Ahmad Hadri Haris - Feed-In Tariff the Malaysian Experiences

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Transcript of 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

    3 2011

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    Learning Process: from Pioneer of FiT

    4 2011

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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

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    2 0 2 0

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    2 0 2 2

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    2 0 2 6

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    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

    19 2011

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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%%

    Othe