Renewable energy Environmental Policy Research Centre

support and overcoming

barriers

Original version presented by Dr. David Jacobs

Distinguished Visitor under Brain Gain Malaysia
TNBR Intellectual Discourse session, 29 October 2010, UNITEN
Edited 2017 for MEHB503
 Overview of presentation

International market development of RE

RE financial support in Malaysia
Power purchase agreement (PPA)
Feed-in Tariff (FiT)
Net Energy Metering (NEM)
Non-economic barriers
International market
development of
renewables
The share of renewables world-wide
The share of renewables world-wide
Renewable energy capacity growth

Increase in RE capacity despite

higher kWh/$ when compared
to fossil power generation
Annual additions of solar PV capacity
Annual additions of wind capacity
Investment in renewables
Targets and policies worldwide
RE financial support
 Traditional power purchase agreement (PPA)
REPPA during SREP period (2001 2010)
Based on conventional power supply
Local consumption Grid supply

RE generated

Highlights uncompetitiveness of RE against conventional

Relying on large scale but resources are relatively small
 Feed-in tariff (FiT)
Purchase obligation
Fixed tariff
Fixed payment duration
Local consumption Grid supply

RE generated
 Tariff calculation methodology
Todays international best practice:
Generation cost + reasonable rates of return
Benchmark: cost for renewable electricity
Transparent tariff calculation methodology should be published

Cost factors:

Investment costs (material and capital costs); Grid-related and administrative costs
(including grid connection, costs for licensing procedure); Operation and maintenance costs;
fuels costs (biomass and biogas)

Source: Mendonca et al. 2009

Tariff calculation methodology

Source: Kettha 2010

FIT rates in comparison RM-Sen/kWh
Malaysia Taiwan Germany Kenya Ontario Ecuador
(2011) (2009) (2010) (2008) (2008) (2007)
Biogas 28-35 21 34-50 22 30-59 30

Biomass 27-35 21 34-50 22 39-42 30

Small 23-24 21 27-54 25-37 37-40 16-18

hydro

Solar PV 85-178 112-130 103-142 --- 193- 162

 Eligible RE Sources / Technology
5 eligible resources (4 in 2011)
Biogas Biomass Small hydropower Solar PV

List can be expanded later to include other sources / technology Geothermal (2015)
Export capacity up to 30 MWe (or higher if approved by Minister)
Maximum share of TNB: 49%
 Size specific tariffs
Tariff differentiation according to size
Economies of scale

Market entrance for small producers

According to typical installation sizes, e.g.

0 kW < Tariff/Price 30 kW
30 kW < Tariff/Price 100 kW
100 kW < Tariff/Price < 2 MW
2 MW and above
 Size specific tariffs in Malaysia
Tariff differentiation according to size for small hydro and solar PV in 2012
Class/category of Hydro installation FIT rate (in RM per kWh)
Installed capacity up to & incl. 10MW 0.24
Installed capacity > 10MW, & up to & incl. 30MW 0.23

Class/category of PV installation FIT rate (in RM per kWh)

Installed capacity up to & incl. 4kW 1.23

Installed capacity > 4kW, & up to & incl. 24kW 1.20

Installed capacity > 24kW, & up to & incl. 72kW 1.18

Installed capacity > 72kW, & up to & incl. 1MW 1.14

Installed capacity > 1MW, & up to & incl. 10MW 0.95

Installed capacity > 10MW, & up to & incl. 30MW 0.85

 Size specific tariffs in Malaysia
Tariff differentiation according to size for biomass and biogas in 2012

Class/category of Biomass installation FIT rate (in RM per kWh)

Installed capacity up to & incl. 10MW 0.31

Installed capacity > 10MW, & up to & incl. 20MW 0.29

Installed capacity > 20MW, & up to & incl. 30MW 0.27

Class/category of Biogas installation FIT rate (in RM per kWh)

Installed capacity up to & incl. 4MW 0.32

Installed capacity > 4MW, & up to & incl. 10MW 0.30
Installed capacity > 10MW, & up to & incl. 30MW 0.28
 Bonus additional tariffs in Malaysia
Subject to bi-annual revision

Bonus additional tariffs for solar PV in 2012

Solar PV bonus (RM per kWh)

use as installation in buildings or building structures 0.25

use as building materials 0.23

use of locally manufactured or assembled solar PV modules 0.03

use of locally manufactured or assembled solar inverters 0.01

 Bonus additional tariffs in Malaysia
Bonus additional tariffs for biomass and biogas in 2012
Biomass bonus (RM per kWh)

use of gasification technology 0.02

use of steam-based electricity generating systems with overall efficiency of 0.01
above 14%
use of locally manufactured or assembled gasification technology 0.01

use of municipal solid waste as fuel source 0.10

Biogas bonus (RM per kWh)

use of gas engine technology with electrical efficiency of above 40% 0.02
use of locally manufactured or assembled gas engine technology 0.01
use of landfill or sewage gas as fuel source 0.08
 Tariff payment duration
Formerly: short periods (logic of
conventional electricity sector)

Nowadays: long payment durations

(usually 15-25 years ~ lifetime of power
plant)

Malaysia: 16-21 years

Necessary because of special

investment structure
Source: Mendonca et al. 2009
 Tariff degression

Tariff degression (automatic, annual reduction); because of technological learning,

economies of scale, rationalization, innovation pressure

Effects only new capacity, i.e. tariff for old plants remains stable over long period of time
Most countries only use it for solar PV (Italy, Spain) Source: Klein et al. 2008
 Tariff degression in Malaysia
Technology annual degression rate*

Solar PV 8.0%
Biomass 0.5 %
Biogas 0.5 %
Small hydro 0%

*applies to basic tariffs and additional bonuses (subject to annual revision)

Latest FiT rates listed at SEDAs website: http://seda.gov.my/

FiT financing mechanism in Malaysia

Source: Kettha 2010

 Net Energy Metering (NEM)
Priority for local consumption
Excess power sell to grid at real market price
Single bidirectional metering of electricity
Local consumption Grid supply

RE generated
 Net Energy Metering (NEM)

Introduced for solar PV in November 2016 as

FiT quota is exhausted
Complements FiT for the other RE sources
500 MWe allocated until 2020
Future smart-grid integration:
Allows for multi-tiered pricing of electrify according
to peak / off-peak periods
Enable energy storage to connect to grid
 Costs and benefits of
renewable energy support
 Costs and benefits of RE in Malaysia
Costs:

RM 6.2 billion by 2020 for 2080 MWe

Benefits:

RM 2.1 billion savings for avoided external costs (42 million tonnes of CO2)
RM 19 billion of loan value
Tax: RM 1.75 billion
52,000 jobs
Source: Kettha 2010
 Overcoming
Non-economic barriers
 Administrative Barriers
High number of institutions (France: 27 for wind)
High number of rejections Institution A
Institution B
High administrative costs Institution C
Long lead times
RES-e
Institution D
developer

Institution E

Institution G
Institution F
 Administrative Barriers
Solution: One-stop-shop institution

Institution A
Institution B

Institution C

One-stop
Institution D institution RE developer
(SEDA) Co-ordinate all authorities that are
involved
Institution E
Provides assistance to applications
Lighter licensing procedures for
small projects
Institution G
Institution F Enforcement of offences
 Grid related Barriers
Uncertainties in grid access and availability
Insufficient grid capacity
Solution:
Fair and transparent grid connection procedures (Grid Code)
Data need to be verifiable and disclosed by grid operator
Clear connection approach; deep vs shallow vs super shallow
National grid expansion plans has to be prepared well in advance
 Grid related Barriers
Cost sharing methodologies for grid connection charging

Source: Auer et al. 2007

 Grid related Barriers
Cost sharing methodologies for grid connection charging

Deep Shallow Super Shallow

Source: Auer et al. 2007
 Social Barriers
NIMBY effect
Lack of awareness on positive attributes of RE

Solution:
Clear information and early participation in decision making process
National tax/levy schemes can increase social acceptance
Local taxes to benefit local community
Inclusion of local communities with direct benefits e.g co-ownership