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RENEWABLE ENERGY DEVELOPMENT & FEED-IN

TARIFF IN MALAYSIA

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SEDA Malaysia

Disclaimer

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Sustainable Energy Development Authority Malaysia (“SEDA Malaysia”) endeavours to keep the

information up to date and correct, the information displayed herein is subject to changes and

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slides , whether by action in contract, tort or otherwise howsoever.

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Background

Definition of Renewable Energy

Renewable Energy (RE) is any form of primary energy

from recurring and non-depleting indigenous resources.

“Renewable resources” means the recurring and non-

depleting indigenous resources or technology as set out

in the first column of the Schedule of the RE Act 2011

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Malaysia: Renewable Energy PoliciesRenewable Energy Development in Malaysia

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8TH Malaysia Plan (2001 -

2005)

• RE as the 5th Fuel

• Implied 5% RE in energy mix

9th Malaysia Plan

(2006 – 2010)

• Targeted RE capacity to be connected to power utility grid:

• 300 MW – Peninsular Malaysia; 50 MW - Sabah

• Targeted power generation mix:

• 54.2% natural gas, 40.2% coal, 5.2% hydro, 0.2% oil,

• 0.2% Renewable Energy

• Carbon intensity reduction target: 40% lower than 2005 levels by 2020

RE as of 31st

December 2010

• Connected to the utility grid (as of 2010): 61.2 MW (17.5% from 9th MP target)

• Off-grid: >1GW (private palm oil millers and solar hybrid)

National RE Policy & Action Plan

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Malaysian National Renewable Energy Policy and Action Plan

Approved by Cabinet on 2nd April 2010

Policy Statement:

Enhancing the utilisation of indigenous renewable energy resources to

contribute towards national electricity supply security and sustainable

socio-economic development.

Objectives:

� To increase RE contribution in the national power generation mix;

� To facilitate the growth of the RE industry;

� To ensure reasonable RE generation costs;

� To conserve the environment for future generation; and

� To enhance awareness on the role and importance of RE.

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Strategic Thrust 2: Provide Conducive Business Environment for RE

Strategic Thrust 3: Intensify Human Capital Development

Strategic Thrust 5: Create Public Awareness & RE

Policy Advocacy Programmes

Strategic Thrust 4: Enhance RE Research and

Development

Strategic Thrust 1: Introduce Legal and

Regulatory Framework

Strategic Thrusts of the National RE Policy

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National RE Goals (excl EPP-10)

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5,000

10,000

15,000

20,000

25,000

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50

MW

Year

Solar PV

Solid Waste

Mini Hydro

Biogas

Biomass

2030

3.5 GW2020

2.1 GW

2050

11.5 GW

2020:

2,080 MW (11%)

11.3 GWh (9%)

2030:

4,000 MW (17%)

17.2 GWh (12%)

2050:

21.4 GW (73%)

44.2 GWh (24%)

2015:

985 MW (6%)

5.4 GWh (5%)

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• New Key Economic Areas : Entry Point Project (EPP) 10: Solar

Power Capacity Initiative

• EPP 10 Target - 1.25GW solar power capacity connected to the

grid by 2020

Year Solar Power

Capacity

(Cumulative)

RE Capacity

(Cumulative)

RE Capacity Mix

2011 20MW 219 MW 1%

2015 295MW 1,275 MW 7%

2020 1,250MW 3,140 MW 14%

2030 3,100MW 7,088MW 25%

EPP 10 – Solar Power Capacity Initiative

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FEED IN TARIFF MECHANISM

Feed-in Tariff: Government Policy

• 10th Jun 2010: 10th Malaysia Plan (chapter 6)

• 15th Oct 2010: National Budget 2011 (paragraph 34)

• 25th Oct 2010: Economic Transformation Programme (chapter 6)

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� A mechanism that allows electricity that is produced from

indigenous RE resources to be sold to power utilities at a fixed

premium price and for specific duration.

� Provides a conducive and secured investment environment which

will make financial institutions to be comfortable in providing loan

with longer period (>15 years).

� Provides fixed revenue stream for installed system

� Only pays for electricity produced: promotes system owner to

install good quality and maintain the system

� With suitable degression rate, manufacturers and installers are

promoted to reduce prices while enhancing quality

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Feed-in Tariff (FiT)

� There are 2 meters in

each home.

� One to record how much

renewable energy is

generated by solar PV

system

� Distribution licensee pays

all the renewable energy

exported to the grid.

� Another to record how

much electricity the

household consumes

Basic Concept of the Feed-in Tariff for Household

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Malaysia: Renewable Energy PoliciesCritical Factors for an Effective FiT Implementation

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FiT must be guaranteed via the RE Act, whereby:

�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 20 years) to give certainty & provide

businesses with clear investment environment

� adequate "degression" to promote cost reduction to achieve

“grid parity”

�Adequate fund is created to pay for the FiT rates & guarantee the

payment for the whole FiT contract period

�Implementation by a competent agency for constant monitoring,

progress reporting and transparency

How is the FiT funded?

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FiT Mechanism for Malaysia

Step 1: Electricity consumers pay

electricity bills to Distribution

Licensees (e.g.

Tenaga Nasional Berhad)

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FiT Mechanism for Malaysia

Step 2: 1 % of electricity

revenue is channelled from

distribution licensees

to RE Fund which is managed

by SEDA Malaysia

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FiT Mechanism for Malaysia

Step 3: Distribution

Licensees make FiT

payment to FiAHs

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FiT Mechanism for MalaysiaStep 4: Distribution Licensees claim from RE Fund, the positive sum of

the differential between FiT payments and the prevailing displaced cost,

including an administrative fee.

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1%

FiT Cost

Source of Funding

� 2011 - additional tariffs collection from

electricity bills

� Every RM100/Month - RM1 for RE

� Additional 1% (proposed in 2013)

The size of RE fund will determine the RE

target for Malaysia

Benefit

� polluters pay concept

� will not affect 75% of electricity

consumers (≤ 300 kWh/mth)

� encourages EE and DSM

Source of Fund for FiT

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1%

FiT Financing in Germany

Gerhard Stryi-Hipp,

Head, Energy Policy,

Fraunhofer Institute

for Solar Energy

Systems

“Germany contributes 15% of their electricity bills

to finance the feed-in tariff. This amounts to €13

billion (2010) and half of this goes to solar PV”.

Germany decision to move to RE is as a result of

people’s choice.

• 70% of electricity is imported. Germany wants

to achieve energy autonomy.

• Chernobyl disaster. Germany wants to reduce

reliance on nuclear power.

• 15% of total electricity price for RE is a small

price for the Germans to pay

What about us? How much are we willing to pay?

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1%

Impact of the FiT in Germany

- Germany’s feed-in tariff was

implemented in 2000

- Created 400,000 green jobs

- In 2000, RE forms 6 % of Germany’s

energy mix and in 2011, RE forms

20 % of Germany’s energy mix.

Source: BMU

- By 2020, RE will account for 35% of Germany's energy output,

soaring to 80% by 2050.

- By end of 2011, Germany will have 22.5 GW of solar PV and 75

GW of wind power

Renewable Energy Act 2011

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Renewable Energy Act 2011

�RE Act: an Act to provide for the establishment and implementation of a

special tariff system to catalyse the generation of renewable energy and to

provide for related matters.

� Comprises of 9 Parts and 65 Clauses

� Part I: Preliminary

� Part II: FiT System

� Part III: Connection, Purchase and Distribution of RE

� 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: 27th April 2011

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Subsidiary Legislations

1. Renewable Energy (Feed-in Approval and Feed-in Tariff Rate)

Rules 2011

2. Renewable Energy (Technical and Operational Requirements)

Rules 2011

3. Renewable Energy (REPPA) Rules 2011

4. Renewable Energy (Criteria for Renewable Resources)

Regulations 2011

5. Renewable Energy (Allocation from Electricity Tariffs) Order

2011

6. Renewable Energy (Recovery of Moneys by Distribution

Licensee) Rules 2011

7. Renewable Energy (Administrative Fees) Rules 2011

http://seda.gov.my/go-home.php?omaneg=00010100000001010101000100001000000000

000000000000&s=1207

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Feed-in Approval & Feed-in Tariff Rules 2011

1) Individuals (≥ 21 years)

Malaysians

Foreign individuals: limited to solar ≤ 72 kWp

2) Companies (ROC)

All legally registered companies and businesses

Direct ownership

Shareholding limitations:

1)DL: ≤ 49% within its distribution area

2)Foreign companies: ≤ 49%

3) Other entities (body corporate, society, co-operative

society, firm, local authority)

FiT Design

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0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

RM

/kW

h

RE-FiT Rate vs Displaced Cost

Displaced Cost (LV)

Displaced Cost (MV)

FiT Biomas

FiT Biogas

FiT Mini Hydro

FiT Solid Waste

FiT Solar PV

Upon grid parity:

� FIAH will be paid prevailing DC rate.

� DL cannot claim from RE Fund (SEDA)

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Grid Parity

Tarif Jualan

RM

/kW

h

Tahun

Displaced Cost

FiT Biomas

FiT Biogas

FiT Mini Hidro

FiT Solar PV

FiT Sisa Pepejal

Degression & Grid Parity (Projected)

FiT Degression: Promote cost reduction towards Grid Parity

� Degression rate to commence on 1st January every year

� Revision: at least once every 3 years30

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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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RE Law Schedule: Solar PV

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RE Law Schedule: Solar PV .. cont

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Annual RE Quota

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Year

Biogas Biogas -

Sewage

Biomass Solid-

Waste

Small

Hydro

Solar

PV <

1MW

Solar

PV >

1MW

Total

(MW)

MW MW MW MW MW MW MW

2011/

2012 20 10 60 20 30 10 40 190

2013 20 10 50 30 30 10 40 190

2014 20 10 50 30 90 10 40 250

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Getting started

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To do list

1. Connection Confirmation Check (72 kW – 180 kW)

RM1000, 2 weeks.

2. Power System Study (> 180 kW)

Both to be conducted by the relevant Distribution Licensee.

Net Export Capacity or Rated kWp of RE

InstallationCost (RM)

Completion

Period

Up To 1 MW 20,000 30 Days

More Than 1 MW Up To 10 MW 40,000 30 Days

More Than 10 MW Up To 30 MW 60,000 42 Days

Additional For Insulation Coordination Studies If

Required20,000 10 Days

Additional for Solar PV - Dynamic Study (Voltage

Fluctuations) If Required10,000 -

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To do list

• Secure legal rights to the site of the RE installation / letter

of intent from the site owner

• Design RE installation (SLD, capacity, technical details, etc)

• Check relevant local authority and other governmental

requirements

• Contact potential financier & obtain financing offer

letters/term sheet

• Prepare work plan & major milestones

• Company info (e.g. certified true copies of audited

accounts, Forms 8, 24, 49, memorandum & articles of

association, board’s reso authorizing representative to

apply FiA on company’s behalf)

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Memorandum & Articles of Association

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Check out

FiT guidelines at http://seda.gov.my/go-

home.php?omaneg=000101000000010101010001000010000000

00000000000000&s=1221

View standardized REPPAs at http://seda.gov.my/go-

home.php?omaneg=000101000000010101010001000010000000

00000000000000&s=563

1. Biogas≤ 10MW

2. Biogas > 10MW to ≤ 30MW

3. Biomass≤ 10MW

4. Biomass > 10MW to ≤ 30MW

5. Small hydro≤ 10MW

6. Small hydro > 10MW to ≤ 30MW

7. Solar PV≤ 1MW

8. Solar PV > 1MW to ≤ 12MW

9. Solar PV > 12MW to ≤ 30MW

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Giving False or Misleading Information

Para 26 (Feed-in Approval & Feed-in Tariff Rate

Rules 2011) A person who fails to disclose or

omit to give any relevant information or

document to the Authority under these Rules,

or provides to the Authority under these Rules

any information or document that he knows or

has reason to believe is false or misleading,

commits an offence and shall, on conviction, be

liable to a fine not exceeding RM300,000 or

imprisonment for a term not exceeding 3 years

or both.

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SEDA’s Portal, www.seda.gov.my

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e-FiT Online System

• FiT quota approvals on ‘first come, first served basis’ – upon submission of

complete application & document

• FiT quota is dynamic44

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e-FiT Online System Tutorial

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� Minimum RM 2.1 billion savings of external cost to mitigate CO2

emissions (total 42 million tonnes avoided from 2011 to 2020, on the

basis of RM 50 per tonne of external cost);

� Minimum RM 19 billion of loan values for RE projects, which will provide

local banks with new sources of revenues (at 80% debt financing for RE

projects);

� Minimum RM 70 billion of RE business revenues generated from RE

power plants operation, which can generate tax income of minimum RM

1.75 billion to Government;

� > 50,000 jobs created to construct, operate and maintain RE power

plants (on the basis of 15-30 job per MW).

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Potential Impact of National RE Policy by Year

2020

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Malaysia: Renewable Energy Policies

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Penang – One of the best spots under the Sun!

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solar@ecosensa.com

http://solar.ecosensa.com