What are the roles of the Sustainable Energy Development Authority Malaysia (Seda) in commercialising tonnes of energy-related researches in universities? Abdul Hafis, Kuala Terengganu
In the National Renewable Energy Policy and Action Plan approved by the Government in 2010, five strategic thrusts have been identified to spearhead the development of renewable energy (RE) industry in the country. Under the Strategic Thrust 4: Enhance RE Research and Development, Seda is responsible to ensure the implementation of a systematic research and development (R&D) programme leading to innovative products and services.
To achieve such feat, Seda is working with other stakeholders including public research institutions such as universities on the R&D action plan, which includes articulation of research areas and identifying potential market for commercialisation of RE researches that have been conducted. Seda is working with Ministry of Science Technology and Innovation which is responsible monitoring the R&D efforts financed by the Government.
How are licences awarded to players of RE production? How do you ensure the award process is fair and transparent? Bernard Lim, Penang
Seda has introduced an on-line system called the e-FiT to process the feed in tariff (FiT) applications. The e-FiT is designed to ensure the FiT mechanism is implemented in a transparent and fair manner. On application, the applicant will key in their data accordingly, submit the required documents and upon successful validation, the quota is pre-allocated. Feed in Approval (FIA) is only given once verification is completed and the documents are in order. The quotas are allocated on a first-come-first-serve basis and outcomes are dynamically displayed on Seda's website, www.seda.gov.my. In order to encourage participation from house owners in renewable energy, there is an allocation of solar photovoltaic (PV) for the individuals and house owners are encouraged to apply.
What are the advantages and disadvantages of renewable energy (RE)? How can consumers and industry benefit from it? Eugenie Devan, Bangsar
RE refers to electricity generated from recurring and non-depleting indigenous resources. RE has become an important alternative source of energy because fossil fuels sources are finite and subjected to the volatility of world's market prices. RE generates a minimum amount of carbon dioxide and is important to mitigate the climate change phenomenon the world is currently facing. RE industry has been able to create a new economic growth area and provide employment for the citizens. RE is also able to provide a fairer wealth distribution and engages every citizen and community in activities towards protecting the climate and environment.
The major difficulty to pursue RE growth in Malaysia is gaining public's acceptance of RE. A successful RE deployment in a country requires a paradigm shift because the current infrastructure and mind set is for conventional power generation like electricity and we have been comfortable with this for more than 50 years. The public is also slow to accept RE because the Government has kept the price of electricity low by subsidising gas from Petronas.
I anticipate the reducing price trend of RE technologies and the eventual subsidy rationalisation carried out by the Government will create a conducive environment for RE to grow in a more sustainable manner.
Should we take advantage of the big solar manufacturing in Malaysia and ask them to sell to us? Mutuamma Kalaidevi, Setapak
Yes, we should but not all the big solar PV manufacturing companies in Malaysia produce the end product, such as the PV modules that are ready for use. Some companies are into producing only wafers and solar cells and the final product is assembled elsewhere. I agree that we should take advantage of the industries producing the end-products and increase the domestic market size of these products.
Seda is seriously looking into this in our efforts to boost the use of PV by house owners to grow the local markets for PV systems.
Solar is straight forward but biomass needs feedstock. Do we have enough feedstock for biomass? Aidan Lee, Puchong
The National Renewable Energy Policy and Action Plan sets a target of 4,000MW of installed RE capacity by 2030, raising the RE portfolio to 13% from less than 1% today. RE from biomass sources is expected to reach 1,340MW by 2030. Malaysia does have huge biomass potential and citing figures from the National Biomass Strategy 2020: the palm oil sector generates the largest amount of biomass, estimated at 80 million dry tonnes in 2010. This is expected to increase to about 100 million dry tonnes by 2020, primarily driven by increases in yield. While this may augur well for the biomass industry, in reality the palm oil waste has multiple usage especially the empty fruit bunches, mesocarp fibres and palm kernel shells. For this reason, the FiT has been designed where the RE technologies, which rely on the feedstock supply, has a tenure of 16 years compared with 21 years for those on energy harvesting mode (solar and hydro). We could not ascertain definitely if the feedstock is enough but Seda's estimates and targets have been very conservative taking into consideration other usage so we should be in the right position.
Why is Seda taking so long to come up with a financial scheme for RE investors? Should our bankers be more involved in RE?PS Tan, Seremban
The Government has initiated the Green Technology Financing Scheme (GTFS) which enables green technology producers and users to secure financing from a consortium of banks where 60% of the loans are guaranteed by the Government. Seda understands that RE players too could secure financing from the GTFS and I think it is a very good start for the industry. However, Seda has been in talks with banks facilitated by Bank Negara to explain more about the FiT mechanism and to understand the perceived risk for RE projects with feed-in approvals. Seda is in the midst of compiling the findings and input from the banking sector, which we will present to Bank Negara.
Currently, we are already paying 1% levy to the RE fund. Why do we have to pay another 1% to the fund? Where is the money going? Hannah Ho, Muar
Under the National Renewable Energy Policy and Action Plan, to achieve the RE target of 2080MW in 2020 and pay for the premium tariff for RE, which will be generated, we need a specific amount in the RE Fund. The RE Fund is established under the RE Act 2011, which is managed by Seda. I would like to clarify to consumers the RE Fund is ring-fenced under Section 23 and Section 25 of the RE Act 2011, which means it could be used for payment of FiT to the RE players only. To ensure transparent and efficient way of managing the RE Fund, Seda is mandated under the law to submit the reports of RE Fund to the Parliament annually. The Government has in principle agreed for requirement for such fund and we have obtained the approval of collecting the 1% additional tariff from electricity consumers during the tariff revision implemented in June 2011. The next 1% levy from the electricity tariff will only be implemented upon approval by the Government.
Malaysia is blessed with RE sources. However the RE capacities are under-utilised, particularly from biomass and solar energy. How is Seda addressing this? Hassan Malek, Kajang
In the past, RE projects have not been able to take off in a sustainable manner because of the lack of reasonable returns and the Government had left it to the free market for RE to grow. The implementation of the Fit mechanism ensures that RE becomes a viable and sound long-term investment for companies, industries and also individuals. This is done by guaranteeing access to the grid and setting a favourable price per unit for RE ensuring a reasonable return on investment. Furthermore, the FiT allows a guaranteed-fixed payment over a duration of 16 years for biomass and biogas resources, and 21 years for small hydropower and PV technologies. With the newly implemented FiT, the Government expects there will more investment in RE industries not just for power generation but also for supporting industries.
Should we introduce a carbon tax for fossil-fuelled power generation? Paul Tan, Ipoh
Honestly I think we should. However introducing a carbon tax will result in an increase of energy costs whether in the form of petrol/diesel or electricity, which currently majority is of fossil fuel sources because the purveyors would want to recoup the costs from the retail prices. Principally the 1% levy is based on polluter's concept meaning the more electricity you consumed, the more one contributes to the RE Fund. Electricity consumers who use more than 300kWh a month will pay the additional 1% charge on the monthly bills, which will encourage them to use electricity efficiently. Power generation in the country is still largely fossil-fuel base and is heavily subsidised. Malaysia will need to wean off these subsidies because it is putting a lot of burden on the Government and consumers would not be prudent when using energy.
Why is there so much exuberance over PV here currently? Meng, PJ
Yes, it is true that PV has the highest take up rate when the FiT mechanism was implemented on 1 December 2011. Although many had felt this was largely due to the lucrative returns from the FiT rates (PV being the highest compared with the other renewable resources), data from the feed-in approval applications showed that PV has the lowest average Internal Rate of Return (IRR) compared with the other sources (small hydro, biomass, biogas). Solar has an IRR of less than 11% while other renewable resources could have higher. We have been informed that some local banks prefer the IRR for PV projects to be between 12% and 15% making it very challenging for the players to secure funding.
PV quota take up is high compared to the rest of the renewable resources because the entry administrative barrier to the project is least compared to others. For example, Seda is aware that for small hydro projects, the state authorities need to get the comment and approval from no less than 30 different departments and agencies before an approval can be issued. For biomass and biogas, the major issue is securing feed-stock and supply over the next 16 years.