SEDA NEWS: FiT - Road to renewable???

Malaysia Aims to Kick Start Renewable Sector with New FiT
 

PUTRAJAYA, NOVEMBER 1 (The Recharge News) -- A new feed-in tariff (FIT) system due come into effect on 1 December will drive the take-up of renewable energy in Malaysia, and at the same time help the country meet burgeoning energy demand, its energy minister says.

Dato Sri Peter Chin, minister for energy, green technology and water resources, says Malaysia’s sophisticated FIT mechanism – applying to biomass, biogas, small-scale hydro and solar – aims to reward individuals, businesses and communities investing in renewable energy.

The tariff system will cover a range of quotas for 2012 to 2014. From next year 282MW will be covered by the scheme; in 2013, 262MW will be covered and 2014’s quota will rise to 304MW.

Chin admits Malaysia has failed to get behind renewable-energy generation over the past decade.

“In the ten years since the implementation of [the Fifth Fuel Policy], we found out the high cost of generation which makes it unattractive for utility companies to buy renewable energy from renewable energy generators,” he tells the Clean Energy Expo conference in Singapore.

“Our subsidy on fossil fuels adds to the problem because the utility companies will always favour the least cost option in dispatching the power required,” he adds.

This has created an “uneven playing field” and is reflected in the “dismal achievement” where by the end of 2010 only 63MW has been successfully connected, which is only 18% of the 350MW target that was set under the Ninth Malaysian Plan (2005-2010), he says.

“The time is right for the government o consider renewable energy to play a significant role for future power generation,” Chin says.

He says the government has also allocated 300m ringgit ($96.4m) as the initial start for the Renewable Energy Fund.

“My ultimate hope is that Malaysia will become one of the leaders within the ASEAN region with our systematic and structured approach for renewable energy development in the country,” Chin says.

The country’s domestic electricity utility, Tenaga Nasional Berhad, has forecast an increase in electricity growth of 6.5% in 2011, versus 2010, driven by commercial and business customers.

The country’s power planning requires 10.8GW of new generation by 2020 and at the same time about 7.7GW of existing generation capacity will need to be retired. By 2020, total installed capacity is predicted to increase by 16% from 2011 levels.

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RE Quota In many countries where the FiT system is implemented, caps on RE installed capacities are highly discouraged as these caps limit RE growth and constrain its impact. The avoidance of such caps is possible in countries where electricity tariff is deregulated. However, in a regulated electricity market such as in Malaysia, the funding source for FiT is limited to a fixed percentage imposed on the utility’s electricity revenue. Therefore, caps are essential to ensure that there will be adequate funds to make the FiT payments to RE generators. Once the electricity market in Malaysia is deregulated, or when FiT has been operating for a considerable period of time, then removal of the caps may be possible.

Capping is achieved by putting a capacity limit or quota for new feed-in approvals in respect of each renewable resource for 6-month windows over the next 3 years. The reason for the 6-month window frame is to limit the waiting period for the next available set of quotas to a maximum of 6 months.

Recap figure: (Allocation Availability????)

Available MW installed

PV capacity for FiT Application	2011 / 2012		2013		2014
	H1	H2	H1	H2	H1	H2
Individual (≤ 1 MW)	3.50	3.50	3.00	3.00	3.00	3.00
Non-individual (≤ 1 MW)	3.50	3.50	3.00	3.00	3.00	3.00
Non-individual (> 1MW)	20.00	20.00	20.00	20.00	20.00	20.00

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