ThIs Is a reprInI oI selecIed arIIcles Irom Ihe cover package oI Ihe

Iune 2U11 Issue oI Ihe Crccn Purchcsng Asc magazIne. For Ihe laIesI
InIormaIIon on Ieed-In IarI In MalaysIa and Ihe SusIaInable Energy
DevelopmenI AuIhorIIy MalaysIa (SEDA MalaysIa}, vIsII www.seda.gov.my
SepIember 2U11
rIomedIa Creen Sdn hd
cover
MaIaysia is aII set tc jcin the ccuntries which
pay fcr renewabIe energy-generated eIectricity
that is fed intc the naticnaI grid. It has hcwever
adcpted a cauticus apprcach by impcsing
quctas cn hcw much the feed-in tari scheme
wiII take in every year.
This is tc avcid the pitfaII cf the free-fcr-aII
apprcach that had Ied tc scme Eurcpean naticns
making premature cuts in prcmised tari rates,
and raising the ire cf investcrs.
Is MaIaysias FiT designed weII encugh tc
avcid thcse mistakes7 Mcre impcrtantIy, wiII it
unIcck the vast pctentiaI cf renewabIes and the
eccncmic spin-cs that ccme with it7

The gcvernment thinks it has gct the strategy

right

The stakehcIders say the ccnditicns must be

right fcr investcrs tc buy in

And scme earIy birds have cwn in fcr the

wcrm.
Acid test
fcr FiT in
MaIaysia

UnIccking the Fifth FueI
FiTs unused qucta tc be carried fcrward tc 2012
Degressicn fcr next year IikeIy tc be deferred
8y Ann Tcoh
Its a billion dollar question whether
Malaysias newly-minted feed-in tariff
(FiT) mechanism is designed well
enough to fully unlock the renewable
energy (RE) potential of the oil-and-
gas exporting country that has long
subsidised natural gas for electricity
generation.
Certainly, the political will has
been demonstrated. The two laws that
will enable the FiT the Renewable
Energy Act 2011 and the Sustainable
Energy Development Authority (SEDA)
Act 2011 were passed by Parliament
end April, and are being gazetted.
Certain processes will take their course
now before the FiT is nally imple-
mented, probably by next month.
Even funds to support the
rst-year targets at RM189 million
(US$62.3 million) have been set
aside.
On top of that, it is interesting to
note that the governments economic
transformation programme has lately
churned out entry-point projects (EPP-
10) that include solar power plants of
higher capacities than those originally
planned under the Renewable Energy
Policy. These have been injected into
the RE targets for the FiT, signicantly
raising them (see table on page 15).
Theres a lot riding on this
scheme. By 2020, RE is touted to cre-
ate a host of spin-off benets, includ-
ing:
Savings of RM2.1 billion in external
costs to mitigate CO

emissions
At least RM19 billion in loan values
for RE projects (at 80% debt nanc-
ing)
RM70 billion of revenue from RE
power
RM1.75 billion in tax income to the
government and
52,000 jobs to construct, operate
and maintain RE power plants (at 15
to 30 jobs per MW).
These were the projections that
Ahmad Hadri Idris, the chief technical
advisor to the National RE/Malaysian
Building Integrated Photo Voltaic
(MBIPV) project team, presented to the
industry in recent months. The success
of the national green policy will be
measured by the RE quotas uptake,
and the realisation of the projections.
Many businesspeople are placing
expectations on the FiT: power produc-
ers, photovoltaic manufacturers, dis-
tributors and installers, palm oil planta-
tions set to make money from their
empty fruit branches, logistics provid-
ers, bankers and insurers, training
institutions and trainers, consultants
and even colleges and universities who
are heavily into research.
Ccuntdcwn tc impIementaticn
The bees are buzzing around the honey
pot, and from what Green Purchasing
Asia has learnt, the frenzy of economic
activities will start as early as next
month. Industry circles and even the
lawmakers themselves, however, think
the effects will only be felt in a year or
so. People need to be trained to set up
electrical systems and to handle ma-
chinery. Bankers need to be engaged
to fund the RE projects as they still see
RE as risky projects.
Hadri calls for patience, saying
those interested will need to be familia-
rised with the application process and
do their math and some may want to
see how others do it before wading in.
As usual, there are some early birds
who want to catch the action early and
have long been prepared.
Based on enquiries received so
far, Hadri expects 20 to 25 applicants
for biomass, biogas and small hy-
dropower. But the biggest attraction
is solar, where there will be about
50 corporate players and hundreds
of individuals. More than 40 solar
photovoltaic installers were listed on
the MBIPV website (www.mbipv.net.
my) as approved installers. They will
now have to seek relisting in the SEDA
website after June 30th.
There is this over-excitement in
LATE5T
At press time, MInIsIer oI En-
ergy, Creen Technology and
WaIer DaIuk SerI PeIer ChIn
announced an average 8.35%
Increase In elecIrIcIIy IarI Ior
boIh IndusIrIal and commercIal
consumers Irom Iune 1sI

2U11.
ThIs Is parIly due Io a decIsIon
by Ihe governmenI Io gradually
wIIhdraw gas subsIdy Irom now
unIIl December 2U15.
Dn Iop oI IhIs IarI In-
crease, come SepIember 1sI,
Ihey wIll also have Io pay an
exIra 1% on IheIr elecIrIcIIy
bIll Io Iund Ihe Ieed-In IarI.
These are Ihe IarI In-
creases Ior Ihe varIous caIego-
rIes oI users:
CcmmerciaI: Irom an aver-
age oI 37.85 sen per kWh
Io /1.U1 sen per kWh, or an
Increase oI 3.1 sen.
IndustriaI: Irom 28.56 sen
per kWh Io 3U.5/ sen per
kWh or an Increase 2.38 sen.
Dcmestic: Irom 27.35 sen
per kWh Io 28.63 sen per
kWh or an average Increase
oI /.52% or 1.21 sen per
kWh. Those who use less
Ihan 3UUkWh per monIh wIll
be exempIed Irom Ihe IarI
Increase.
The Increase Is largely
conIrIbuIed by an Increase In
Ihe naIural gas prIce Io Ihe
power secIor Irom RM1U.7Ul
mmIu Io RM13.7UlmmIu
wIIh eecI Irom Iune 1.
ElecIrIcIIy prIce may be
Increased every sIx monIhs due
Io Ihe Iuel cosI pass-Ihrough
mechanIsm IhaI Ihe govern-
menI has adopIed.


the market, and some people are going
to be frustrated, but thats the beauty
of it because you have competition,
and competition means better costs. At
the end of the day, its an open market,
and the market will balance itself, he
says.
The roadmap is simple. SEDA will
be set up, probably by next month,
after the chairman and CEO and board
members have been appointed. The
Renewable Energy Fund details would
also have been sorted out by then.
Next comes the information mecha-
nism the website that the public
will refer to for guidance on the FiT.
Enough time will be given for them to
become familiar with it.

ried forward to next year. The gure is
likely to be just over half of the original
target depending on when FiT actually
starts. This has to be shared among
four sectors: biogas, biomass, mini-
hydro and solar PV (see table on page
15 for the quotas).
There is market fear that the quo-
tas will hinder the development of RE
and the creation of related economic
opportunities. Detractors accuse those
behind the quotas of paying lip service
to RE to protect fossil fuels in the
power mix. However, if one studies the
experience of countries that success-
fully carried out the FiT and also those
that failed, the quota system seems a
sensible way for controlled develop-
ment of RE. This is more so when
the Malaysian experiment of renew-
able energy, via the Small Renewable
Energy Project (SREP) that started in
2001 has been at best a good experi-
ment and learning opportunity, and at
worst, a dismal failure.
The target set by the 9th Malaysia
Plan in 2005 targeted 350MW of RE
connected to the grid (or 1.8% of the
power generation mix) by 2010. What
it got was one-sixth of that, 62.3MW,
or a mere 0.4% of the energy mix. Giv-
en this poor record, setting a quota will
give the planner a chance to prepare a
strong foundation in the initial years.
It is learnt that the government is
considering passing on the unused
quotas for 2011, to 2012, since it is
already mid-year. It is also consider-
ing not imposing the degression for
2012. (Read interview with Energy,
Green Technology and Water Minister
on page 16.) This will please investors,
especially those in the solar PV sector
which faces the highest degression
rate.
Malaysian Photovoltaic Industry
Association president Shamsudin Kha-
lid is concerned about the degression,
saying the FiT and degression have to
be business-friendly to encourage take-
up. If they (the investors) dont bite,
we cannot achieve our target of 5.5%
for RE by 2020, says Shamsudin, who
is also marketing manager for Sharp
Solar at Sharp Roxy Sales and Service
Company.
Degressicn principIe
The degression principle is based on
the expectation that RE technology
costs will go down over time, as in the
case of solar PV. That is why there is
no degression for mini hydro which
is a mature technology. However,
the Fukushima nuclear plant crisis in
Japan may alter the scenario, as some
countries have put on hold plans to
pursue nuclear and are opting for solar
energy, at least for now. This brings
up demand for solar PV, which may
increase prices.
These concerns were expressed
during an industry dialogue conducted
by the Ministry of Energy, Green
Technology and Water for some 300
stakeholders in April, and echoed by
Ahmad Hadri
Iikens the FiT
tc a hcney pct
ucta system
Malaysias FiT is based on the German
model (and has reportedly received ac-
colades from the German pioneers) but
with a big difference: there is a quota
system which will effectively limit
the growth of each RE source. The
quota system means interested energy
producers will have to vie for limited
megawatts yearly when they apply to
be feed-in approval holders.
The good thing is once the quota
is allocated to a company or individual,
it is licensed to make money for the
next 20 years, backed by a xed pay-
ment scheme that does not depend
on subsidies or economic vagaries.
The direct licensee (the main power
generator and distributor), which is
Tenaga Nasional, is obligated by law
to buy the RE from these producers.
That said, 219MW was originally
up for grabs this year when FiT was
anticipated to start in April 2011 but
because the FiT has been delayed, the
quota for this year will probably be
reduced, and the unused portion car-
5hamsudin
khaIid the sky is
dark, but the rain
hasnt faIIen yet
ndusIry dIalogue:
The ballroom was sIIll
packed wIIh parIIcIpanIs
aIIer lunch durIng Ihe
MInIsIry oI Energy,
Creen Technology and
WaIer brIeng on Ihe
secondary legIslaIIons
relaIed Io Ihe
Renewable Energy AcI
and SusIaInable Energy
DevelopmenI AcI.
Some 3UU sIakeholders
were aI IhaI brIeng
held aI a PuIrajaya
hoIel In laIe AprIl

cover
a potential major player privately to
Green Purchasing Asia. However, these
legitimate fears may be short-term.
If there is a shortage of solar panels,
prices may not drop that quickly, but in
the medium term, economies of scale
will even things out.
Hadri is optimistic the FiT will de-
liver. Theres a difference today. When
we did the SREP, they just provided
the targets without the means. Its like
providing the food without the tools to
eat. Now we provide not only the food,
but also the cutlery to enjoy the food,
he says. He credits the willingness
and openness of the industry players,
especially those who started with the
SREP, in sharing their views and even
condential business information with
the authorities when the latter devel-
oped the laws and the FiT.
Engaging Tenaga Nasional took
two full years and industry discus-
sions were sometimes heated. The end
results, however, seemed pleasing to
Hadri. Hans-Josef Fell and the late Dr
Hermann Scheer, both pioneers of FiT,
came to Malaysia to understand what
we were doing and they said we were
on the right track. That gives us con-
dence. Of course, there are limitations,
like the quotas, but Hans-Josef said
thats ne. You are starting from a zero
base, or even negative base. Its okay
to start slowly.
If the people want renewable
energy badly enough, they will be will-
ing to pay more, the RE fund will be
expanded and then the sector will truly
soar. For now, the target is 1.2GW by
2015, and 3.1GW by 2020. These alone
will mean RM70 billion in revenue
from RE power for companies and
individuals by 2020.
AnnuaI E capacity target (qucta, MWlyear]
Year icgas icgas- icmass icmass- 5maII 5cIar PV 5cIar PP ucta Cum.
sewage waste hydrc 1MWp (EPP10] MWlyear MW
>1MWp
2U11 5 5 55 1U 2U 6 1U 111 111
2U12 2U 1U 6U 2U 6U 12 35 217 328
2U13 2U 1U 7U 3U 8U 1/ 5U 27/ 6U2
2U1/ 25 1U 6U /U 6U 16 8U 251 853
2015 25 10 70 50 60 17 110 342 1,235
2U16 25 1U 8U 35 6U 15 13U 355 1,55/
2U17 3U 1U 5U 3U 5U 21 15U 381 1,575
2U18 3U 1U 1UU 2U /U 2/ 16U 38/ 2,355
2U15 3U 1U 1UU 2U 3U 28 165 383 2,7/2
2020 25 10 100 10 20 33 170 368 3,110
2U21 25 5U 6 37 3U 188 3,258
2U22 25 5U 5 /1 8U 2/1 3,535
2U23 2U / 8U /7 13U 281 3,82U
2U2/ 2U 3 7U 6U 25U /U3 /,223
2025 20 60 80 250 410 4,633
2U26 2U 5U 1U5 25U /25 5,U58
2U27 2U 5U 135 25U /55 5,513
2U28 2U 5U 175 25U /55 6,UU8
2U25 22U 25U /7U 6,/78
2030 280 300 580 7,058
enewabIe energy (E] icgas icmass 5maII hydrc 5cIar PV
RE InsIalled capacIIy /MW 1UMW 1UMW 6kW
RE generaIIonlmonIh [a] 2,U//MWh 5,11UMWh /,166.67MWh 6UUMWh
FIT raIe [b] RMU.3/lkWh RMU.33lkWh RMU.2/lkWh RM1./6lkWh
FIT duraIIon 16 years 16 years 21 years 21 years
FIT paymenI per monIh
= [a x b] RM65/,56U RM1,686,3UU RM1,UUU,UUU RM876
SImple payback perIod /.8 years /.5 years 7.5 years 8.6 years
ExampIes cf pctentiaI inccme frcm feed-in tari (FiT]
5ourcc. Mnstry o] Encrgy, Crccn Tcchnology cnd Wctcr, Mclcysc
5ourcc. Mnstry o] Encrgy, Crccn Tcchnology cnd Wctcr, Mclcysc
Notc. Thcsc tcrgcts cssumc thct thc 5EDA wcbstc gocs lvc n Junc 2011 cnd thc FT stcrts n 5cptcmbcr 2011.
What it takes
tc tap E
fcr eIectricity
As wIIh any oIher counIry In Ihe world,
renewable energy wIll only supplemenI
Ihe base load oI power In MalaysIa. DI
course, Irom an almosI zero base, II wIll
Iake a loI oI doIng and a loI oI IIme Io
Iurn RE InIo a IIh Iuel Ior elecIrIcIIy
generaIIon.
The counIrys currenI base demand Is
1U,UUUMW, wIIh peak demand aI
15,UUUMW. ThIs Is beIng saIIsed by
power planIs IhaI use maInly gas and
coal.
These are Ihe reasons why RE can
only play a lImIIed role, accordIng Io
MalaysIas power generaIor Tenaga
NasIonal erhad:
Though InexhausIIble and non-
polluIIng, solar and wInd power
are subjecI Io InIermIIIency.
Solar power Is capIIal InIensIve,
and needs vasI land areas Io
produce a reasonable amounI oI
elecIrIcIIy.
SIudIes In several regIons In
PenInsular MalaysIa showed low
poIenIIal Ior wInd. ecause Ihere Is
noI always enough wInd, elecIrIcal
compensaIIon and sIorage are
needed.
Iomass, solId wasIe and bIogas
have sIrong poIenIIal In MalaysIa.
DI Ihe 88MW projecIs under Small
and Renewable Energy Programme,
nearly halI or /U.35MW comes
Irom bIomass and bIogas planIs.
These planIs, lIke oIher Iuel-based
planIs, can be acIIvaIed aI wIll Io
meeI changIng demands. However,
Ihere may be compeIIng needs Ior
Ihe Iuel. urnIng Is Involved, so Ihe
energy Is noI compleIely clean.
Energy
scurce
FueI fcr 1,000MWe fcr
1 Year
Solar 1UU sq km oI land
WInd
3,UUU wInd IurbInes oI
1MW
Iogas 8UU mIllIon chIckens
Iomass
3U,UUU sq km oI
planIaIIon area
5ourcc. Tcncgc Ncsoncl
A ccmpariscn cf what is needed tc
prcduce 1,000MW cf eIectricity
1
2
3
4


Investors looking at Malaysias feed-
in tariff (FiT) mechanism as a busi-
ness opportunity should nd comfort
in the initiatives the government has
taken to ensure the potential problem
areas are adequately addressed. The
government may be cautious in ap-
proach, but it is not short on ambition.
To ensure the fund is kick started
without a hitch, the government has
agreed to inject RM189 million into
the Renewable Energy Fund to fund
the RE targets for a year, Datuk Seri
Peter Chin says. The advance was
given via the Performance Manage-
ment & Delivery Unit (Pemandu), a unit
under the Prime Ministers Department
whose role is to oversee implementa-
tion of the countrys Economic Trans-
formation Programme and Government
Transformation Programme.
In the long-run, however, the RE
Fund will be fed by a 1% electricity
tariff increase. (At press time, Chin
held a press conference to say that the
1% increase will take effect from Sept
1st. He also announced an average
7.12% increase in electricity tariff
beginning June 1st, partly because of a
gas subsidy reduction exercise. How-
ever, domestic users who use less than
300kWh per month will be exempted
from these increases).
Chin says that because there has
been a delay in the onset of the FiT,
the amount in the RE Fund that is not
used for this year will likely be carried
forward to 2012. He indicates
the FiT will start in July
with the set up of the
Sustainable Energy
Development Author-
ity (SEDA) at an ofce
in Putrajaya.
As for requests from
stakeholders that the
degression of 8% for
2012 be postponed for
the same reason, Chin
5takehcIders in the renewabIe energy sectcr whc view MaIaysias feed-in tari mechanism as a hcney
pct, are ccncerned cver certain aspects cf the scheme, Iike the qucta system and degressicn timetabIe.
In an hcur-Icng interview with 9NA<$==GGF+A=O, MaIaysian Minister fcr Energy, Creen TechncIcgy
and Water Datuk 5eri Peter Chin Fah kui addresses their grcuses, and shares the gcvernments thinking
cn grcwing renewabIe energy.
E investcrs get FiT suppcrt guarantee
If we renege cn cur
FiT cbIigaticns, any
cf the pIayers can use
the Iaw tc sue the
gcvernment. It is as
simpIe as that.

cover

says: This seems to be the case; that
we have to adjust. This indication
from the minister will please industry
players as whatever tariff that has been
agreed on will last for the duration of
the agreement 21 years in the case of
solar photovoltaics.
The minister touched on a num-
ber of other issues in the interview.
On whether RE levy will be increased
2% or 3% to boost the RE sector
If we want a larger role for RE, we
have to promote it. We can increase
the RE levy to boost the pool fund.
However, there are other mechanisms
we can use to promote RE, like double
deduction for investments or (reduc-
ing or abolishing) import and excise
duties. Dont forget that electricity con-
sumption grows over time and the 1%
levy will translate into a larger amount.
It all boils down to the size of the
RE fund. For the rst year, I am get-
ting RM189 million from Pemandu as
advance. As I collect more, and if the
pool is big enough to sustain higher
quotas, I will do it. After all, the money
is earmarked for this purpose. If it is
growing the green economy, why not?
If we invest a small amount and get big
returns from it, why cant we do it?
If you invest a certain amount to
grow the economy and it is successful,
why cant we do some more? Those
funds can be from other sources, not
just from the 1% tariff hike. If the gov-
ernment feels it is a good deal, it can
invest. However, if it falls at, I cant
justify asking for more.
The existing quotas are to prevent
overheating of the RE industry, but
they are not carved in stone. They will
be revised accordingly, depending on
the funds available.
Assurance for players in Malaysias
FiT scheme, given the ip-op in
some countries
The law is explicit. We are applying a
law passed by parliament. If we renege
on it, any of the players can use the
law to sue the government. It is as
simple as that. The agreements that we
sign is part and parcel of the regula-
tions that will come. I am using the law
to guarantee you. Which government
wants to be sued? This is the inbuilt
system. Everything depends on the
total amount we can collect, and it will
be disbursed. We dont want to keep
the money.
On the rationale for quotas in the FiT
I met investors at the Malaysia-Europe-
an Union Forum in Vienna, and among
other things, they want Malaysia to
remove the cap on annual capacity tar-
gets. They want a free-for-all as is be-
ing done in some European countries.
We know however that some have
failed when the funds ran out because
there were too many players.
We cant be too bullish from the
beginning. I would like to see SEDA
taking a cautious approach. We start
small. This is something new. We dont
want to fall into the trap that some
countries found themselves in because
they went overboard.
On whether foreign participation is
crucial to the success of the FiT
For the amount of money we have
(in the fund), I think locals can take
up the quotas. I have many people
writing to me. I say you have to bid;
I cant promise you. I think foreign
participation will be in providing
technology. You have one or two
Chinese companies keen to do solar
farming here.
In the solar sector, Malaysia has
the best opportunity to position itself
and become a global leader in solar PV
manufacturing. Four leading multi-
national PV companies First Solar,
Q-Cells, Sunpower and Tokuyama
have either set up operations here or
have announced their FDIs equivalent
to RM14 billion. They provide busi-
ness opportunities for local players
to understand, build capacities, enter
the PV business and benet along the
supply chain.
On nancing of RE projects
As of now, there is a lack of awareness
among nancial institutions because
RE projects are still being considered
high-risk investments, which makes it
difcult for RE developers to source
for funding. SEDA and the ministry will
look at this issue thoroughly so that
action is taken to ensure support from
nancial institutions in RE develop-
ment.
On the importance of a transparent
online FiT application process
Because the process is transparent, it
will avoid all sorts of talk on whether
so-and-so was selected because of his
connections. You can see the quotas
online and can see who has been
selected at any point of time.
On withdrawal of gas subsidy for
electricity generation within four
years
Yes, this is the plan. The government
has only this pool of money. You can
use it to subsidise fuel (to prevent
ination) but it is non-productive and
doesnt grow the economy. Or you can
use it to invest in many productive
areas, to build incomes and eventually
to build a bigger pool of funds. This is
a policy choice. And the choice is that
we need to transform our economy.
We will increase the electricity tariff.
But we will all learn to be more energy
efcient.
We dcnt want
tc faII intc the
trap that scme
ccuntries fcund
themseIves in
because they went
cverbcard.
If we invest a
smaII amcunt and
get big returns
frcm it, why
cant we dc it7

Primer cn MaIaysias FiT
Feed-in tari rates
5maII hydrc
Tari:
RMU.23RMU.2/
AnnuaI
degressicn: NIl
Term: 21 years
5cIar PV
Tari:
RMU.85RM1.23
AnnuaI
degressicn: 8%
Term: 21 years
icgas
Tari:
RMU.28RMU.32
AnnuaI
degressicn: U.5%
Term: 16 years
icmass
Tari:
RMU.27RMU.31
AnnuaI
degressicn: U.5%
Term: 16 years
The feed-in tariff (FiT) is an incentive
to encourage the private sector to go
into green power generation. Renew-
ables make up only 0.5% of Malaysias
fuel mix. It is hoped that with the FiT,
renewal energy (RE) will make up
5.5% of the mix by 2015.
Malaysia uses Germanys FiT as
its model, but imposes annual quotas
based on the rationale that they will
promote orderly development of RE,
and will prevent overheating of the
market. The quotas also ensure there
is enough money to honour power
purchases. The government is also
cautious about raising electricity tariff
too much to fund the growth of RE.
(FiT will be paid from consumer elec-
tricity tariff.)
Malaysias FiT are xed tariffs
paid for RE-generated electricity that
is fed into the national grid. How much
is paid depends on the type of technol-
ogy, the year the plant starts operating
and the size of the plant. In Malaysia,
four types of RE are eligible: biomass,
biogas, small hydropower and solar
photovoltaic (PV).
Solar PV enjoys the highest tariff,
as high RM1.78 (US$0.59) if one
includes bonuses for using local
products, if it is used as a building
material, and if the capacity is up to
4kW. However, an annual degres-
sion of 8% is built into the solar FiT.
The tariff is xed for 21 years.
Hydropower enjoys the lowest rate
of only 23 to 24 sen, also for 21
years, but there is no annual degres-
sion. This is because the technology
is mature and will not see drastic
price changes.
Biomasss basic tariff is between
27 and 29 sen, excluding bonuses
for efciency, use of local products
or the use of municipal waste (10
sen, or more than a third of the
biomass basic tariff).
Basic biogas tariff is between 28
and 32 sen. The FiT for biomass
and biogas are for 16 years.
Other aspects of the Malaysian FiT:
EIigibiIity
Almost anyone can be a power gener-
ator if they have the capital. However,
foreigners and grid system opera-
tors, technically referred to as direct
licencees, can only own up to 49% of
any plans. Entities like cooperatives,
municipal councils and management
bodies of common properties like
Transparent rst-ccme, rst-served system
Cuaranteed access, guaranteed payment cnce apprcved
8y Ann Tcoh
NoIe: ExcepI Ior small hydro,
bonus paymenIs are gIven
under cerIaIn condIIIons. The
above are basIc IarIs. See
Ihe Renewable Energy AcI Ior
Iull IarIs.

&
&
2

cover
condominiums may also apply.
Participants of the Small Re-
newable Energy Programme (SREP)
launched ten years ago and other
government-subsidised programmes
have to go through the same applica-
tion process. Those who have renew-
able power purchase agreements with
direct licencees have to terminate them
rst.
Application is only available
online. Once approval is given, also
online, the quota is immediately al-
located.

cnus
Bonus tariff is given for a host of things
like solar PV installations on build-
ings or as building structures (26 sen
for every kWH; a generous sum when
the tariff for small hydropower is only
23 sen), and locally manufactured PV
panels and inverters. There are also
incentives for efciency, like an extra 1
sen for steam-based systems (biomass)
with efciency above 14%.
Degressicn
Annual degression refers to the annual
lowering of tariff for new power plants.
The operative word is new. For in-
stance, with a 10% annual degression,
Company A which is commissioned
this year may enjoy RM1/kWh tariff
for the next 21 years, but Company B
which is commissioned next year will
only get 90 sen (RM1 minus 10%) for
the next 21 years.
The degression takes into account
market conditions, and the maturity
and cost of technology. For instance,
the cost of PV systems dropped from
RM31,000/kW in 2007 to RM26,000/
kW in 2009. Today, the cost is only
RM18,000/kW. The law provides for re-
visions at least once every three years.
Cuaranteed access tc the grid
The Renewable Energy Act guarantees
access to the grid on a rst-come-
rst served basis, based on a prede-
termined quota. If you get approval,
access duration to the grid is xed: 16
years for biomass and biogas, and 21
years for small hydro and solar photo-
voltaics.

uctas
Every year, quotas are available for
application. For instance, a total of
111MW capacity is up for grabs this
year (if the FiT starts in September
2011), to be shared among biogas, bio-
mass, small hydro and solar. The quo-
tas will be reviewed every six months
via a computerised system. Unused
balance will be offered to sectors with
higher demand.
Funding fcr FiT
Malaysia uses the shared burden
principle. This means the cost of RE-
generated electricity is shared by all
electricity consumers (except those
who use less than 300kWh per month).
As electricity from RE is more expen-
sive than that from fossil fuels (at least
for now), consumer electricity tariff
will be increased to fund the FiT via
the Renewable Energy Fund.

5ustainabIe Energy DeveIcpment
Authcrity (5EDA]
SEDA will be the statutory body that
administers the RE Fund and manages
the FiT. It will review the FiT at least
once every three years.

Targets fcr renewabIe energy
Malaysia has had a Renewable Energy
Policy since 2001, launching it with
the Small Renewable Energy Power
Programme (SREP) that covered power
generation plants of up to 10MW. How-
ever, SREP failed due to the lack of a
support system.
The targets set by the 8th and
9th Malaysia Plans were not met and
even revised downwards in the latter.
The 8th Malaysia Plan (20012005)
envisioned 5% renewable energy in
the energy mix by 2005. The target
was revised downwards to 1.8% in
the 9th Malaysia Plan (20062010).
But as of December 31st 2010, the RE
connected to the grid was only 0.4%
or 62.3MW. With the FiT, the target
has been revised upwards again to
5.5% (1.27GW) by 2015 and 3.14GW
by 2020. By 2030, it should more than
double to 7GW.
eguIaticns
Aside from the Renewable Energy Act
2011 and the Sustainable Energy Cor-
poration Act (SEDA) 2011, there will be
seven subsidiary laws which have been
discussed with the industry.
These will be uploaded on
www.seda.gov.my once SEDA is set
up. For now see www.mbipv.net.my for
details on tariff and other information.
The Energy Commission is the
authority that licenses power genera-
tion. Laws that affect electricity supply
generation must be complied with. Ap-
proval by SEDA is only for the FiT.
PctentiaI impact cf MaIaysias E pcIicy cn energy mix
NaIural gas
Hydro
Coal
Nuclear
CombIned
RE elecIrIcIIy
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5ourcc. Mnstry o] Encrgy, Crccn Tcchnology cnd Wctcr, Mclcysc

Ministry cf Energy, Creen TechncIcgy and Water
lock E/l5 Parcel E, Federal CovernmenI
AdmInIsIraIIve CenIre, 62668 PuIrajaya, MalaysIa
Tel: +6U3-8883 6UUU
Fax: +6U3 8885 1335
www.keIIha.gov.my
ricmedia Creen 5dn hd (52/675-H}
3-3 Ialan SolarIs 2, SolarIs MonI KIara
5U/8U Kuala Lumpur, MalaysIa
Tel: +6U3 62U3 7681 (MalaysIa}
+65 5U68 U18/ (SIngapore}
Fax: +6U3 6211 2681
www.greenpurchasIngasIa.com
5ustainabIe Energy DeveIcpment Authcrity MaIaysia
Level 5, LoI /C11
No 25, PersIaran Perdana, PresInI /
6257U PuIrajaya, MalaysIa
Tel: +6U3 887U 58UU
www.seda.gov.my
2U11: rIomedIa Creen Sdn hd