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Dr Pola Singh
Member of Sustainable Energy Development Authority (SEDA) Malaysia

Significant Surge in Clean Energy Capacity in 5 Months

Overall electrification rate is about 98 %

Peninsular Malaysia - 100 % Sabah: 80 %; Sarawak: 70 %
High penetration rate in rural areas achieved at high costs Reasons for high penetration rate Strong political will (votes count!) Dedicated funds made available by the Ministry of Rural & Regional Development

Rural Electrification – another success factor
Private Sector Support (Malaysian Electricity Supply
Industries Trust Account (MESITA)

Trust Fund from IPPs’ contribution: 1% of pretax profit for rural electrification, RE & EE projects.

Small Renewable Energy Programme (SREP)

Fresh Fruit Bunch –Oil Palm

Launched in 2001 - Very Slow Progress Allowed small RE producers (up to 10 MW) to sell electricity to the utility on a (un)willing buyer willing seller basis for a 21-year period at a predetermined (low) price After 11 years, the RE capacity was only 68.45 MW

Why the SREP failed
Unequal bargaining position/level playing field Utilities had no time for ‘small’ fries

Significant transaction costs to conclude RE Power Purchase Agreement – cost of grid connection borne by RE developer

Low price - ‘Take it or leave it’ attitude – projects were not bankable

Why the SREP failed (continued)

not able to compete with electricity produced by highly subsidized fossil fuels Business as usual’ approach - not sustainable nor appropriate to develop the RE sector Lack of institutional framework No regulatory framework was in place – Utility company not obliged to purchase RE No RE Fund

Unlocking the abundant natural resources: Four Key Frameworks:

Policy Framework  Regulatory

 

Renewable Energy Act Sustainable Energy Development Authority Act (Creation of a dedicated agency in charge of development and promotion of RE)

Institutional &  Financial Frameworks

RE Fund


Enabling Environment /Critical Factors that gave RE the much needed ‘breakthrough’ (Feed-in Tariff)

Access to the grid is guaranteed – utilities legally obliged to accept all electricity generated by RE private producers Local approval procedures are streamlined and clear FiT rates
high enough to produce ROI + reasonable profit (not excessively) to act as an incentive fixed for a period (typically 21 years) to give certainty & provide businesses with clear investment environment Projects were bankable

Enabling Environment /Critical Factors that gave RE the much needed ‘breakthrough’ (Feed-in Tariff)(continued)
Adequate funding - to pay for the FiT rates & guarantee the payment for the whole FiT contract period Funding Support – RE Fund created 1% levy on consumers (those who use more than 300kWh per month) Implementation by a dedicated agency (SEDA Malaysia) In short the Policy, Regulatory, Institutional and Financial Frameworks have been put in place

Source of Fund for FiT The size of RE fund will determine the RE target for Malaysia Benefits 1%  Polluters pay concept  Will not affect 75% of electricity consumers (≤ 300 kWh/mth)  Encourages Energy Efficiency and Demand Side Management Efforts

What are the Implementation Issues?
Skewed towards Solar PV – higher returns

What are the Implementation Issues?

Constrained by size of RE Fund Not a level playing field for different sources of RE
From start to fully operational status – longer time for hydro Availability of ready supply of feedstock – Biomass (if they don’t own plantations)

Need to fine-tune the Quota Issues with Commercial Operation Date (bringing it forward)

Other RE Sources: drawing up a comprehensive RE wind map

How do these efforts support Malaysia’s rural electrification program

Rural folks will have greater access to electricity:
Biomass & geothermal power plants will be sited in rural areas More interconnection lines in the interior More affordable Solar PV – economies of scale and core expertise being built up will reduce unit cost With higher prices, more mini hydros can be expected to be developed in rural areas

Thank you