Ahmad Hadri Haris - Feed-In Tariff the Malaysian Experiences

8/6/2019 Ahmad Hadri Haris - Feed-In Tariff the Malaysian Experiences

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FiT in Malaysia: The Beginning

2June 2005: Study mission to Berlin, Germany

2011


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Why FiT Stern Review Report:

Sir Nicholas Stern stated that Comparisons between deploymentsupport through tradable quotas and feed-in tariff price support suggestthat feed-in mechanisms achieve larger deployment at lower costs.

UNDP-GEF Report: Promotion of Wind Energy - Lessons Learned FromInternational Experience and UNDP-GEF Projects

Feed-In tariff policies have been very effective in Germany, Spain ande

nmar , ea ng o e wor s rs , secon an ns a e w nenergy capacities.

International Energy Agency: Deploying Renewables - Principles for EffectivePolicies

Feed-in Tariffs are more effective and cheaper than quotas for RE Ernst & Young Report: Renewable Energy Country Attractiveness Indices:

Feed-in Tariffs are cheaper than Trading System

Traditional RPS country/state moving towards Feed-in Tariff

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Learning Process: from Pioneer of FiT

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Learning Process: from Pioneer of FiT

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Learning Process: from FiT Advocates & RE Policy Experts

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Learning Process: from Other Countries & Reports

Germany Italy

Thailand Taiwan Spain

South Korea USA France

Portugal Switzerland Others

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Must be guaranteed via the RE Act, whereby:

Access to the grid is guaranteed utilities legally obliged to accept all electricitygenerated by RE private producers.

Local approval procedures are streamlined and clear . FiT rates must be high enough to produce a ROI plus reasonable profit (not

excessively) to act as an incentive.

FiT rates will be fixed for a period (typically 20 years) to give certainty and

Critical Factors for an Effective FiT Implementation

provide businesses with clear investment environment.

Adequate " degression " for the FiT rates to promote cost reduction to achievegrid parity

Adequate fund is created to pay for the FiT rates (incremental cost) andguarantee the payment for the whole FiT contract period.

The design of the FiT must be customized to suit contextual conditions of thecountry.

Implementation by a competent body in a professional manner that includesconstant monitoring, progress reporting and transparency .

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Malaysia: Renewable Energy Policies

8 th Malaysia Plan (2001 2005)RE as the 5th fuel

Implied 5% RE in energy mix

th

300 MW in Peninsular Malaysia

50 MW in Sabah

10 th Malaysia Plan (2011 2015) & beyondNew RE Policy & Action Plan

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National Renewable Energy Policy

Approved by Cabinet on 2 nd April 2010

Policy Statement: Enhancing the utilisation of indigenous renewable energy

resources to contribute towards national electricity supply security- .

Strategic Thrusts (RE Action Plans):1. Introduce appropriate regulatory framework.

2. Provide conducive environments for RE businesses.3. Intensify human capital development.4. Enhance RE research and development.5. Design and implement an RE advocacy programme.

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10 th Jun 2010: 10 th Malaysia Plan (chapter 6) 15 th Oct 2010: National Budget 2011 (paragraph 34) 25 th Oct 2010: Economic Transformation Programme (chapter 6)

Feed-in Tariff: Government Policy

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Renewable Energy Bill

RE Bill: an Act to provide for the establishment and implementation of aspecial tariff system to catalyse the generation of renewable energyand to provide for related matters.

Part I: Preliminary Part II: FiT System

, Part IV: Feed-in Tariff Part V: Renewable Energy Fund Part VI: Information Gathering Powers

Part VII: Enforcement Part VIII: General Part IX: Savings and Transitional

Passed in Parliament: April 201112 2011


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Definition of Renewable Energy

Renewable Energy (RE) is any form of primary energy fromrecurring and non-depleting indigenous resources, such asagricultural produce, hydro-power, solar, wind, solid-waste, etc.

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RE Law Enables Feed-in Tariff System

Establishment of FiT System

Biogas

Small

Biomass

Solar PV

Hydro

Feed-in Tariff (FiT) system provides:

Connection to supply line by RE installationsPriority of purchase and distribution by DL

Payment by DL to FIAH according to FiT rates

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20,000

25,000

30,000

W

Cumulative RE Installed Capacity

Solar PP

Solar PV

Small Hydro

Biomass-WasteBiomass

Biogas-Waste

Biogas

20303.5 GW

20202.1 GW

205011.5 GW

2030:7,088 MW (25%)

2050:26.3 GW (74%)42.6 GWh/Yr (19%)Cum. 597.2 mil T-CO2

National RE Goals

-

5,000

10,000

,

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

2 0 1 9

2 0 2 0

2 0 2 1

2 0 2 2

2 0 2 3

2 0 2 4

2 0 2 5

2 0 2 6

2 0 2 7

2 0 2 8

2 0 2 9

2 0 3 0

2 0 3 1

2 0 3 2

2 0 3 3

2 0 3 4

2 0 3 5

2 0 3 6

2 0 3 7

2 0 3 8

2 0 3 9

2 0 4 0

2 0 4 1

2 0 4 2

2 0 4 3

2 0 4 4

2 0 4 5

2 0 4 6

2 0 4 7

2 0 4 8

2 0 4 9

2 0 5 0

M

Year

2020:3,140 MW (14%)12.6 GWh/Yr (9%)Cum. 45.6 mil T-CO2

.

Cum. 165.7 mil T-CO2

2015:1,275 MW (7%)5.7 GWh/Yr (5%)Cum. 11.3 mil T-CO2

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RE Law Schedule: Biogas

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RE Law Schedule: Biomass

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RE Law Schedule: Small Hydropower

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Schedule: Renewable Resources, FiT RatesRE Law Schedule: Solar PV

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FiT Rates = Empirical Value

ConduciveFiT rates

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Basis of Determining FiT Rates:Economic Viability of RE Projects

Factors Biomass Solid Waste Solar PV

IRR (based on typical rates forpower generation sector)

8% - 13% 8% - 13% 5% - 12%

Simple Payback Period (SPB) < 7 years < 7 years < 12 years

Positive cash-flow Yes Yes Yes / Neutral

Factors to calculate IRR Biomass Solid Waste Solar PV

Capital expenditure 6-8.5 RM/W RM/W RM/W

Loan rates & tenure 7-8.8%, 15 yrs 7-8.8%, 15 yrs 6-7%, 15 yrs

Fuel cost & transport 30 RM/tonne N/a N/a

O&M cost, depreciation, insurance % of capex % of capex % of capexAnnual cost increment 3% 4% 3%

Revenues: FiT duration 16 yrs 21 yrs 21 yrs

Capacity factor 70% 70% 13-16%%

Other revenue N/a Yes N/a21 2011


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Cost Breakdown forAverage Domestic Electricity Tariff

Subsidized Fuel for Power Generation

Generation CostTransmission & Distribution CostFiT LevyCustomer Service Charge

FiT Cost 1% collection goes to REFund under the RE Law

RE Fund: Allocation from Electricity Tariff

38%

25%

20%

1%16%

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1,000

1,200

1,400

i o n

Annual RE Fund vs Annual FiT Transaction Cost

Annual RE Fund

Annual FIT Cost

Final RE FundCollection

(2030)

RE Fund

start

RE Fundincrement

The quota (MW) allocated foreach RE technology for eachyear is based on the:

Availability of RE Fund

Balancing Act: RE Fund VS FiT Transaction Cost

-

200

400

600

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

2 0 1 9

2 0 2 0

2 0 2 1

2 0 2 2

2 0 2 3

2 0 2 4

2 0 2 5

2 0 2 6

2 0 2 7

2 0 2 8

2 0 2 9

2 0 3 0

2 0 3 1

2 0 3 2

2 0 3 3

2 0 3 4

2 0 3 5

2 0 3 6

2 0 3 7

2 0 3 8

2 0 3 9

2 0 4 0

2 0 4 1

2 0 4 2

2 0 4 3

2 0 4 4

2 0 4 5

2 0 4 6

2 0 4 7

2 0 4 8

2 0 4 9

2 0 5 0

R M - m

i l l

Last REPPA (FiT) (21 years)

First REPPA (FiT) (21 years)

2 0 4 8

RE Fund.

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FiT Quota: Open & Transparent Platform

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FiT Rates: Open & Transparent Platform

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RE Fund: Open & Transparent Platform

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FiT Application: Online

FiT quota approvals onfirst come, first servedbasis upon submission

of complete application &document

FiT quota is dynamic

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Other Critical Issues: RE Connection & Approvals

PMU132kV / 33kV

PPU33kV / 11kV

PE11kV / 0.4kV

Feeder Pillar0.4kV / 0.23kV

PPU

DL AFiT Meter

33kV / 11kV

DL B

1MW

DL Meter

DL Meter

FiT Meter28 2011

DL Meter

FiT Meter


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FiT Payment

RE installations Biogas Biomass Small Hydro Solar PV

RE installed capacity [A] 4 MW 10 MW 10 MW 6 kW

RE generation/month [B]2,044

MWh/month5,110

MWh/month4,166.67

MWh/month600

kWh/month

FiT payment is calculated based on actual kWh reading by the revenue meter[ (new kWh reading minus last kWh reading) x FiT rate ]

FiT rate [C].

per kWh

.

per kWh

.

per kWh

.

per kWh

FiT duration [D] 16 years 16 years 21 years 21 years

FiT payment by TNB to FIAH per

month= [ C x B ]

RM

694,960per month

RM

1,686,300per month

RM

1,000,000per month

RM

876per month

Capex RM 40 mil RM 90 mil RM 90 mil RM 90,000

Simple Payback Period 4.8 4.5 7.5 8.629 2011


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Recovery of FiT Payments by Power Utilities

RE Fund (SEDA)

SEDA

(U) (S) (A)

(F) FiT payment

(D) Displaced Cost

(S) = (F) - (D) Recovery of Money

(U) = 2% x (S) Admin fee to DL

(A) = 3% x (S) Admin fee to SEDA

30

Distribution Licensee

FIAH

(F)

(D) (S)

Grid Connection PointDisplaced

Cost

Medium voltage 1kV 0.2047

Low voltage


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FiT Degression: To Promote cost reduction towards Grid Parity

Degression rate to commence on 1 st January every yearRevision: at least once every 3 years

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1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

W h

Displaced Cost (LV)

Displaced Cost (MV)

FiT BiogasFiT Biogas-Waste

FiT Biomas

FiT Biomass-Waste

FiT Small Hydro

Degression & Grid Parity (Projected)

Upon grid parity:FIAH will be paid prevailing DC rate.DL cannot claim from RE Fund (SEDA)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

2 0 1 9

2 0 2 0

2 0 2 1

2 0 2 2

2 0 2 3

2 0 2 4

2 0 2 5

2 0 2 6

2 0 2 7

2 0 2 8

2 0 2 9

2 0 3 0

2 0 3 1

2 0 3 2

2 0 3 3

2 0 3 4

2 0 3 5

2 0 3 6

2 0 3 7

2 0 3 8

2 0 3 9

2 0 4 0

2 0 4 1

2 0 4 2

2 0 4 3

2 0 4 4

2 0 4 5

2 0 4 6

2 0 4 7

2 0 4 8

2 0 4 9

2 0 5 0

R M /

FiT Solar PV

FiT Solar PP

Grid Parity

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Other Critical Factors: Quality Standard and Reliable Services

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Sustainable Energy Development Authority of Malaysia

(SEDA Malaysia)

Ministry of Energy, Green Technology & Water

Energy Green Technology Water

Electricity SectorRE (& EE)

SectorGreen Technology

Sector Water & Sewage Sector

ST

Regulator

SEDAImplementing

Authority

MGTC

Green TechnologyPromoter

SPAN

Regulator

JBA

ImplementingDepartment

JPP

ImplementingDepartment

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SEDA Bill

SEDA Bill: an Act to provide for the establishment of the SustainableEnergy Development Authority of Malaysia and to provide for itsfunctions and powers and for related matters.

Part I: Preliminary Part II: The Authority

Part IV: Employee of the Authority Part V: Finance Part VI: General

sustainable energy means energy which, in its generation, provisionand use, is such that it meets the needs of the present withoutcompromising the ability of future generations to meet their needs,and includes renewable energy.

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Part III S.15: Functions of SEDA Malaysia

a) Advise the Minister & Government entities on all matters relating to sustainableenergy;

b) Promote & implement national policy objectives for renewable energy;

c) Promote, stimulate, facilitate & develop sustainable energy;d) Implement, manage, monitor & review the Feed-In Tariff system;e) Implement sustainable energy laws including the Renewable Energy Act &

recommend reforms

f) Promote private sector investment in sustainable energy sector;g) Carry out / arrange research, advisory services & disseminate information;h) Conduct, promote & support sustainable energy researches & innovations;i) Conduct, promote & support sustainable energy training and human capacity

development; j) Implement measures to improve public awareness;k) Act as focal point to assist the Minister on matters relating to sustainable

energy & climate change matters relating to energy;

l) Other function under sustainable energy law. 36 2011


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Thank You

More info on feed-in tariff is available from

coming soon...www.seda.gov.my

Ahmad Hadri Haris - Feed-In Tariff the Malaysian Experiences

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