FiT-ted for greener energy push

Thestar: Saturday November 13, 2010

PETALING JAYA: The implementation of feed-in-tariff (FiT) in the middle of next year will put Malaysia on a sustainable path towards promoting a renewable energy (RE) market, said experts. According to the RE/Malaysia Building Integrated Photovoltaic (MBIPV) national project team under the Energy, Green Technology and Water Ministry, the FiT system has, over the years, proven to be an effective and efficient mechanism to encourage the development of sustainable markets for RE.
For example, in Germany, the RE capacity has been raised substantially in just 10 years after the introduction of FiT by its government, making the country the world’s leader now in the technology. Last year, Germany’s RE contribution to total electricity consumption stood at 16.1% and the technology was estimated to have created 300,000 green jobs.

The proven success of FiT is the main reason for its growing popularity all around the world, including in many developing countries such as India and Mongolia.
In Malaysia, FiT forms part of the RE Act that will be tabled in Parliament next month for first reading.
Once passed, it is expected to take effect in the middle of next year, and by then, individuals or business owners can sell the electricity they generate from renewable resources to utility companies such as Tenaga Nasional Bhd (TNB) and Sarawak Energy Bhd at a fixed premium rate for a specific period.

For now, the RE resources eligible under the proposed FiT are biomass (from plantation, agriculture, forestry residues and solid waste); biogas (from plantation, agriculture, forestry residues, animal waste, landfill gas and sewage gas); mini-hydro; and solar photovoltaic.

Nevertheless, consumers may have to pay a little bit more for their monthly electricity bills to support the higher charges being levied on RE next year. A 1% tariff hike to cover the costs associated with the FiT scheme may come into force as early as January, but this will only affect users that consume more than 200kwh a month.

Under the proposed RE Act, a new RE Fund will be created, with contributions coming from the 1% levy on high users’ electricity bill. The RE Fund will be managed by the Sustainable Energy Development Authority (SEDA).

RE/MBIPV national project leader and chief technical adviser Ahmad Hadri Haris (pic) told StarBizWeek via email: “In this case, TNB will disburse the FiT payment to all FiT holders. TNB will only cover a certain displaced cost and claim the difference between the displaced cost and FiT payment from the RE Fund.”

(The displaced cost is the average cost of generating and supplying electricity through the utility’s supply line and up to the point of interconnection with the RE systems.)
“TNB will also be paid an administrative fee for managing the billing and payment system for these FiT owners,” Hadri said.

“As such, it is a win-win solution for all parties – the public can install an RE system and generate revenue; TNB does not have to bear the full cost of FiT but gets the renewable electricity; and the country would benefit from RE deployment such as creation of new green jobs.”