SOLAR ENERGY POTENTIAL OF MALAYSIA:

A technological potential assessment with policy

recommendations

ISyE 6701

Stephen Spicher

Jan Moellmann

Mayuri Rajput

Catharina Hollauer

Joshua Oladipo

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INDEX

PROJECT ABSTRACT ................................................................................................................................ 5

I. ECONOMIC AND ENERGY OVERVIEW ............................................................................................ 6

II. POLICY OVERVIEW .............................................................................................................................. 7

a) Feed-in-Tariffs ....................................................................................................................................... 9

b) Net Metering....................................................................................................................................... 11

III. ANALYSIS OF TECHNOLOGY OPTIONS ....................................................................................... 12

i. Large scale solar (LSS) ........................................................................................................................ 12

a) Large Scale Solar Potential ............................................................................................................. 13

• Solar Radiation in Malaysia ............................................................................................................. 13

• Land Availability .............................................................................................................................. 13

• Theoretical Electricity Generation Potential .................................................................................... 15

• Installed Capacity ............................................................................................................................. 15

b) Economic analysis .......................................................................................................................... 16

• Costs ................................................................................................................................................. 16

• Levelized Cost of Energy (LCOE) .................................................................................................... 17

ii. Rooftop potential ................................................................................................................................. 18

• Land availability ............................................................................................................................... 19

• Generation Potential .......................................................................................................................... 19

a) Results.............................................................................................................................................. 20

IV. CARBON EMISSIONS AND TRADING POTENTIAL.................................................................... 21

V. CONCLUSIONS .................................................................................................................................... 23

a) Challenges and further research for LSS ............................................................................................. 23

b) Challenges and further research for Rooftop Solar ............................................................................ 25

c) Regulatory Recommendations ............................................................................................................ 25

d) Non-Regulatory Recommendations .................................................................................................... 27

REFERENCES ............................................................................................................................................ 28

APPENDIX ................................................................................................................................................. 32

A1 ENERGY AND ECONOMY APPENDIX....................................................................................... 32

A2 LARGE SCALE SOLAR APPENDIX............................................................................................. 32

A3 ROOFTOP SOLAR APPENDIX ..................................................................................................... 41

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A4 CARBON EMISSIONS AND TRADING APPENDIX ...................................................................... 42

FIGURES INDEX

Figure 1 – Yearly average solar radiation (kWh/m2)* ............................................................................. 13

Figure 2 – Current land-use in Peninsular Malaysia* .............................................................................. 14

Figure 3 – Large scale solar suitable area in Peninsular Malaysia* ......................................................... 15

Figure 4 – Discounted Cash Flow ........................................................................................................... 18

Figure 5 – Payback Period ....................................................................................................................... 18

Figure 6– Rooftop Solar Case Base Scenario: Discounted Cash-Flow SEDA FiT rates ........................ 21

Figure 7 - Installed Capacity (Million Kilowatts) .......................................................................... ......... 33

Figure 8 – Electricity Generation Mix (GWh) 2015 ................................................................................ 33

Figure 9 – Location and capacity of large scale solar plants in Peninsula Malaysia* ............................. 34

Figure 10 – Daily average solar radiation (MJ/m2 )* .............................................................................. 35

Figure 11 – Initial investment costs in Peninsular (%) ............................................................................ 35

Figure 12 – Scenario Discounted Cash Flow .......................................................................................... 37

Figure 13 – Scenario 4 Payback Period ................................................................................................... 37

Figure 14 – Parameters Sensitivity Analysis Results: Discount Rate and LCOE .................................... 38

Figure 15– Parameters Sensitivity Analysis Results: Efficiency and Energy generation potential ........ 39

Figure 16– Parameters Sensitivity Analysis Results: Efficiency and Emission reduction potential ........ 39

Figure 17– Parameters Sensitivity Analysis Results: Average radiation and required installation capacity

................................................................................................................................................................. 40

Figure 18– Parameters Sensitivity Analysis Results: Average daily radiation and LCOE ....................... 40

Figure 19– Parameters Sensitivity Analysis Results: Avg implementation cost and LCOE .................... 41

Figure 20 – CO2 European Emission Allowances .................................................................................. 43

Figure 21 – Share of GHG emissions covered ........................................................................................ 45

Figure 22 – Prices in implemented carbon pricing initiatives ................................................................. 46

TABLE INDEX

Table 1 - Original Malaysian FiT Rates .................................................................................................. 10

Table 2 – Current Malaysian FiT Rates* ................................................................................................. 10

Table 3 – Displacement Costs .................................................................................................................. 12

Table 4 – Electricity Generation Potential ............................................................................................... 16

Table 5 – Associated Installed Capacity .................................................................................................. 16

Table 6 – Results .................................................................................................................................... 17

Table 7 – Breakdown for Rooftop Solar 2016* ...................................................................................... 20

Table 8 – LSS Carbon Potential Results ................................................................................................. 24

Table 9 – Rooftop Solar Carbon Potential Results ................................................................................. 24

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Table 10 – Yearly radiation in Malaysian towns ..................................................................................... 34

Table 11 – Scenario 5MW Results .................................................................................................. ....... 36

Table 12 – Weak points of EU and China ETS ....................................................................................... 44

Table 13 – Emission reduction potential ................................................................................................. 47

Table 14 – Greenhouse gas offset over project lifetime .......................................................................... 48

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PROJECT ABSTRACT

Malaysia’s rise to prominence in South East Asia has attracted the attention of other regions

and countries, including the United States. The U.S. State Department mission in Kuala Lumpur

is interested in why solar energy holds a small market share and in what might be a path towards

a more diversified energy mix. This report aims to answer these questions by validating solar

energy potential in Malaysia and providing analysis and recommendations of current or potential

policy changes to support growth of solar power.

The charter issued by the U.S. State Department presented the hypothesis that public

perception in Malaysia is that solar power is not viable due to frequent cloud cover. We show that

for both large scale solar (LSS) installations and roof-top solar projects (on current construction),

the energy generation potential is more than enough to meet the 2030 energy requirements.

Moreover, both LSS and roof-top installations indicate positive net present values and levelized

cost of energy (LCOE) in line with current electricity prices, besides substantial CO2 emissions

reduction potential.

We identify constraints on renewable energy development, such as the Feed-in-Tariffs that

are capped or closed, low availability of capital for LSS projects, and the federal funding source

for incentives that is not sustainable for the duration of payment periods. Also, multiple

externalities are not reflected in the market; fossil fuel subsidies and the lack of carbon pricing are

the most significant.

We present the following policy options and recommendations:

• Green energy bonds can increase the available capital for solar projects. These

financial instruments provide return on investment and low volatility similar to other bonds, but

their intention is to fund renewable energy projects. Other countries, including China and India,

are issuing green bonds regularly. Private companies can provide additional capital resources by

issuing green bonds on their own; Apple is cited as an exemplary model for this.

• Incentives to promote renewable energy installations can be reopened and

expanded. The sustainable energy fund can to be funded by increasing the current tariff of 1.6%

on electricity consumers above 0.30 MWh..

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• A carbon tax to internalize the impact of fossil fuel sources needs to be analyzed

for economic impact but can support the growth phase of Malaysia’s renewable energy portfolio.

• The balancing of the federal budget, started by the Subsidy Rationalization process

in 2010, will enable the development of renewable energy in Malaysia. Natural gas and coal

subsidies negatively affect the national budget, and artificially lower consumer electricity rates to

a level that eliminates the financial incentives for solar and other renewable energy sources.

The first section focuses on the development of the energy mix over the years. The second

section analyzes the past attempts and current status of renewable energy development in Malaysia.

The third section addresses the technological potential of large scale solar and rooftop solar. The

fourth section evaluates the carbon trading potential as an upside for the project and a possibility

of developments through the carbon development mechanism. Finally, the last sections expose the

conclusions and recommendations for increasing the solar generation in Malaysia.

I. ECONOMIC AND ENERGY OVERVIEW

Malaysia’s favorable economic outlook reflects a well-diversified and open economy that

has successfully weathered the impact of external shocks. Anti-crisis policies such flexible

exchange rate regimes, large international reserves, selective and temporary capital controls to

stabilize capital flows, and careful prudential regulation of the domestic financial sector have been

adopted over the years. (Gan PY, 2008) estimated the expected GDP growth of Malaysia to average

4.6% between 2004 and 2030. Energy consumption is projected to increase by 4.3% annually

through 2030. Although the growth rate of energy consumption is a bit lower than the GDP growth

rate, the absolute amount of energy consumption would be 3 times greater. This growth coupled

with insufficient natural gas supply in high-demand centers is driving the country to diversify its

power generation fuel mix and to add electricity capacity to avoid future power shortages. In 2014,

the generation capacity was approximately 9.0 GW.

Malaysia's electricity demand which is mainly fulfilled by natural gas and coal has

expanded rapidly over the years (Oh TH, 2018), and the crucial challenge facing the power sector

in Malaysia is the issue of sustainability (Ong HC, 2011 ). The development of renewable energy

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policies can ensure secure and sustainable energy supplies at reasonable costs and to address issues

related to global climate change (Kardooni R, 2018 ).

Since the year 2000 in Malaysia (time of the 8th Malaysian Plan), renewable energy has

been included as a key fifth element in the country's fuel policy along with hydro, coal, gas, and

oil, and a target of obtaining 5.0% of the total energy supply from renewable sources was set

(Kardooni R, 2018 ). Since 2010, gas and coal have primarily made up roughly 80–90% of the

domestic's installed generation capacity and output (Oh TH, 2018) as shown in Appendix A1.

Coal and natural gas remain as the two most important sources in powering up the country

and their consumption is projected to escalate when more power plants based on these two

resources go online by 2020. The total installed capacity at present stands at around 30 gigawatt

(GW), with most of the power stations located in the more densely populated and industrialized

Peninsular Malaysia (Oh TH, 2018).

Malaysia targets to increase its renewable energy installed capacity from 220 MW in 2011

to 12 GW by 2050 (Bekhet HA, 2014). A reduced dependency on gas, primarily due to the gradual

retirement of gas turbine units on top of new coal-fired power plants (Oh TH, 2018). However, the

consumption of gas has remained consistent over the years and latest data from TNB showed that

as of August 2016, coal, gas and hydropower remained the top three resources in the generation

mix at 51%, 45% and 3.5%, respectively (Oh TH, 2018) (Tenaga, 2016).

As a country that is rich in fossil fuels, it is no easy hurdle for Malaysia to abandon its

dependence on these resources within a short transition period. Coupled with the long history of

the not-so-efficient policy in enforcement and implementation, it comes as no surprise that even

after more than a decade since renewable energy was introduced and numerous relevant

programmes instigated, renewable energy is only 1.0–2.0% of the total energy mix (Oh TH, 2018).

The next chapter analyzes the policies adopted in Malaysia to foster investments in renewable

energy generation.

II. POLICY OVERVIEW

The National Energy Policy of Malaysia was introduced in 1979 with three main objectives.

The first was based on supply and aimed at ensuring an adequate, secure and cost-effective energy

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supply based on the maximum use of indigenous resources. The second focused on the utilization

aspect, promoting efficiency and conservation measures to eliminate wasteful and non-productive

patterns of energy consumption. And finally, the third states that in achieving the supply and

utilization objectives, environmental concerns will not be neglected (Alam SS, 2013) (Wright,

2008).

From 2001 onwards, new energy policies introduced were mostly RE-related to explore

and promote the use of renewable energy as an alternative fuel source. These steps include the

Fifth-Fuel Policy under the 8th (2001-2005) and 9th (2006-2010) Malaysia Plan, Energy Efficiency

in Commercial Buildings (MS1525), The Kyoto Protocol, the Malaysian Building Integrated

Photovoltaic Programme (MBIPV), and Biomass (Alam SS, 2013) (Haw, 2006).

At the end of 2005, the Fifth-Fuel Policy of the 8th Malaysia Plan, targeted for 0.50GW of

electricity generation from renewable sources to the national grid. However, only 12MW was

delivered from two projects from the Small Renewable Energy Power Programme (SREP). The

SREP was established to support the government’s strategy to intensify the development and

utilization of RE as the fifth fuel resource in power generation. To facilitate the expeditious

implementation of grid-connected RE resource-based small power plants. Although the SREP has

targeted to generate 5.0% or 0.60GW of the country’s electricity from RE by 2005, only 0.30%

was achieved.

In 2011, one of the more impactful and notable policies was adopted under the SEDA`s

purview: the FiT scheme, which allowed the mass public to become power producers (Oh TH,

2018) (SEDA, 2011). SEDA is a statutory body formed under the Sustainable Energy

Development Authority Act 2011 (SEDA, 2011) with the key role to manage and administer the

implementation of the FiT initiatives decreed under the Renewable Energy Act in 2011.

Under FiT, commercial entities and individuals are allowed to generate RE from four

sources (solar PV, biogas, biomass and mini hydro) and sell the energy to TNB through the utility

grid which is obligated under the RE Act 2011. The FiT in Malaysia gives much emphasis on solar

PV and has proven to be increased the investment and development of solar plants of varying sizes.

Furthermore, a cornerstone of RE incentives is the Feed-in-Tariffs implemented on November

2011 and the net metering policy implemented on November 2016.

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a) Feed-in-Tariffs

Feed-In-Tariff (FiT) is a scheme in which the owner will be paid for any amount of

electricity generated in kilowatt-hour (kWh), with a contract period of typically 20 years. This is

one of the incentives offered to increase the renewable energy penetration, especially for small

scale electricity generation (Muhammad-Sukki, 2011). According to SEDA, the FiT ranges from

1.20 MYR for smaller plants up to 0.85 MYR for larger plants. Additional bonus rates exist if each

plant has the following features (SEDA, SEDA Portal, 2018):

Bonus 1: Use as installation in buildings or building structures.

Bonus 2: Use as Building Material.

Bonus 3: Use of Locally Manufactured or Assembled PV modules.

Bonus 4: Use of locally manufactured or assembled solar inverters.

Table 1 - Original Malaysian FiT Rates Plant Size FiT

Rate

Bonus

1

Bonus

2

Bonus

3

Bonus

4

Total

Up to 4 kW 1.23 0.26 0.25 0.03 0.01 1.78

4 kW – 24 kW 1.20 0.26 0.25 0.03 0.01 1.75

24 kW – 72 kW 1.18 0.26 0.25 0.03 0.01 1.73

72 kW – 1 MW 1.14 0.26 0.25 0.03 0.01 1.69

1 MW – 10 MW 0.95 0.26 0.25 0.03 0.01 1.5

10 MW – 30 MW 0.85 0.26 0.25 0.03 0.01 1.4

Table 2 – Current Malaysian FiT Rates* Description of Qualifying Renewable Energy Installation Jan 2018

a) Basic FiT rates having installed capacity of FiT Rates (RM per kWh)

(i) up to and including 4kW 0.67

0.65 (ii) above 4 kW and up to and including 24 kW

(iii) above 24 kW and up to and including 72 kW 0.44

b) Bonus FiT rates having the following criteria (one or more) Additional (+)

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(i) use as installation in buildings or building structures 0.13

0.08 (ii) use as building materials

(iii) use of locally manufactured or assembled solar PV modules 0.05

(iv) use of locally manufactured or assembled solar inverters 0.05

*Rates are applicable to the project application date

In the tables above, it is possible to note the significant emphasis on smaller plants and

towards utilizing solar plants in or on buildings. The FiT system is considered a successful tool for

RE incentive in any given market. Regarding the cost effectiveness of Malaysia`s FiT policy,

(Muhammad-Sukki, 2011) shows that most typical PV installations obtain between 5.0-10. %

returns over the project lifetime. With a growing number of funding resources for R&D activities,

and supported by numerous government policies, solar could become one of the major renewable

sources for electricity generation in Malaysia.

In comparison to other installation models, (Muhammad-Sukki, 2011) finds only one that

surpass the average employee provident fund and while not immediately profitable over other

investment options, investors have taken advantage of the tariff to greatly expand PV production.

Additionally, the annual discount rate is a built-in reduction of the FiT paid to the producer in order

to track changes in market costs and also account for technology advancements as a technology

matures.

Malaysia uses a fixed 8% discount rate for all FiT applications. This fixed rate provides

security to investors when considering a PV project (Muhammad-Sukki, 2011). The report

stipulates that one of the principal requirements for a successful FiT is to be stable (Couture, 2010).

However, PV technology rapidly decreases which would ultimately hamper the funding of the FiT.

To fund the FiT, the Malaysian government originally implemented a 1.0% and later,

increased to 1.6% the tariff on electricity consumption (Pacudan R., 2014). This distributes the

cost of the program across the entire population which insulates the program from political or

regulatory budgetary constraints. Moreover, given the energy market structure in Malaysia (single-

buyer and highly regulated), this additional revenue is used for other sources such as subsidies to

liquid natural gas electricity generation.

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a) Net Metering

In 2016, Malaysia started its first large scale net metering policy (SEDA, SEDA Portal,

2018). While still in its infancy, net metering has the potential to greatly incentivize small scale

PV implementation. The policy is designed for achieving a capacity of 0.50GW total generation

by 2020, which will be met by phased quotas for each year leading up to 2020. Also, prioritizes

the Peninsula over Sabah (90%-10%) and residential customers are limited to 72 kW, while

industrial customers recently had the capacity of 1.0 MW removed in favor of a 75% of maximum

demand on their current system.

The current structure allows for prosumers to recoup the displaced cost of the energy they

generate. Equation 1 shows the current calculation and it requires the implementation of a second

meter which together with start-up costs might increase the bill. This is opposed to three-meter

systems found elsewhere in the world (Tenaga, Guidelines Solar Photovoltaic Installation on Net

Metering Scheme, 2015).

𝑁𝑒𝑡 𝐵𝑖𝑙𝑙 = [𝑘𝑊ℎ 𝐶𝑜𝑛𝑠𝑢𝑚𝑒𝑑 ∗ 𝐺𝑎𝑧𝑒𝑡𝑡𝑒𝑑 𝑇𝑎𝑟𝑖𝑓𝑓] − [𝑘𝑊ℎ 𝐸𝑥𝑝𝑜𝑟𝑡𝑒𝑑 ∗ 𝐷𝑖𝑠𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝐶𝑜𝑠𝑡]

Equation 1

Moreover, the displacement cost is calculated by yet another adjustment to energy cost by

other-than-renewable means using a tariff. The table below shows the different set displacement

costs based on the connection voltage for any of the renewable energy resources.

Table 3 – Displacement Costs

Peninsula (MYR/kWh) Sabah (MYR/kWh)

50 kV to 230 kV - 0.21

1 kV to 50 kV 0.24 0.22

< 1 kV 0.31 0.30

These displacement costs are lower than the market rate which is set by three electrical

utility monopolies in Malaysia. SEDA operates a live system that updates prosumers on the current

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status of available quotas and while 2018 is currently showing an increase in applications for net

metering, only 2.6% of the available quota from 2016 and 2017 had been used (SEDA, SEDA

Portal, 2018).

III. ANALYSIS OF TECHNOLOGY OPTIONS

i. Large scale solar (LSS)

Malaysia has great potential for LSS power due to its location in the equatorial region

(Mekhilef S, 2012). In the Green Technology Master Plan 2017-2030, LSS farms are promoted

and targeted with 1.2GW until 2020, of which 0.20 GW will be in Sabah and 1.2GW in Peninsular

Malaysia (Malaysia Ministry of Energy, 2017).

With the launch of feed in tariffs in 2011, LSS farms became more popular in Malaysia.

Since 2016, several PV plant projects totaling 0.33GW in combined capacity were approved,

showing the increasing interest and activity in LSS. Figure 13 in Appendix A2 displays the location

of those plants (Energy Commission, 2017).

a) Large Scale Solar Potential

This section identifies and quantifies the theoretical potential for LSS PV plants in

Malaysia (in contrast to later presented scenario and sensitivity analyses, this total theoretical

potential is referred to as base case in the following). Therefore, first the solar radiation in specific

areas is examined. Second, land availability is identified. Third, based on this information, the

theoretical power potential is calculated.

• Solar Radiation in Malaysia

Solar radiation is taken from several studies which refer to the NASA website of Surface

meteorology and solar energy. Per year, the average of solar insolation is 1600 kWh/m2 (ranging

from 1400 to 1900 kWh/m2, see graphic below) with recorded sunshine in the range of 4-8 hours

daily (Muhammad-Sukki, 2011). This has significant implications for the location decision of LSS

plants. In terms of radiation, the north of Peninsular as well as Sabah have the greatest potential.

For the daily sun shine (in terms of hours), 6 hours is assumed as the median between above

mentioned 4 and 8 hours/day. Average PV yield based on current development in the country

suggests that 6 hours is an optimistic approximation (SEDA, 2011).

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Figure 1 – Yearly average solar radiation (kWh/m2 )*

* (Muhammad-Sukki, 2011)

• Land Availability

The total area of Malaysia is about 330,000 km2 of which almost 120,000 km2 is made up

of Sarawak, 74,000 km2 by Sabah, and 130,000 km2 by Peninsular Malaysia (Mekhilef S, 2012).

In order to determine the land availability for LSS plants in Peninsular, a study by (Sabo, 2016)

and (Sabo, 2017) is used. The figure below shows a map of Peninsular Malaysia to characterize its

current land-use.

Figure 2 – Current land-use in Peninsular Malaysia*

* (Sabo, 2016)

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The criteria used to detect potential LSS locations include regional solar radiation,

orography (elevation, slope and hill shade), land character (exclusion of water bodies,

environmentally sensitive areas, vulnerable areas like flood plains or areas vulnerable to landslides,

and developed urban areas), technical (access to grid and roads), and acreage (3.3 acres must be

available per individual MW of capacity, at least 170 acres for 50. MW PV plant).

Applying these criteria, the potential area suitable for large scale solar plants in Peninsular

Malaysia is 101,km2 (7.6 %). The figure below displays the result.

Figure 3 – Large scale solar suitable area in Peninsular Malaysia*

* (Sabo, 2016)

The potential area for Sabah and Sarawak were roughly approximated based on the result

(7.6 % of land area in Peninsular) and the criteria of the same approach. Since Sabah and Sarawak

have similar landscapes like Peninsular, but less roads and grid lines (since population density is

lower) and more mountain range, the factor of 7.6 % is reduced to 6.0 % for Sabah and 4.0 % for

Sarawak (since the above-mentioned modifications apply even stronger here and sun radiation is

significantly lower). This means a potential area of 4.4 x 103,km2 in Sabah and 5.0 x 103 km2 in

Sarawak for large scale solar plants.

• Theoretical Electricity Generation Potential

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To calculate the total theoretical electricity generation potential (EGP) of large scale PV

in Malaysia, average annual solar radiation (ASR), a packing factor of 80 % (PF, which expresses

the percentage of actual useful area of the PV panel that absorbs solar radiation (Yang, 2015)),

total potential area, and average panel efficiency of 15 % (PE, which is assumed to already account

for degradation over time by taking the average value of an 16 % efficient solar module at t=0 and

annual output drop of 0.60% (Hernández-Moro, 2013)):

𝐸𝐺𝑃 = 𝐴𝑟𝑒𝑎 ∗ 𝑃𝐹 ∗ 𝐴𝑆𝑅 ∗ 𝑃𝐸 Equation 2

Table 4 – Electricity Generation Potential

Location Electricity generation potential (106

GWh/year)

Peninsular 2.0

Sabah 0.93

Sarawak 0.92

Total 3.87

Based on this electricity generation potential, the greenhouse gas reduction potential was

calculated to be 3 Gt CO2 per year.

• Installed Capacity

The associated installation capacity (IC) is calculated by dividing the total electricity

generation potential per year by the average number of sun hours per year (6 hours/day*365

days/year). This leads to the required installation capacities presented in the table below, used to

realize the electricity generation potential.

Table 5 – Maximum Potential Installed Capacity

Location Installation capacity (GW)

Peninsular 920

Sabah 430

Sarawak 420

Total 1,770

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b) Economic analysis

• Costs

Data for investment and variable cost was taken from a feasibility study of a 5.0 MW solar

power plant in Perlis, Northern Malaysia conducted in 2015 (Kassim MP, 2015). These values can

be found in Appendix A2. Land prices are difficult to estimate and vary for the different parts of

Malaysia. For the base case, a constant land price of 111,000 $/MW is considered for Peninsula

Malaysia (according to the feasibility study) and lower prices for the less populated and developed

Sabah and Sarawak.

Solar module prices are adjusted based on the most recent available data for solar module

prices in Malaysia. A price (including a Goods and Services tax of 6.0 %) lower than the average

module price (2.5 MYR/W, 0.63 $/W) is considered since large scale projects usually enable

cheaper prices due to bulk orders. Compared with other studies, particularly the IEA and SEDA

national survey report of PV power applications in Malaysia 2016 (IEA, 2016), these values for

the total system investment are conservative.

The annual costs consist of O&M and insurance. O&M are approximated and converted

from the same feasibility study in Malaysia that was used for the investment cost (48,000 MYR

per year for 5.0 MW or $0.0024 per watt) (Kassim MP, 2015) and annual insurance costs are

assumed as 0.25 % of the capital cost of the system (Hernández-Moro, 2013).

• Levelized Cost of Energy (LCOE)

With these costs, an assumed lifetime of 21 years, and a discount rate of 6.0 % (Sabo, 2017),

the LCOE is $0.090 per kWh which matches with current values in the 2016 Lazard report, widely

considered to be a benchmark (Lazard, 2017). This value is slightly lower than the average

electricity price for households (0.39 MYR/kWh, 0.10 $/kWh) and for industrial companies (0.41

MYR/kWh, 0.10 $/kWh), and significantly lower than for commercial companies (0.47

MYR/kWh, 0.12 $/kWh), which points to the economic feasibility of the project (IEA, 2016).

Due to the nature of the LCOE and the fact that all cost components are considered per

capacity (and not generated electricity), the LCOE is constant for different energy generation

potentials but varies with the capacity as can be observed in later scenario and sensitivity analyses.

This means that with the current model an increase in energy generation potential leads to a

proportional increase in the required installation capacity and thus the associated costs. Since the

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LCOE compares the cost to generated electricity, the LCOE does not change. Therefore, this does

not capture the real dynamic situation (e.g. through learning curves and consequently decreasing

production costs). The developed model is viewed as sufficient for evaluating the current state with

static efficiencies, solar radiation per area and packing factors (and therefore static purchasing and

implementation prices per installed watt). A sensitive analysis was conducted and can be found in

Appendix A2 to account for this static characteristic (and for the uncertainty in some other key

variables of the model).

c) Scenario Analysis: Realizing 30 % of renewable energy in 2030

Part of Malaysia’s plan to reduce greenhouse gas emissions is to reach 30 % of renewable

energy in generation capacity by 2030. This scenario presents the implications of this goal being

reached solely with LSS plants. According to a forecast by (Haiges, 2017), Malaysia’s installed

capacity will be 123000 MW in 2030. Currently, approximately 18.6 % of the installed capacity,

or 5800 MW, are supplied by renewable energy sources (PSIE, 2014). Consequently, 31,000 MW

net additions are required until 2030. The values below show the summary of this scenario and

state its feasibility and profitability.

The project revenue is based on feed in tariffs. Assuming that large scale plants have

capacities between 1 MW and 10 MW, a FiT rate of $ 0.24 per kWh is considered (with a

degression rate of 8 %), and an effective contract period of 21 years. Additionally, it is assumed a

discount rate of 6 %. Moreover, the payback period is calculated to estimate the number of years

required for the cash flow to equal the total investment, i.e. how quickly the cost of the investment

can be recovered. The payback period for this project is six years.

Table 6 – Scenario 30% RE Results

Total required installation capacity (GW) 31

Total required energy generation potential

(GWh per year)

68,000

Emission reduction (Gt CO2/year) 0.050

Total investment costs ($Billion) 65

Total annual costs ($MM) 240

LCOE ($/kWh) 0.090

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Figure 4 – Discounted Cash Flow

Figure 5 – Payback Period

ii. Rooftop potential

-80.00

-60.00

-40.00

-20.00

0.00

20.00

40.00

60.00

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

TIME (YEARS)

-70.0

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

TIME (YEARS)

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There are two types of solar PV connections: on-grid and off- grid. An on-grid connection

simply means that there is interconnection between the building and the national grid, allowing

any generated electricity from solar PV to be exported into the grid. This type of connection is

normally associated with the Feed-in Tariff (FiT) scheme. An off-grid connection on the other

hand does not have any link to the national grid. This type of configuration is normally connected

to a storage bank such as battery, which will store the electricity and is suitable for remote places.

In 2016 alone, a total of 3794 applications for PV under the FiT were approved with a total capacity

of 101,60 MW. For earlier attempts refer to Appendix A3.

• Land availability

The potential of BIPV in the residential, commercial, and industrial sector is huge. For the

residential sector, approximately 2,500,000 households are suitable for BIPV. An evaluation

conducted by Sopian et al assesses the rooftop area available in Malaysia for solar installations

after consideration of orientation, shading and other factors. A typical roof surface of a household

(detached homes), is approximately 10 m2.

Most commercial businesses are located in urban areas with a potential for PV application.

Approximately 45,000 building can be considered for BIPV. About 10 % of these buildings are

not suitable for BIPV due to shading or obstacles on the roof. Shopping mall and a business park

have an available PV installation of 1.0 x 103 m2.

The industry sector is usually bordering the urban centers. They offer large flat roof areas

averaging 2.0 x 103 m2. 10% of the buildings are again not suitable because of influencing factors

(shading, construction not able to carry additional weight). Thus, the total available surface for

BIPV is 110,000,000 m2 (Residential = 2.5 x 106 x 10 m2, Commercial = 4.0 x104 x 1000 m2 and

Industry = 2.1 x 104 x 2000 m2) (Sopian K, 2005).

• Generation Potential

A tropical country such as Malaysia is generally hot all year and experiences its rainy

season during the end of the year. For rooftop solar calculations, the same values regarding solar

radiation are assumed as in the LSS part (average of 6 hours of daily sunshine and average solar

energy received between 1400 and 1900 kWh/m2 annually).

The area considered in theoretical potential for 1kWp of solar installation is of 9.5 m2, while

the total area available is 110 MMm2. Therefore, the installation potential is about 12 x 103 MWp.

20

a) Results

As per the report by SEDA and IEA, cost breakdown for rooftop solar (including goods

and services tax in Malaysia) is shown in the following table.

Table 7 – Breakdown for Rooftop Solar 2016*

* (SEDA, 2018)

Taking average expenses for this project, the cost for a 1kWp system is RM 7,830 (USD

1977). The cost to attain maximum possible installation is RM 90.6 billion (USD 23 billion).

Moreover, the O&M (includes the cost to remove dirt and dust on the PV panel and the PV panel

direction adjustment) cost is RM 10/kW/year.

Summarizing the assumptions for the base case scenario: (i) One entity is taking hold of

all the rooftop area available for installation; (ii) The investment is made in the first year itself

without any loans; (iii) Derating factor=90%; (iv) Discount rate=6%; (v) Lifetime of the system=21

years; (vi) Current FiT rates @RM 0.89, guaranteed for 21 years by SEDA are considered for the

analysis (v) Dollar exchange rate: 1 MYR = 0.252573 US$ (Tenaga, 2015) , (SEDA, 2018).

21

Figure 6– Rooftop Solar Case Base Scenario: Discounted Cash-Flow SEDA FiT rates

As the calculations show, rooftop solar can be profitable with the current FiT rates. The

LCOE for the project is $ 0.1524/kWh. Even though the capital cost for this endeavor would be

high, it makes sense to encourage solar rooftop installations considering the long-term benefits.

Also, as subsidy is being provided to low-income households (if their electricity bill is less than

RM 20 (US$ 5.05), their whole bill is exempted from payment) which can be a large burden on

state funds.

IV. CARBON EMISSIONS AND TRADING POTENTIAL

Electric power consumption in Malaysia has grown substantially since 1970, when its

economic dominance shifted from the primary sector (mainly agricultural) to the secondary sector

(industrial) (Begum RA, 2015). Currently, economic development in Malaysia is moving towards

the services sector, which is an energy-intensive sector (Begum RA, 2015). Meanwhile, the

government has set a voluntary target to reduce GDP emission intensity 35% by 2030 (World Bank

Group, 2017) compared to 2005 levels as well as a goal of achieving high-income nation status by

2020 (NEAC, 2009). Carbon prices have the potential to reduce emissions because they increase

the price of carbon-based energy, which decreases demand for it (World Bank Group, 2017).

Pricing carbon can lead to substitution towards less carbon-intensive forms of energy and lower

demand for energy overall. Refer to the Appendix A4 for carbon prices in the EU market.

22

As a developing country, Malaysia joined the CDM voluntarily as one of the non-Annex I

countries. The CDM allows Annex I countries to invest in projects in non-Annex I countries and

receive credits for certified emission reductions (CERs). It can help industrialized countries meet

their obligations under the Kyoto Protocol in a cost-efficient manner while promoting sustainable

development in non-Annex I countries (Zainuddin ZB, 2017).

After joining the UNFCCC on 9 June 1993 and following ratification on 13 July 1994,

Malaysia officially became a member in the Protocol on 4 September 2002 (NRE, 2005). Many

projects in Malaysia have been successfully registered as CDM projects since then. This had

motivated other corporate sectors in the country such as power manufacturing, waste management,

forestry, oil and gas manufacturing, agriculture and transportation to proactively participate in

CDM project applications (Lim X, 2013). By August 2012, the CDM had received a total of 4460

CDM projects in the pipelines. Out of the total CDM projects, 69% are renewable energy projects

and 2.42% are in Malaysia.

In order to simulate the financial upside of an emissions trading scheme implementation in

Malaysia, the analysis for Rooftop Solar and Large Scale Solar takes into account that only 20%

of global annual GHG emissions are covered by carbon trading. The estimation is done considering

the report from (World Bank Group, 2017) in which it is mentioned that European Union

Emissions Trading System – ETS covers 40% of the emissions and in order to be conservative, it

is considered for the estimation that 20% of the emission reduction will be covered by the trading

scheme.

Also, considering the difficulty of forecasting carbon prices and the fact that Malaysia does

not have an ETS system already implemented, the prices used in the evaluation are based on the

EU ETS system. Therefore, given a €13.82 of CO2 European Emission Allowances price as

observed in April 2018 and no discount rate, the results for LSS and Rooftop Solar are shown

below. For more detailed information about the CO2 emissions and ETS systems, refer Appendix

A4.

23

Table 8 – Large Scale Solar and Rooftop Carbon Potential Results

The results demonstrate the carbon trading potential in both models. As the prices present

some variability and are different between ETS systems, the evaluation is considered conservative.

Note that the emissions trading scheme is still under development in Malaysia. The trend is that

the ETS will be implemented in the face of the international emissions trading market growth.

V. CONCLUSIONS

a) Challenges and further research for Large Scale Solar

Target conflict land use: For the implementation of large scale solar plants, much land is

required, and it is currently predominantly used for palm oil or covered by forests and reserves.

Further research is needed here to determine whether the large scale solar has higher economic

potential in the long term than the established palm oil industry and to which extent land is

available for both industries.

Moreover, there is a target conflict with forests since those cannot be removed without far-

reaching impacts on the environment, considering their CO2 capture (Turney, 2011). Other

important forest-provided services include the generation of wood and pulp, moderation of local

air temperatures and mitigation of flood waters by tempering the runoff hydrograph (Turney, 2011).

This last point in particular sticks out for Malaysia since it faces heavy rainfalls during monsoon

season (see next point).

The applied criteria to determine the available land included the exclusion of

environmentally sensitive areas, vulnerable areas like flood plains or areas vulnerable to landslides

and therefore is likely to already account for those mentioned concerns. The maps showing current

Emissions Reduction

(Gt CO2/year)

Carbon Trading Price (EUR/tCO2 )

Coverage Factor

(%)

Conversion Rate (EUR to US$)

Financial Upside (Million

US$/year)

Large Scale Solar 0.05 13.82 20% 1.18 163.08

Rooftop 0.02 13.82 20% 1.18 65.23

24

land use and the result of potential land sites display that no land was determined as ‘available’

that is currently forested.

Monsoon seasons: Heavy rainfalls during monsoon seasons are another major concern. It

is worth mentioning that the considered average values for solar radiation (per year) already

account for those seasons that are characterized by heavy rainfalls and high cloudiness. Moreover,

potential damages due to monsoons are already considered in the insurance costs and therefore

included in the LCOE. However, it is highly recommended to build LSS plants in regions that are

at low risk for monsoons (e.g. the west of Peninsular Malaysia). Additionally, storage solutions

are necessary, particularly for decentralized rooftop solar applications in order to guarantee

electricity even in cases of hour- or week-long rainfalls. Future research should therefore detect

whether those as ‘available’ determined land areas are potential monsoon regions, calculate the

required peak power generation capacity supplied by low-carbon and monsoon-independent

alternatives like natural gas, and investigate the cost impacts of decentralized storage solutions for

solar power that would enable solar-powered electricity supply even during monsoon seasons.

Energy security and safety: Conventional electricity generation is more reliable than solar

energy which depends on the amount of solar radiation and therefore does not generate electricity

during nights. Since storage options are expensive and not sufficient for large-scale

implementation yet, energy security is a reasonable argument against the 100% large scale PV

scenario.

Initial investment and financial support mechanisms: One of the main barriers for large

scale solar as shown in the calculations above is high capital investment. Banks often do not secure

financing of large-scale projects due to too low cash-flows for the perceived higher risks of

renewable energy investments (Petinrin, 2015). Consequently, governmental incentives, financial

support mechanisms, and the attraction of (foreign) direct investment from third party investors

are required to promote large-scale developments in solar installations (Huda M. O., 2017).

Public awareness: Benefits, particularly environmental and economic potential, legal

requirements, and financial aspects are not communicated effectively and therefore hamper

investments (Ab Kadir, 2010). Education and training in renewable energy and energy efficiency

is therefore urgently required and could be implemented in schools, universities, and mass media.

25

Externalities: Not only are environmental and social consequences (e.g. climate change and

health implications) not internalized in the price for electricity generated by conventional

technologies, but also are fossil fuel subsidized (Ab Kadir, 2010). Therefore, current prices create

an imperfect market and do not incentivize deployment of renewable energies. Reducing the

subsidies for fossil fuels and instead subsidizing renewable energy technologies helps to internalize

environmental and social costs of fossil fuels and will accelerate the installation of large scale solar

plants.

b) Challenges and further research for Rooftop Solar

Individual Installations:

A study was carried out to analyze the return from a solar PV installation as a form of

investment compared to other investment tools available in Malaysia. Malaysians could invest in

unit trusts, national unit trusts, Employee Provident Fund (EPF) government bonds, fixed deposits

and savings accounts. This study, however, indicates that the FiT return is one of the lowest

compared to most of the investment tools available in Malaysia, which further suggests that

Malaysians might not be interested in considering solar PV as a form of investment

(MuhammadSukki, 2011).

c) Regulatory Recommendations

Malaysia and SEDA have been very proactive in implementing modern and robust

incentives and policies in support of their RE goals. However, the current trend lines do not indicate

that their goal of 30% RE production in 2030 will be met (Chen, 2017). To optimize the current

policy structure, the following recommendations should be further analyzed.

The FiT system must be extended. As PV technology become cheaper, investment in

smaller, distributed systems will increase. Incentivizing individual consumers to take advantage of

the FiT will only further increase this effect. There are two areas where the FiT policy can be

improved: implementing a responsive degression model and improving funding for the FiT by

incorporating more RE friendly methods.

The current degression rate of 8% allows for a consistent valuation of projects to be

undertaken by investors. This stability is attractive but is better suited for more developed and less

volatile technologies such as wind or hydro. The variability in PV technology advancement needs

to be accounted for. Germany recently adopted a responsive system based on previous year market

26

conditions and PV capacity. This policy will slow the degression rate if new installations are low

or accelerate the degression rate if installations are high (Couture, 2010). However, in emerging

markets such as Malaysia, an even more responsive approach may be beneficial. Setting degression

rates to be reevaluated at intervals such as every two years will allow real pricing data to drive the

degression rates. While this will eliminate the stability that fixed rates provide, it will ensure that

accurate data influences the rate. In the potentiality of a technology price increase, this system also

accounts for that which would provide a risk mitigation to investors.

As previously stated, the FiT is funded by a 1.6% tariff on consumer electrical consumption.

This situation is more complex as the FiT funding tariff is the intersection with the rest of

Malaysia’s electricity generation market. Specifically, Malaysians pay significantly less than the

natural price for imported LNG due to large subsidies. Coal is also heavily subsidized (Bekhet HA,

2014). While the subsidy rationalization program, enacted in 2010, has effectively reduced these

subsidies to ease strain on the national budget, the cost does pass through to consumers. These two

factors combine to make an increase to the FiT quota unsupportable. Two novel solutions that

should be explored are Green Energy bonds and implementing a carbon tax.

Green Energy bonds allow for investors to commit to rising trends in renewable energy

investment while ensuring a stable return on investment. The return on these bonds would have to

be nominally lower than the return on FiT investing, but current trends in green bonds have shown

success in both China and India (Williams, 2017). Depending on the investment in these bonds,

additional projects could be undertaken beyond funding the FiT.

Implementing a carbon tax can also improve the funding for FiT. While this will inevitably

increase consumer energy prices given the large share of electricity generated by non-renewable

means, the internalization of the impact of the release of carbon is one of the Malaysian energy

market's greatest failures. Given Malaysia’s current market structure (3 utility providers who enjoy

a monopoly in their respective regions) and lack of commitment to energy investment, a tax is

preferable in the first stages in order to provide price certainties during cost valuation (Change.,

2009). As the program matures, a cap and trade policy can be implemented. Regardless, further

analysis on the scope and applicability of such a carbon tax should be undertaken immediately to

correct the effect of carbon externalities in Malaysia.

27

Moreover, the recommendations are not focused on total substitution of the gas and coal

sources but on a more diversified mix. Natural gas always arises as a highly attractive energy

source and combined-cycle and gas-fired power plants are an efficient option to guarantee energy

supply, especially during peak load hours and on electricity markets with high penetration of

renewable energy sources. Therefore, a more diversified mix does not represent backing down

from gas and coal development, but a broader range of investments and subsides.

d) Non-Regulatory Recommendations

Critical to encouraging both economic growth and adherence to their renewable portfolio

standards is private investment in renewable energy sources. Green energy bonds can serve this

purpose as well. For example, Apple has a large green bond portfolio and is seen a success in the

privatization of renewable energy capital acquisition. Encouraging this behavior in Malaysia will

enhance private funding for renewable energy.

As previously mentioned, Large Scale Solar projects were capped by SEDA-mandated

quotas but funded by private capital investment. This method of public-private partnership has

proven successful in utilizing the financial resources of private entities to meet the known enacted

standards. Finally, a system implemented in India of encouraging private power purchasing

agreements between building owners and solar energy generation firms is also promising, allowing

firms with capital available to finance the construction of solar generation plants and sell that power

to the building owners at a lower rate than traditional sources. This will require an adjustment to

FiT quotas to permit more rooftop solar allowances.

28

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32

APPENDIX

A1 ENERGY AND ECONOMY APPENDIX

Figure 7 - Installed Capacity (Million Kilowatts)

Figure 8 – Electricity Generation Mix (GWh) 2015

A2 LARGE SCALE SOLAR APPENDIX

Figure 9 – Location and capacity of large scale solar plants in Peninsula

Malaysia*

0

5

10

15

20

25

30

35

40

Total Electricity (Million Kilowatts)

Total Renewable Installed Capacity (Million Kilowatts)

Total Fossil Fuels Electricity Installed Capacity (Million Kilowatts)

10.74 %

46.29 %

41.04 %

0.03 % 1.05 % 0.85 %

Hydro

Gas

Coal

Oil

Diesel

Others

33

Table 10 – Yearly radiation in Malaysian towns

Figure 10 – Daily average solar radiation (MJ/m2 )*

* Peninsular Malaysia Electricity Supply Outlook 2017

34

LSS Base: Initial Costs

Figure 11 – Initial investment costs in Peninsular (%)

* ( Petinrin, 2015)

8.81

5.24

31.73

29.73

7.22

12.93 3.25 1.09

Management cost Land acquisition

Building, infra and civil work Solar modules

Inverters Installation cost

Electrical equipment Others (Legal Fees/General)

35

LSS Scenario analysis

Since the impact is difficult to fully grasp by those potential numbers, another scenario

shows the results for implementing a single large scale solar farm, here assumed as a 5 MW solar

park in Peninsular Malaysia.

(i) Scenario 5 MW Single Large Solar Park

The scenario shows the most tangible and practical results for implementing a single large

scale solar park in Peninsular Malaysia. The values below show that also the installation of a single

solar farm is profitable with the assumed numbers. But still even for a single plant, the initial

investment cost is high which is one of the main challenges of large scale solar. Project revenues

are based on FiT rates as described in the LSS main part.

Table 11 – Scenario 5.0 MW Results

Total installation capacity (MW) 5

Total energy generation potential

(GWh/year) 11

Emission reduction (kt CO2/ year) 6900

Total investment costs (MM$) 11

Total annual costs ($) 39000

LCOE ($/kWh) 0.10

NPV (MM$) 6.8

36

Figure 12 – Scenario Discounted Cash Flow

Figure 13 – Scenario Payback Period

-12

-10

-8

-6

-4

-2

0

2

4

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

TIME (YEARS)

-12

-10

-8

-6

-4

-2

0

2

4

6

8

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

TIME (YEARS)

37

LSS Sensitivity analyses

Since all parameters are based on several assumptions and since values are subject to

change in the future, a sensitivity analysis was conducted to observe how the results of the study

change based on variable discount rates, solar modules efficiencies, average solar radiation per day

and average implementation costs of large scale solar projects. The results are presented in the

form of graphics below.

Discount rate: The results indicate that the higher the applied discount rate, the higher the

levelized cost of electricity and the lower the net present value of large scale solar projects. The

basic discount rate of 6 % was used after reviewing several studies. One should have in mind that

a higher discount rate of up to 10 % is not unusual for solar PV projects (Hernández-Moro, 2013).

Figure 14 – Parameters Sensitivity Analysis Results: Discount Rate and LCOE

Solar module efficiency: Efficiency is likely to increase in the following years and decades

due to technology innovations and improved production technologies. The following graphics

show the potential for even higher solar energy generation, larger emission reduction with the same

available area due to efficiency increases.

Figure 15– Parameters Sensitivity Analysis Results: Efficiency and Energy generation potential

- 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Discount rate (%)

Discount rate and LCOE

LCOE ($/kWh) average household electricity price ($/kWh)

38

Figure 16– Parameters Sensitivity Analysis Results: Efficiency and Emission reduction potential

Average solar radiation per day: Daily solar radiation in Malaysia averages between 4 and

8 hours (Sabo, 2016). The installed capacity highly depends on that number. Lower values increase

the LCOE to the point where it is above the average household electricity price. Therefore, it is

strongly recommended to identify available land areas with longer average solar radiation

(particularly in northern Peninsular and Sabah) since the basic calculation of this report considers

only an overall average of 6 hours for Malaysia as a whole.

-

1.00

2.00

3.00

4.00

5.00

6.00

10 12.5 15 17.5 20

Efficiency (%)

Efficiency and Energy generation potential

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50

10 12.5 15 17.5 20

Efficiency (%)

Efficiency and Emission reduction potential

39

Figure 17– Parameters Sensitivity Analysis Results: Average radiation and required installation

capacity

Figure 18– Parameters Sensitivity Analysis Results: Average daily radiation and LCOE

-

0.50

1.00

1.50

2.00

2.50

3.00

4 5 6 7 8

Average daily radiation (h)

Average daily radiation and Required installation capacity

-

0.02

0.04

0.06

0.08

0.10

0.12

0.14

4 5 6 7 8

Average daily radiation (h)

Average daily radiation and LCOE

LCOE ($/kWh) average household electricity price ($/kWh)

40

Average implementation costs: As argued in the main body of this report, the current model

is static in the sense that it does not capture the expected increases in efficiencies and therefore

price drops per installed watt which leads consequently to the problem of constant LCOE for

different parameters (see section “economic analysis”). Therefore, consequences of different prices

per installed watt are displayed below. Since this report shows the total theoretical potential that is

achievable in the long-term future, lower prices per watt due to increases in efficiency are highly

probable. History shows and several studies projects that due to the laws of mass production and

experience learning, future costs will come down substantially in the next decades (Hernández-

Moro, 2013). Therefore, the current estimations with static prices is conservative. The graphics

below show how investment costs and LCOE increase.

Figure 19– Parameters Sensitivity Analysis Results: Average implementation cost and LCOE

-

0.02

0.04

0.06

0.08

0.10

0.12

1.5 1.55 1.6 1.65 1.7 1.75 1.8 1.85 1.9 1.95 2 2.05 2.1 2.15

Average implementation cost ($/W)

Average implementation cost and LCOE

LCOE ($/kWh) average household electricity price ($/kWh)

41

A3 ROOFTOP SOLAR APPENDIX a) Earlier attempts

Small Renewable Energy Power Program (SREP): Launched on the 11th May 2001 to

encourage the participation of private sectors in the RE sectors, and the possible sources recognized

under this program including solar, biomass, biogas, wind, and mini-hydro energy. The RE

developers can sell the generated electricity to utility suppliers, such as Tenaga Nasional Berhad

(TNB) in West Malaysia, or Sabah Electricity Sendirian Berhad (SESB) in Sabah. The electricity

is then sold to end-users through the National Grid. Despite of the high expectation (5.0 x 102 MW)

when SREP was launched, from 2001 to 2005, only 12 MW of RE from two projects went on-grid

(Wong, 2015).

The Malaysia Building Integrated Photovoltaic (MBIPV): to investigate the feasibility of

solar PV in urban areas, the Malaysia Building Integrated Photovoltaic (MBIPV) Technology

Application Project was launched on the 25th July 2005 with support and funding from United

Nations Development Program (PSIE, 2014). The main objective of this program was to reduce

long-term cost of BIPV technology in Malaysia, which would lead to an increase in BIPV

technology applications whilst reducing emissions of green- house gases. The MBIPV project

focused on market development for BIPV technology and on building national capacity in three

major areas: (i) policy and education; (ii) technical skill and market implementation, and (iii)

technology development support (Muhammad-Sukki, 2011).

Solar Home Rooftop Program (SHRP): Launched by SEDA Malaysia on 24th September

2012 to boost the public participation in RE generation. Through this program, Malaysians can

participate in the RE as individuals. At the end of April 2013, a total of 15 MW was approved in

the form of 1079 Feed-in Approvals (FiA) application for individuals. The number rose to 1316

applications with the total capacity of 17 MW (Wong, 2015) at the end of August 2013 (SEDA,

2018).

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A4 CARBON EMISSIONS AND TRADING APPENDIX

Figure 20 – CO2 European Emission Allowances

Table 12 – Weak points of EU and China ETS

43

* (Zhang M, 2018 )

Figure 21 – Share of GHG emissions covered

* (World Bank Group, 2017)

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Figure 22 – Prices in implemented carbon pricing initiatives

45