FAQs on FiT

8/6/2019 FAQs on FiT

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1. Q What is the Feed-in Tariff?

A The FiT is Malaysia’s new mechanism under the Renewable Policy and Action Plan to catalysegeneration of RE, up to 30 MW in size. This mechanism allows electricity produced from

indigenous renewable energy resources to be sold to power utilities at a fixed premium price

for a specific duration.

2. Q What do you mean by indigenous resources?

A Indigenous means RE sources must be sourced from within the country and are not imported

from neighbouring countries.

3. Q Is FiT applicable to Sarawak?

A No, FiT is applicable to all states in Malaysia with exception to Sarawak as Sarawak is a state

with its own legislation and regulations governing their electricity supply. The RE Act (that is

currently being drafted) refers to the Electricity Supply Act under the purview of the Federal

Government.

4. Q How does it work?

A The basic concept of feed-in tariff is that the distribution licensee pays the renewable energy

power generator a premium for clean energy that is generated. This allows owners to sell

their clean energy to the distribution licensee for a fixed number of years; the duration is

dictated by the type of renewable energy used for power generation. The incentive provides a

fixed payment from the electricity supplier for every kilowatt hour (kWh) of electricity

generated and a guaranteed minimum payment for every kWh exported to the grid.

5. Q When will the FiT mechanism start?

A The FiT mechanism will start upon the completion of 2 processes; 1) Approval granted by

Parliament on the RE Act and 2) Availability of the RE fund to pay the FiT. It is anticipated that

FiT is expected to start in mid 2011.

6. Q So far how's the progress of the Act?

A The Act is progressing as scheduled as both Acts (the RE Act and SEDA Act) have been

presented for 1st reading at Parliament and Ministry of Energy, Green Technology and Water is

targeting for the Acts to be tabled to Parliament for its 2nd and 3rd readings in the March 2011

session.

7. Q Who will oversee the running of the FiT?

A The Sustainable Energy Development Authority (SEDA), which is a statutory body under the

Ministry of Energy, Green Technology and Water, will be established under the Act of

Parliament to manage and oversee the implementation of the FiT. The Act is targeted to be

approved by parliament in March 2011 and is expected to be established by April 2011.



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8. Q Why Energy Commission is not tasked the responsibility of an implementing agency? Why

does the government require a new agency?

A In Malaysia, currently the Energy Commission is the only agency focussing on energy sector.

However, the Energy Commission is constrained in resources to discharge the full functions as

required of an FiT implementing agency, hence the need for a dedicated and focussed agency

to serve as a one stop renewable energy (RE) centre.

9. Q What is the status of grid-connected Renewable Energy in Malaysia currently?

A As of end October 2010, Malaysia has:

• 40 MW grid-connected power from Biomass;

• 1.7 MW from Biogas;

• 8 MW from Mini-hydro;

• 7 MW from Solid waste; and• 1.5 MW from Solar PV

10. Q Which RE resources are eligible?

A The following RE resources will be eligible for FiT:

• Biomass (including solid waste);

• Biogas (including landfill gas & sewage);

• Small-hydro; and

• Solar PV.

11. Q What about solar thermal? Is it eligible for FiT?

A No, there is no FiT for solar thermal.

12. Q What about wind and geothermal? Will there be a FiT for these two energy sources?

A No, FiT will not be offered for wind and geothermal when the FiT is launched in 2011 as the

resource potential of wind and geothermal have yet to be determined nor analyzed. This is

because at this point of time, the Ministry of Science, Technology and Innovation through

SIRIM Berhad is still undertaking a study to identify the resource potential for wind in the

country while the Ministry of Natural Resources and Environment will soon be commissioning

a study on the potential of power generation from geothermal in the state of Sabah. As such,

results from the two studies will only be ready from 2012 onwards. The FiT is sourced from all

consumers therefore is not meant for financing of research and development of technologiesbut rather for proven technology with established resource potentials in the country.

13. Q What are the rates/tariffs like?



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A An indicative range of FiT rates for the various technologies concerned as well as their

individual duration and degression, is shown in the table below. Please note that the rates

may be adjusted during the legislation process of the RE Act and are therefore not final.

Renewable

energy

technology

Capacity of renewable

energy installation

Feed-In-Tariff

rate (in

ringgit/kWh)

Effective

period

Annual

degression

rate

Biogas • Installed capacity up

to and including 4

MW

0.32 16 years 0.50%

• Installed capacity

above 4 MW, and up

to and including 10

MW

0.30 16 years 0.50%


above 10 MW, and up

to and including 30

MW

0.28 16 years 0.50%

• Additional for use of

gas engine

technology with

electrical efficiency of

above 40%

+ 0.02 16 years 0.50%


locally manufactured

or assembled gas

engine technology

+ 0.01 16 years 0.50%


landfill or sewage gas

as fuel source

+ 0.08 16 years 1.80%

Biomass • Installed capacity up

to and including 10

MW

0.31 16 years 0.50%


above 10 MW, and up

to and including 20

MW

0.29 16 years 0.50%


above 20 MW, and up

to and including 30

MW

0.27 16 years 0.50%


gasification

technology

+ 0.02 16 years 0.50%



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steam-basedelectricity generating

systems with overall

efficiency of above

14%

+ 0.01 16 years 0.50%



or assembled

gasification

technology

+ 0.01 16 years 0.50%


municipal solid waste

as fuel source

+0.10 16 years 1.80%

Small

hydropower

• Installed capacity up

to and including 10

MW

0.24 21 years 0%


above 10 MW, and up

to and including 30

MW

0.23 21 years 0%

Solar

photovoltaic

• Installed capacity up

to and including 4

kWp

1.23 21 years 8.00%


above 4 kWp, and up

to and including 24

kWp

1.20 21 years 8.00%


above 24 kWp, and

up to and including

72 kWp

1.18 21 years 8.00%


above 72 kWp, and

up to and including 1

MWp

1.14 21 years 8.00%


above 1 MWp, and

up to and including

10 MWp

0.95 21 years 8.00%


above 10 MWp, and

up to and including

30 MWp

0.85 21 years 8.00%



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• Additional for

installation inbuildings or building

structures

+0.26 21 years 8.00%

• Additional for use as

building materials

+0.25 21 years 8.00%



or assembled solar

photovoltaic modules

+0.03 21 years 8.00%



or assembled solar

inverters

+0.01 21 years 8.00%



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14. Q What sort of capacities of renewable energy can we expect once FiT is launched?

A The cumulative RE Capacity are as shown below:

Year Cumulative RE Capacity (MW)

Biogas Biomass Solid Waste Small Hydro Solar PV Solar PP* Total

2011 20 90 20 60 9 20 219

2012 35 140 50 110 20 55 410

2013 50 200 90 170 33 105 648

2014 75 260 140 230 48 185 938

2015 100 330 200 290 65 295 1,280

2016 125 410 240 350 84 425 1,634

2017 155 500 280 400 105 570 2,010

2018 185 600 310 440 129 725 2,389

2019 215 700 340 470 157 890 2,772

2020 240 800 360 490 190 1,060 3,140

*Note: Solar PV targets reported based on policy measures under NKEA OGE Lab but subject to formal

confirmation

The long term targets (cumulative capacities) are shown below:

YearCumulative RE Capacity (MW)

Biogas BiomassSolid

Waste

Small

Hydro

Solar

PV

Solar

PP*Total

2020 240 800 360 490 190 1,060 3,140

2030 410 1,340 378 490 1,370 3,100 7,088

2040 410 1,340 378 490 7,450 5,000 15,068

2050 410 1,340 378 490 18,700 5,000 26,318



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15. Q What is the impact of CO2 emission avoidance as a result of implementing the FiT?

A The FiT could, on a cumulative basis, avoid 46 million and 166 million tonnes of CO2 from thepower generation sector by 2020 and 2030, respectively. This will be achieved when the

country generates at least 3,000 MW and 7,000 MW (see table below) of RE capacities by

2020 and 2030, respectively, through the FiT.

Year

Cumulative RE Capacity (MW)

Biogas BiomassSolid

Waste

Small

Hydro

Solar

PV

Solar

PP*Total

2020 240 800 360 490 190 1,060 3,140

2030 410 1,340 378 490 1,370 3,100 7,0882050 410 1,340 378 490 18,700 5,000 26,318

16. Q Currently, under the SREP programme, RE electricity will only be paid based on maximum

generating capacity of 10 MW. Will SEDA Malaysia consider a revision of the maximum

installed RE capacity?

A Yes, under the RE Act, the capacity limit (for some RE technologies) will be increased to 30

MW.

17. Q Will Malaysia cap its capacity of RE once FiT System starts?

A Yes, Malaysia has to cap the various RE technologies from the very beginning to keep the costs

within our projected funding capability once the FiT mechanism starts, and depending on themagnitude and availability of the RE Fund.

18. Q How much PV capacity can an applicant seek to install and how will the applications be

treated?

A Applicants can apply for any capacity that they wish to install but the capacity that can be

approved will depend on the total capacity that is allocated for each of the respective RE

technologies concerned. However for PV capacity, there will be two categories of capacities

that will be offered; 1) one for installed capacities upto 1MW and 2) for capacities > 1MW

upto 30 MW. For solar PV upto 1 MW, the capacities available will be offered equally among

residential and commercial. All applications will be treated transparently and on equal basis

according to the category of the installation such as residential, commercial, industrial, or

power plant type, and whether they are roof or facade mounted, or ground mounted.

19. Q How shall the biomass industry address the feedstock supply issue?

A The plantation owner, millers and RE developers are encouraged to work towards an

agreeable solution should the investment be financially viable.



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20. Q How does SEDA address the issue of contending use of feedstock which leads to price

competition between RE developers and other users of the feedstock?

A Feedstock should expand and include biomass waste which can be converted into energy. The

use of waste provides another avenue for RE developers to generate revenue via producing

green energy.

21. Q How does SEDA address the issue of supply security of feedstock, if feedstock should be

imported?

A The definition of RE requires that the feedstock be indigenous in nature. Malaysia will not

consider imported feedstock as the principle is to fully utilise the indigenous sources and

promote energy autonomy. In addition, Malaysia has a commitment to reduce 40% of GHG

emission intensity in the COP 15 and this may not be achievable if we rely on imported fuel

sources.

22. Q If a co-generation plant uses fuel or sources from renewable energy, are they eligible for

FiT?

A Yes. As long as the fuel source is indigenous and there is no fossil fuel sources. The RE Act

imposes high penalty for dishonest use of fuel source to generate RE electricity.

23. Q What if two RE technologies were combined for example, biomass and biogas?

A For RE systems with varying criteria resulting in varying tariffs, the rule is that the lowest rate

will apply for the FiAH connected to a single meter.

If an existing FiAH plans to increase its capacity in the following year or any time in future, the

lowest rate will apply for the entire total capacity generated based on the rate established for

the year of COD for the additional capacity if it is an extension to the earlier application and

uses the same meter. In this case, the existing FiAH will have to terminate its previous REPPA

and FiA upon receiving the approval of the new FiT rate.

If the FiAH wishes to maintain the rates according to the earliest COD application, the FiAH is

required to apply for separate meters and sign separate Renewable Energy Power Purchase

Agreements (REPPAs).



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24. Q How does the Authority know if a person is a genuine applicant and not just intending to

book the capacities for the resale market?

A During submission of application for the FiT, an eligible producer will be required to submit

their work plan. Once the Feed-in-Approval is granted, SEDA will monitor closely each project

and if any delays were detected, a dedicated time frame will be given to the Feed-in Approval

Holder (FiAH) to declare their status failing which, a notice of revocation will be sent to FiAH.

This is to prevent the RE developers from abusing the FiT system and to allow other interested

parties apply for the FiT.

There will also be stringent requirements for successful submission of Feed-in Approval (FiA)

where only genuine applicants will be able to furnish the required information. Penalties will

be imposed if an applicant is found to falsify any information.

25. Q Currently, under the SREP programme, there are many licensees that are not active/

pursuing their RE projects. Is there a possibility for the existing license holders to be revoked

once FiT comes into effect?

A The Ministry and ST have been revisiting the current license holders. Those who are in

progress can continue with their licence but those who have not shown any progress, will

have their license revoked and will have to re-apply if they are interested to participate in the

FiT.

26. Q Do you allow an internal utilisation of electricity production?

A Yes. But the distribution licensee will purchase generated RE power based on the net energy

exported to the grid* If RE Developers choose to utilise the RE electricity, then they forfeit theopportunities for higher revenue generation which may not make business sense.

*Note: PV systems interconnected to the grid (direct feed) will have an FiT based on the gross

electricity generated.

27.Q Is there any limitation to apply for FiT? Limitation based on maximum capacity or number

of approvals during the plan period?

A Limitation is only based on RE technology quota which will be made known via the online

system. This limit is due to the RE Fund.

28. Q How is the FiT programme financed by the Government?

A The FiT scheme is not financed by the government. Instead it will be financed by the electricity

consumers themselves who will contribute an additional one percent (1%) of their total

electricity bills through a tariff adjustment formula when the gas price for power generation

and the associated utility tariffs are revised in due course. However, those customers who

consume 200 units of electricity or less will not have their tariffs raised to accommodate this

mechanism to pay towards the fund.



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29. Q Malaysians currently pay electricity bills based on a highly subsidized gas pricing. Is it

possible to transfer a portion of the subsidy to finance RE projects?

A It is not possible to transfer a portion of the subsidy to finance RE projects as gas is in actual

fact not a direct subsidy by the government but what it means is that the use of gas for

electricity generation is at a subsidized rate. This is forgone revenue for the government in

terms of taxes as the gas, if sold at market prices, will provide a higher income for the country.

30. Q What are the measures to ensure funds allocated for the FiT programme is managed

appropriately?

A The management of the fund will be under the supervision of dedicated financial experts

appointed by the government (with possibility of secondment from BNM). Other measures

include transparency in disclosing and publishing of financial reports on funding receipts,

funding disbursement to FiT recipients, administrative fees payable to the utility and to the

authority. The accounts of the authority will be presented to Parliament as is required for all

such authorities and be subjected to Government Audit.

31. Q Will the RE fund contribute to R&D for RE?

A The fund is not for R&D. Under the National RE Policy and Action Plan, the fourth Strategic

Thrust addresses the need to strengthen R&D in the RE sector where the Ministry of Science,

Technology and Innovation (MOSTI) will spear-head all efforts in this area with strong support

from KeTTHA.

32. Q Contribution to the RE Fund: While the lower income households are exempted fromcontributing, it appears that the industry (which makes up 40% of utility’s clientele) is the

largest contributor to the levy. Is the Government aware of this situation?

A The Government is aware that the largest contributor to the RE levy is from the industrial

sector. For this reason, the impact is only 1% of the electricity tariff where impact to the

industry’s cost of manufacturing is minimal. Additionally, the industry may be motivated to

offset the incremental electricity cost by applying energy efficiency measure in their factories

and perhaps take the opportunity as well to generate RE under the FiT mechanism.



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33. Q How can the Malaysian government prevent energy price distortion with the

implementation of feed-in tariffs?

A Currently, the energy price in Malaysia is already distorted due to the natural gas subsidy for

power generation. Furthermore, the cost of electricity generation is not directly passed to

consumers whereby the electricity tariff is still regulated.

In this respect, the feed-in tariff mechanism provides the opportunity to pass over the cost of

RE electricity generation to consumers but at a very minimum value that has almost no impact

to the electricity tariff. The design of the Malaysian feed-in tariff system takes into account the

type of electricity that the RE electricity will displace, including the associated transmission

and distribution costs. For example, electricity from solar energy will displace peak electricity

from natural gas, while electricity from biomass will displace medium load from coal. Thus the

RE tariff prices are designed to reflect the true cost of electricity generation, transmission anddistribution that it will displace. Hence the argument of energy price distortion is invalid.

The feed-in tariff in Malaysia is designed with main objective to achieve grid parity once the

subsidy for fossil fuel is removed and when all external costs of fossil fuel power generation

are taken into consideration.

34. Q I hear many people talk about grid parity. What does it mean and does it have anything to

do with us here in Malaysia?

A Grid parity occurs when the cost of generating renewable electricity is equivalent or cheaper

than the cost of generating electricity from conventional fossil fuel or nuclear energy. Yes,

even though our electricity is subsidized in Malaysia, grid parity is still valid for us as we will

one day reach grid parity for different RE technologies. Is it only the rate at which we reach

grid parity that may differ from unsubsidized markets. Those with subsidised energy markets

will reach grid parity at a later rate than those without subsidies.

35. Q Is there a possibility for (retail) electricity tariff to increase beyond the contracted FiT rates

before expiry of REPPA?

A Yes and it is stated in the RE Act. RE developers will be paid the electricity tariff (displaced

cost) should displaced cost exceed that of the FIT rate and this will happen once grid-parity is

achieved.

36. Q Is the (retail) electricity tariff subjected to change?A Yes, the (retail) electricity tariff is subjected to change and will be reviewed periodically by the

government.



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37. Q Could you explain what does “displaced cost of electricity” mean and what does it mean to

me? Do I have to deduct this from the indicated FiT rate to get my tariff?

A Displaced cost of electricity is the cost of generating and supplying electricity from

conventional fossil fuel sources up to the point of interconnection with the consumer. It will

not affect potential RE developers and NO, you do not have to deduct this from your FiT rates.

The displaced cost of electricity has relevance to only the distributor and the Authority where

on a monthly basis, the distributor will claim the positive difference between the FiT payment

and the displaced cost, for all RE generated power, from the Authority.

38. Q What is a ‘degression’? What does it mean and why is there a need for one?

A Tariff degression refers to the annual reduction of renewable energy tariffs. The rate of

reduction depends on the maturity and the existing cost reduction potential. Tariff degression

applies to all technologies and will only affect a developer every time he/she comes applies

for the FiT.

For example, a home owner (A) installs a Solar PV system in year 1 and signs an agreement

with TNB at an FiT rate of RM1.75 per kWh. Home owner (A) will continue to receive this rate

throughout his/her agreement duration of 21 yrs. A year after home owner (A) installs the

system, his/her neighbour, (B) decides to install a PV system in his/her home too. By year 2

the FiT rate has now reduced by 8% to RM1.61 per kWh. Therefore, home owner (B) will now

have a 21-year contract with the TNB selling their PV electricity at RM1.61 per kWh. This form

of degression rewards the early movers of RE in the country and also promotes cost reduction

of the RE technology.

39. Q How do you derive the degression rate?

A The degression rate is derived based on observation of historical market performance and as

such, the rate is an empirically derived. Degression rate for each technology is based on its

potential for future price decline and to prevent market abuse of over pricing and takes into

account the status of the RE technology, the system cost trends, O&M costs, needs for fuel

cost/transport, inflation, and the starting rates of FiT as well as balancing of the RE Fund. From

the RE fund management perspective, the higher degression will imply higher RE capacity for

FiT and allows prudent use of public fund.

40. Q Based on the projection, the system price of solar is predicted to go down. But this is

depending on market forces. What if the price goes up? Is the degression still applicable?

A These are the dynamics of the market which will have to match both government’s as well as

the industry’s perspectives.



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41. Q Will my FiT rate within the REPPA contract degress in subsequent years?

A No, your FiT rate within REPPA is confirmed for the next 16 or 21 years depending on the REtechnology applied for. The rate is fixed until such time as the displaced cost of electricity

exceeds the FiT rate. This is to provide some form of security for your investment. The main

objective of the degression is to encourage reduction in cost and increase in efficiency as well

as to achieve grid parity at a faster rate.

42. Q As FiT rate is based on COD, if I install my solar PV system today but I can’t commission my

system within this year, what rate will I get?

A You will get the rate of that year minus the degression for that particular year.

43. Q If I commission my PV system in 2011. What rates will I get?

A If FiT commences in 2011 you will get this maximum tariff. Then on 1st January of thesubsequent year, the rates will degress by 8% for new applications. Interested parties are

advised to refer to SEDA’s website for the applicable FiT rates.

44. Q What is the cycle for the development of a biomass/ biogas plant? What if we apply for

2011 but, the plant will only be in operation in 2012?

A When you apply for the FiT, you need to be realistic in forecasting your COD. Most of these

projects should be able to commission within 36 months but biogas plant development is

faster than that which is around 24 months.

45. Q How can we ascertain the COD (commercial operation date) since it depends on the utility’s

availability? How can SEDA facilitate this, as any delay in commissioning will affect FiT rates

as the rate degresses in the subsequent year?

A Under the RE Law, the distributor is obligated to interconnect and to purchase RE generated

power, failing which a penalty will be imposed. Specific time-frames will be set for all parties

involved and client charters will be established. Registered Service Providers (RSP)/contractors

and FiAH are however reminded to set realistic targeted dates for COD.

46. Q On solar PV technology, what is the definition for ‘installation in building’ or ‘building

structure’? What does building material mean?

A ‘Installation in building or building structure’ shall mean roofed building structures which can

be independently used and entered by humans and are primarily designed for the purpose of protecting humans, animals or objects whereas ‘building material’ means there must be no

secondary building material beneath the solar PV serving the same function.



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47. Q Which tariff will apply for normal houses with existing roofs which are then installed with a

PV system on it?

A If you install on top of an existing roof, you will be entitled for a tariff for ‘building structure’

but you will not be eligible for the bonus under ‘building material’. Unless, the PV itself is part

of the roof (remove the roof tiles and replace with PV modules) then you are entitled for both

‘building structure’ as well as for ‘building material’.

48. Q When will application be opened to the public?

A There will be announcements by KeTTHA on when the FiT will commence.

49. Q How can I apply for the FiT?

A Application can be made either via the online portal (recommended) or through manual

submission. Detailed application guidelines will be made available once the FiT is officiallylaunched.

50. Q Where can I apply?

A Application forms will be made available on the authority’s website but hardcopies will be

made available at the authority’s office. There are future plans to make applications web-

based hence you can apply from anywhere as long as you have a computer and internet

access.

51. Q Is there a number I can call to find out more?

A Yes, there will be a hotline number for the public to call but this is chargeable at standard

telecommunication rates. The number will be announced closer to the time of the launch of the FiT.

52. Q What I understand the renewable energy fund for FiT is based on “polluters to pay concept”

so high volume consumers will get preference over smaller consumers?

A High volume consumers would pay about 1% which translates to a higher actual amount. But

there are no preferential treatments for FiT applications.



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53. Q Can you share with me the expectations of SEDA Malaysia for application in terms of

information required?

A The following information must be furnished by the FiAH to SEDA Malaysia at the point of

application including, but not limited to:

• The location of the facilities;

• The generating capacities & potential energy yields;

• The connection of such facilities to transmission systems and distribution systems,

including technical specifications with respect to the connection;

• The expected COD of the generating facility;

• Information of applicant (Individual/company);

• Information of consultant (Registered Service Providers/ other consultants);

• Project description,

• Technical specifications;

• Fuel requirement;

• Design & Operation Standards;

• Project Financing Plan;

• Possible source of financing (IRR, equity, loan rates, etc);

• Work plan; other supporting technical documentations (equipment, machinery,

licence, REPPA requirements and etc).

*Note: This is not the final requirement and may include other necessary documentation at

the point of time when FiT is launched.

54. Q How about guidelines for applications? Will there be any guidelines available for potential

developers?

A Yes, guidelines will be made available for easy reference but this will be web-based and

downloadable before the launch of the FiT. Please check KeTTHA’s website for updates on the

availability of the guidebooks.

55 Q Our company is keen to have a PV system at our manufacturing plant. What steps must we

take?

A Please refer to Annex 1

56. Q Why do RE developers need a Registered Service Provider to act on their behalf?

A The choice is up to the individuals. They can do it themselves or may appoint their own

consultants/RSPs to act on their behalf as application requires extensive technical input.



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57. Q Does the project owner (RE developer) have to register with SEDA?

A The RE developer can engage any Registered Service Provider or may appoint their ownconsultants to act on his/her behalf. But both the RSP/consultants and the RE developer are

jointly responsible for the project.

58. Q In the case of two Registered Service Providers (RSPs) whereby I have authorised RSP A to

act on my behalf and RSP B discovered about my project and hijacked by registering my

project account. This means RSP A will not be able to proceed with me?

A No, you will still be able to proceed with RSP A as there is a stringent filtering process. First of

all, you, as the client (RE Developer) will have to give consent to the Registered Service

Provider and preferably have signed an agreement before the FiT application is lodged. Each

submission of FiT application requires a processing fee and the RSP will have to obtain prior

permission from you in order to proceed. Once the FiT application is lodged, you will be givena password to access the application portal to verify the details submitted by the appointed

RSP. RSPs will not be able to hijack accounts as they will not be able to proceed without the

consent of the client.

59. Q What if I am a current SREP developer with an existing plant in operation? Can I apply for

the FiT?

A Yes, you will be eligible for the FiT but you will need to re-apply for the FiT and re-sign a new

REPPA You must also terminate your existing REPPA signed under the SREP programme.

However your license period will be adjusted accordingly taking into account the number of

years your plant had generated electricity for commercial sale to the distribution licensee.

60. Q Will individuals get incentives or allowance for installation of related devices? How is

government going to regulate this?

A The incentive for individuals to install for example a solar PV system in their homes is the FiT

itself. For other incentives, the government has been very supportive of RE generation by

providing fiscal incentives in the yearly budget. However fiscal incentives are available for

companies while the third party exemption on equipment such as solar PV systems and solar

heating, although not provided directly to individuals but to distributors or importers,

provides for a reduction in the system price via exemption of sales tax or import duty.

The Sustainable Energy Development Authority, which is a statutory body under the Ministryof Energy, Green Technology and Water, will be established under the Act of Parliament to

oversee the implementation of the FiT.



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61. Q I have received grants as capital investment to construct a biogas plant. Will I still be eligible

for FiT?

A All potential developers will have to declare all incentives received when filing the online

application and eligibility for FiTs for those with existing incentives such as capital grants will

be reviewed on a case by case basis.

62. Q Would the other government fiscal incentives (such as those announced under Budget 2008

& 2009 – double tax allowances, waiver of import duty & sales tax) still be applicable for

Feed-in Approval Holder?

A Yes, those fiscal incentives will still be applicable for Feed-in Approval Holders

63. Q For Double Tax Relief (DTR), if a commercial entity applies to MIDA this year but

commissions the solar PV system middle of next year (new building) would they be awardedthe tax exemption?

A The fiscal incentives (ITA) or DTR as you call it, is currently applicable for all applications made

before 31st December 2015. Successful applicants are given a 1 year period for the

implementation of the project. Hence if your application is submitted before that date you can

implement the project later but within the allowed time frame.

64.Q Would the other government fiscal incentives (such as those announced under Budget 2008

& 2009 – double tax allowances, waiver of import duty & sales tax) still be applicable for

Feed-in Approval Holder (FiAH)?

A Yes, government fiscal incentives such as claims on investment tax allowance and waiver of import duty and sales tax will still be applicable for FiAH. Those fiscal incentives will continue

till 31 December 2012 as presented by Y.B Prime Minister in the National Budget Speech for

the year 2011 while the fiscal benefits for GBI certified buildings will continue till 31 December

2014.

65. Q If an RE developer were to set up the infrastructure and procurement for solar PV power

plant this year, and the solar farm is commissioned middle of next year, would they still be

eligible for double tax relief (application for ITA to be submitted this year 2010)?

A Under the present incentives regime, you should be eligible for the ITA incentives for setting

up a solar PV farm, as mentioned for Q64 above. However, for it to be eligible for FiT, thisissue needs some further clarification which we cannot confirm at present. The relevant

criteria and other conditions for such investments will be put up on our MBIPV web-site once

the details have been finalized in accordance with the conditions imposed under the RE Act.



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66. Q I do not wish to have the FiT but I am an existing SREP developer. Is this ok?

A Yes, you may proceed with your current REPPA.

67. Q Am I still eligible for the FiT if I am a SURIA 1000 incentives recipient? Do I need to do

anything or will my system migrate automatically into a FiT based system?

A Yes, you will still be eligible for FiT but no, migration is not automatic. You will need to apply

for the FiT. Detailed information on the application procedures will be published once the FiT

is launched.

68. Q I understand that for me to be eligible for the FiT, I will need to re-apply for it even though I

am already having a net-metering account with TNB for my solar PV installation. How do I

do this?

A You can either apply yourself via our online application or engage any RSP/consultants to do it

on your behalf. However, if RSP/consultants applied on your behalf, he/she will impose a

service charge.

69. Q Will existing players be given first priority for FiT?

A No, when FiT is launched, it will be open to all on a fair basis hence existing players will need

to submit their applications just like any other potential FiAH. However, existing players will

be able to provide earlier COD dates as all documentation required by the authority would

have been prepared and ready for submission. Also as the RE installations are already in place,

COD can take place much faster than any new plants coming on stream.

70. Q I am a foreign investor and am interested to apply for the FiT. Am I eligible? What are therequirements for foreigners?

A Yes, you are eligible but the foreign equity shareholding is capped at a maximum rate of 49%.

71. Q Why can’t the foreign equity be 100%?

A In the National RE policy & Action Plan it is clearly stated that the FiT is to encourage and

develop the local industry. Foreign company can participate but equity shareholding is limited.

72. Q Can the utility/distribution licensee participate in FiT?

A Yes but the equity shareholding is capped at a maximum rate of 49% if it is in its area of

jurisdiction.

73. Q Can the State Government and agencies participate in FiT?

A Yes. State Government can participate in FiT but it must be through a company.

74. Q Off-grid for rural electrification – Can they be entitled for FiT?

A If the community is serviced by a distribution licensee, then they are eligible for the FiT.



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75. Q My company is located in an area where NUR (Northern Utility) is the distributor. Will I be

eligible for the FiT?

A Yes, you are eligible for FiT. Details on application requirements for potential RE developers in

this segment will be available before the FiT is launched.

76. Q Are CDM projects eligible to apply for FiT?

A We have not restricted the eligibility of FiT approval holders who apply for CDM but eligibility

and approval for CDM will ultimately depend on UNFCCC (to be applied by the developers

themselves and separate from the FiT mechanism).

77. Q How will I know if I am successful in my FiT application?

A You will be notified via written notice/email by SEDA Malaysia if you are successful or

otherwise.

78. Q How long does it take for the application to be processed?

A Assuming all documents are submitted in order, applicants can expect notification within 2-4

weeks.

79. Q I have received a notification from SEDA Malaysia stating I have been successful in my

application. What next?

A Please refer to Annex 1.

80. Q You mentioned TNB & ST licensing. What kind of licensing is this? Is it licensing for solar

power generation or licensing to sell power back to the grid?A All power generators above a specified capacity must have power generation license from ST.

For PV power generation license fees, at RM 1.5 per kW of generation capacity, are payable

for capacities of over 24 kW (for 1 phase) and above 72 kW (for 3 phase) power generation

capacity.

81. Q I have submitted my license application to ST. How long does it take for them to process it

and how will I know if my submission was accepted?

A Client charters are currently being established for the FiT mechanism and will be made known

to applicants once finalised (before the launch of the FiT)

82. Q What should I expect when FiT starts if my house has a PV system and I am a successful FiT

applicant?

A At the end of the month, your meters will be read (TNB meter and PV meter) by the

distribution licensee and you will be given a bill on your energy use and an invoice on the

energy you produced. You will have to pay the amount due to TNB for the electricity

consumed while TNB will pay you for your PV generated energy. Mode of payment from TNB

will be outlined once FiT is launched.



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83. Q What is a REPPA and how do I obtain it?

A REPPA stands for the Renewable Energy Power Purchase Agreement which is a legal contractbetween the potential RE developer (FiAH) and the distribution licensee (eg.TNB, SESB, etc.).

Potential RE developers will be able to download a standard REPPA from the FiT website in

future as KeTTHA is currently in the midst of preparing standardised REPPAs.

84. Q Will the standard REPPA form indicate the effective period?

A Upon receiving an FiA, SEDA’s system will allocate the tariff and the duration for the tariff to

be paid to the owner. ST as a regulator will issue a public license to generate electricity for a

maximum period of 21 years (solar PV). For 16 years REPPA, the license will be 16 years.

85. Q If the RE sources are different, are the REPPAs going to be the same?

A REPPA is dependent upon on the RE technology and installed capacity.

86. Q What happens when my REPPA under this FiT scheme expires?

A You have the option of reapplying the FiT (if it is still available and have not reached grid-

parity).

87.Q What happens if I decide to shift or sell my house? Can the signed REPPA and FiA be

transferred the new owners?

A The FiA shall not assign, transfer, sublet or otherwise dispose of its rights, duties, liabilities,

obligations and privileges or part thereof under the conditions of FIA. However for household

solar PV systems, the standard REPPA for solar households & buildings allows the REPPA to be

novated / transferred to the new registered owner of the house/building where the new

owner of the house can continue with the rates established by the first FiAH. The term

“novate” legally means to allow a new party to step into the shoes of the old party without

requiring a new agreement.

88. Q Is TNB supportive of this initiative? Will they take up my generated power from renewable

resources?

A Yes, TNB is supportive of the Government’s initiative and yes, they will take up all generated

power from renewable resources.

89. Q What if the distributor (TNB/SESB) refuses to purchase all of my RE power?

A Under the new Renewable Energy Policy, the Renewable Energy Act obliges the distributor tointerconnect and purchase all RE generated power failing which a penalty will be imposed on

the distributor.

90. Q You have mentioned that the distributor has given a written confirmation to support the FIT

and agreed to enter into a new REPPA upon the launching of FIT. Can the distributor refuse

to terminate the existing REPPA upon the launching of the FIT?

A Yes, but very unlikely. In any case, KeTTHA/SEDA can intervene.



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91. Q Who bears the cost for interconnection for FiT?

A The potential RE developer will have to bear the cost of interconnection but the distributionlicensee will bear the cost to upgrade the network (if necessary).

92. Q Who will bear the costs of interconnection if I were to develop a solar farm in a developing

area where there is no substation provided?

A The RE developer (i.e. owner) will have to bear all costs (including cost for power system

studies, if necessary) up to the point of interconnection. Therefore, you have to find the

nearest interconnection point with distributor and conduct proper financial evaluation before

submitting your FiT application. The distribution licensee will be responsible for reinforcing

the network (if required).

93. Q Will there be a requirement for Power System Studies (PSS)?

A Power System studies will be required for RE plants that are connected to Medium Voltage

(MV) and above. For RE systems connected to Low Voltage (LV), safety requirement for

interconnection will be as prescribed by the regulator (ST) to ensure safe supply of electricity.

SEDA will provide the necessary guidelines for the PSS as reference for FiAHs.

94. Q I heard there will be a minimum energy performance clause for FiAH when FiT starts. Is this

true? What does this mean?

A Yes, this is true. This means that FiAH must guarantee security of supply for TNB/SESB at 80%

of their declared energy yield based on an average annual output. FiAH who fail to comply will

be slapped with a penalty by the Authority. This performance clause is however exempted for

small systems (installed capacities 10 MW and below).

95. Q Is the state authority obliged to give automatic approval once SEDA has given conditional

approval for the FiT application? Will the Federal Government relax rules on this as the

developers have to bear the additional cost?

A RE Act is a general legislation, thus the Federal Government has no jurisdiction on any issues

pertaining to the State. However SEDA which has a role as one stop centre can liaise between

RE developer and State Government to expedite the process.

96. Q What happens if the state authority declines the application when I have invested in the

project?

A In the FiT application, the applicant must submit the status / provide information on local

authority requirements. Applicants are required to do preliminary enquiries on the

situation/status before submitting the applications for FiT. However, SEDA will also look into

this matter to expedite the process.

97. Q Is FiT income considered as taxable income?

A Yes, it is and any exemptions would entail a policy decision from the government. KeTTHA will

monitor progress of RE growth in the country and conduct necessary analysis wrt this matter

before putting forth any policy recommendations in this respect.



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98. Q Will there be any special bank financing available for capital investment for

individual/company? If so, please provide the details.

A Yes there will be special bank financing available, details for financing RE capital investment

will be made available in the near future on the Authority’s web portal. However, prospective

applicants can choose to use their own current banks to finance their investment in RE

projects under the FiT regime.

99. Q Why has Malaysia chosen the FiT? Are there any other countries with the FiT system?

A Malaysia has chosen the FiT because over significant number of years, the FiT has proven to

be powerful and efficient in developing new markets for RE. The concept of FiT is simple and

has low administrative costs making it a highly effective tool for boosting RE. As an example,

Germany is the first country which successfully implemented the feed-in tariff under their

German Renewable Energy Sources Act 2000. In ten years of FiT implementation alone,Germany has been able to increase their RE capacity substantially making them the world

leader in RE with an RE contribution of 16.1% to their total electricity consumption in 2009

which created 300,000 green jobs. Germany also has not only developed the most dynamic

solar PV electricity market but also a flourishing and robust PV industry as a result of the FiT

and all this for a country that is not one of the sunniest in the world.

Many other countries have also implemented the FiT. As of 2009, FiT policies have been

enacted in many countries including most of Europe. 63 jurisdictions around the world,

including in Australia, Brazil, China, Greece, Iran, Israel, the Republic of Korea, South Africa,

Taiwan and in some states in the United States. It is gaining momentum in other countriessuch as India and Mongolia. In South East Asia, Thailand and Philippines have also

implemented the FiT mechanism.

100. Q Why does Malaysia not introduce the ‘green certificate’ like some countries in Europe which

is found to be more successful? Is there any plan to establish green certificate scheme?

A Malaysia has decided not to confuse the market at this point of time. There’s no mechanism

for green certificate unless we refer to CDM projects through CER. The Ministry has carried

out extensive studies on the various schemes to catalyse development of RE in Malaysia and

the outcome is that the FiT mechanism is best suited to catalyse grid-connected RE generation

in the country.

101. Q There will be an estimated 50, 000 RE jobs created as a result of the FiT implementation.

What type of labour force will these RE jobs constitute? Will they be h igh-value jobs or

lower value labour force?

A A majority of the estimated 50,000 RE jobs created will be high value ones that essentially

provides professional services such as the design, supply and service of RE systems.



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Annex 1: Feed-in Tariff Application Workflow



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Disclaimer: The answers to the above FAQ are given within the context of the RE. Ministry of Energy,

Green Technology and Water has compiled this in good faith and information above may change

without prior notice.

FAQs on FiT

Documents

Transcript of FAQs on FiT