local communities with direct benefits e.