Hello my loyal blog readers! We are back again in this second blog post regarding renewable energy and energy efficiency effort by Sustainable Energy Development Authority (SEDA Malaysia). SEDA Malaysia is the implementer of Feed-in Tariff program for development of renewable energy in Malaysia. The importance of the renewable energy sector in Malaysia has been recognized since the Eighth Malaysia Plan when the Five Fuel Policy was introduced in 2001 to include alternative sources of energy apart from conventional energy sources – oil, coal, gas and large hydro's.
Subsequently, Small Renewable Energy Power Program (SREP) was introduced to further promote the development of RE in Malaysia. The development of RE within the last 2 decades were slow given the fact that we have only managed to achieve 61.2MW by the end of 2010 which is only 17% from the 350MW target that has been set under the Ninth Malaysia Plan. This is due to various barriers faced by the industry.
There were many issues revolving around the implementation of FiT mechanism in Malaysia during that time. First of all, it was not easy for Minister of Energy, Green Technology and Water, Yg. Bhg. Datuk Seri Peter Chin to announce an average 8.35% increase in electricity tariff for both industrial and commercial consumers starting from June 1st 2011. This was due to the decision made by the government to gradually withdraw gas subsidy until December 2015 in Malaysia.
The increase was largely contributed by an increase in the natural gas price to the power sector from RM 10.70/mmBtu to RM 13.70/mmBtu with effect from June 1st of the year. Some of the public members do not understand this situation and blame the ministry and the government entirely. The public must understand that electricity price may be increased every six months due to the fuel cost pass-through mechanism that the government has adopted.
To help the public with the recent increase of energy price, SEDA Malaysia implements the Feed-in Tariff mechanism to explore renewable energy potential in order for the country to not be dependent solely on natural gas to produce electricity. Malaysia’s Feed-in Tariff system requires the Distribution Licensees (DLs) such as Tenaga Nasional Berhad and NUR Distribution Sdn. Bhd. (NUR) with this year’s addition of Sabah Electricity Sdn. Bhd (SESB) to buy from renewable energy producers the electricity produced by them. FiT rates are set by SEDA Malaysia with approval from KeTTHA to pay for the renewable energy supplied to the electricity grid for a specific duration.
Malaysia’s FiT applies quota system which will effectively limit the growth of each renewable energy source. The system allows interested energy producers to vie for limited megawatts yearly when they apply to be feed-in approval holders. The approved quota for the individual or company will allow the producers to make money for the next 20 years backed by a fixed payment scheme that does not depend on subsidies or economic vagaries. This quota system is important in the development of renewable energy so that premature cuts in promised tariff rates can be avoided and not making the public furious about it. Setting the quota will definitely ensure that a planned preparation for strong foundation in the initial years can be guaranteed.
By having access to the grid and setting a favourable price per unit of renewable energy, the FiT mechanism also ensures that renewable energy becomes a viable and sound long-term investment for companies, industries and individuals. This can happen very easily if consumers are registered under SEDA Malaysia as one of the producers of renewable energy through solar panels, small hydro power, biomass and biogas at their homes or private lands.
The Cabinet has also agreed for the surcharge on consumers’ electricity bills that has been gazetted and collected from consumers. 1% surcharge is needed to achieve the target capacity of renewable energy in the long run. As of 2013, 1% surcharge was imposed on all electricity customers and domestic electricity consumers are obliged to contribute to the surcharge only if their monthly electricity consumption exceeds 300 kWh or RM 77 a month.
This money is channelled into the Renewable Energy Fund and administered by SEDA Malaysia to pay the premium Feed-in Tariff rate to those producers who generate electricity from renewable resources at homes or in industrial companies. However, as of January 2014, this surcharge increases by 0.6% to be 1.6 % for current electricity users. This increase will also affect the consumers in Sabah and Wilayah Persekutuan Labuan as they are charged with 1.6% of their electricity bills for the first time. Please refer to www.seda.gov.my for more news and information about this tariff.
It is hoped that Malaysians will understand the rationale of FiT tariff mechanism and the surcharge implemented to the electricity bills based on the above reasons. Renewable energy and energy efficiency effort will always be the methods that can ensure Malaysia move towards a greener and feasible energy growth, all this done for our future generation. Thank you for reading, take care and God bless.