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| KeTTHA's website |
On
Monday, 2nd December 2013, The Ministry of Energy, Green Technology
and Water (KeTTHA) has announced the adjustment of the surcharge on electricity
bill for the Renewable Energy Fund from 1% to 1.6% starting January 2014. This
review of electricity tariffs also affects Sabah consumers for the first time
as they are imposed with 1.6% of surcharge in the electricity bills and it
becomes shocking to most people out there. However, do all of you realize the
rationale behind the review of electricity bills in Malaysia and its importance
in the long run? Allow me to explain the small steps that have been taken to
ensure a better future for our younger generation in Malaysia.
As
we are all aware, 90% of Malaysia’s supply of electricity is generated by
fossil fuels such as coal, petroleum and natural gas. At the same time, these
sources are also identified as major causes of global warming that changes
climate throughout the globe. It causes flood, drought, hurricane and many other
natural disasters that threaten the lives of human beings, animals and our
mother earth. Besides, the depletion of fossil fuels in many parts of the world
causes fuel hike that together constraint the lives of the earth’s citizen day
by day. It is time for us to shift to a greener, much more efficient
alternative source of energy. The Government of Malaysia has initiated an
aggressive implementation of renewable energy resources such as solar, biomass,
biogas and small hydro power to generate alternative electricity in Malaysia.
| www.seda.gov.my |
The
importance of the renewable energy sector in Malaysia has been recognized since
the Eight Malaysia Plan when the Five Fuel Policy was introduced in 2001 to
include alternative sources of energy in our daily consumption. The development
of renewable energy in Malaysia were a bit slow given the fact that it took so
many years before it was actually implemented in the national level. In 2011,
Sustainable Energy Development Authority (SEDA) Malaysia is finally formed
under the Sustainable Energy Development Authority Act 2011 [Act 726]. SEDA
Malaysia becomes the implementer of the Feed-in Tariff program for the
development of Renewable Energy in Malaysia.
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| www.seda.gov.my |
However,
how does the Feed-in Tariff (FiT) system works? For your information,
Malaysia’s Feed-in Tariff system requires the Distribution Licensees (DLs) such
as Tenaga Nasional Berhad 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. 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.
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| www.seda.gov.my |
The
Cabinet has also agreed for the 1% surcharge on consumers’ electricity bills
that has been gazetted and collected from consumers. This 1% surcharge is
needed to achieve the target capacity of renewable energy in the long run. As
of 2013, 1% surcharge is still 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
at homes or in industrial companies. But as of January 2014, this tariff will
increase 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.
Why
is this increase necessary in the long run for the development of renewable
energy sector in Malaysia? The additional 0.6% surcharge imposed for the
electricity bills for the renewable energy fund is to ensure energy security
and autonomy. In Malaysia, it is not only sufficient to have energy security
but it is also essential that the country has its indigenous supply of energy
resources that is renewable and sustainable in the long run. The increasing use
of renewable resources creates an energy source which is autonomous and in
return creates a more resilient economy.
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| www.seda.gov.my |
In
Malaysia, under the National Renewable Energy Policy and Action Plan (2010),
the country is expected to achieve 73% of renewable energy in the total power
generating capacity by 2050. In order to achieve this target, certain
assumptions are put in place and one of them is to implement the FiT by 2011.
Today, Malaysia is moving towards 1.6% surcharge on electricity bills for the
Renewable Energy Fund and this is well below the surcharge implemented in all
other countries. It should also be noted that in countries such as China,
Germany, Japan and Thailand, the electricity tariff is unsubsidized by the government.
Therefore, a 1.6% surcharge imposed on a subsidized electricity tariff is not
foreseen to be a huge economic burden to the people.
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| www.seda.gov.my |
Alright,
I guess that is all for today and I hope that you can consider the rationales
behind the increase of electricity surcharge in Malaysia. If you have further
questions, please visit www.seda.gov.my
for details on the Feed-in Tariff mechanism. You can drop off your comments
below and I will try as much as possible to answer your questions based on my
basic understanding about SEDA Malaysia and the 1.6% increase of surcharge.
Take care and God bless, and please use energy efficiently!
