Solar PV in Malaysia: The Sun Shines but We ain’t Got No Power

Ushering a change to an entrenched system is never an easy task so kudos to SEDA and KETTHA for paving the way to renewable energy in Malaysia. The establishment of the Feed-In-Tariff (F.I.T.) and renewable energy quotas has progressed in fits and starts but very clearly, we can conclude that the quotas set for Renewable Energy (RE) Installations, in particular for solar PV, are decidedly too small to be of significance to the energy sustainability of Malaysia.

Benchmark
Looking just across our border, Thailand has installed 228 MW of solar energy (connected and selling to grid, as of March 2012). Thailand’s solar target (Alternative Energy Development Plan 2012-2021) is now the highest among ASEAN countries, aiming for 2000 MW of solar energy by 2021. 

In almost innocuous fashion, one of our regional neighbours has leapfrogged over us in total PV installed. In fact, Bangladesh has already installed 1.3 million solar home systems (PVs off-grid) equating to 65 MW and they did it without an F.I.T. system (though it should be noted that they had the initial help of the World Bank and low-cost loans from Grameen Shakti Bank, an offshoot of Grameen Bank). The Bangladeshi government has already aimed to increase RE generation to 500 MW by 2015 which is around 9% of their current generation. 

Malaysia,on the other hand, has a modest national target of 5.5% RE power mix by 2015, i.e. approximately 985MW, of which the expected PV component is merely around 55 MW, although this is expected to be revised upward pending new quota releases in Quarter 1, 2013.

To date, Malaysia has
Obstacles
Industry players in Malaysia are of the opinion that both the miniscule quotas combined with the first-come first-serve ‘lottery’ system are choking the solar PV industry and making the PV business unsustainable. It makes it impossible to market PV installations in a meaningful way when you cannot guarantee the customer that they can get the quota. In particular, for commercial or industrial sized projects, this hampers the financial planning of the project. Ultimately, the limited quota stutters consumer demand.

Various reasons have been proffered for the limited PV quota, one of which is that there are not enough funds to support the F.I.T. rate which comes from a surcharge on consumer electricity bills. The current surcharge is 1% and the government is unwilling to impose a more realistic 2 to 3% surcharge presumably to avoid antagonizing the citizens of Malaysia who have been spoiled by years of subsidized electricity costs. Therein lies the fallacy. Why?



Demystifying the rationale for the limited PV quota

Fact #1
The 1% surcharge is only imposed on customers whose electricity consumption is more than 300kWh per month which means that approximately 70% of TNB customers don’t pay the surcharge.

Fact #2
Consumers who practice even turning off some lights and their standby electrical equipment can easily reduce their monthly electricity bill up to 3 to 5% without even blinking an eye.

Fact #3
Consumers who change their light bulbs to energy efficient LED and/or CFLs will reduce their monthly electricity bill another 5 to 15% depending on their lighting needs and use of other electrical appliances.

Fact # 4
Consumers who increase their air-conditioning thermostat to 24-25 degC can reduce their monthly electricity bill from 5 to 20% depending on how low their previous temperature settings were. 

Fact # 5
Consumers who upgrade their centralized air-conditioning systems or split unit air-conditioning systems which are more than 12 years old can generally reduce their monthly electricity bill 10 to 20% depending on how inefficient their previous equipment was how and often they used air-conditioning.

Fact # …
There are so many more ways to save electricity it’s not even funny.

Plain Question
If it looks like consumers (residential, commercial, and industrial) are all capable of saving energy cumulatively in the range from 5 to 50%, why would a 2% surcharge on only 30% of the consumers be a concern?



an Interim Solution to enlarging the PV quota
1.      Increase the surcharge to 2% for the top 20% (+/-) of consumers
2.      Widen the bandwidth of consumers paying the surcharge


FOR EXAMPLE,

Residential consumers
CURRENT POLICY – Consumers who use more than 300kWh per month (approximately the top 25% of residential consumers), pay 1% extra on their electricity bill. 

PROPOSED POLICY - Set another level for e.g. at 500kWh as the next band of contribution, then those above 500 kWh will pay another 1%.

Industrial and Commercial consumers,
CURRENT POLICY – Consumers who use more than 300kWh per month pay 1% extra on their electricity bill. 

PROPOSED POLICY - Establish the band where >60% of the consumers are excluded, therefore for the consumers in the top 40% of consumption, impose a 1% for RE, and for the top 20% of consumers, impose another 1%.

All consumers
Continue gradually increasing the bandwidth of consumers that can pay for the F.I.T. for the next few years and/or increase the surcharge rate.

This could generate enough funds to

open up more PV quota for the F.I.T. ,

don’t you agree?

Please share your thoughts with us….
 


revamp The lottery system
It seems there are moves afoot to correct the weaknesses of the previous lottery system for FIT applicants.

SEDA has starting issuing notices to the FIAH (Feed-in Approval Holders) who have not met the installation milestones, as a preliminary step to revocation unless otherwise remedied. 

SEDA has also announced a new system called e-FIT (“…an online system to process the Feed-in Tariff (FiT) applications to ensure good governance, transparency and openness of the feed-in tariff mechanisms”).

We are awaiting further announcements on a date and venue of the briefing by SEDA for the new e-FIT system. Stay tuned. 


REFERENCES
Islam S., Alertnet, “Bangladesh sees a surge in use of solar energy”, http://www.trust.org/alertnet/news/bangladesh-sees-surge-in-use-of-solar-energy/

Thailand’s Energy Policy and Planning Office (EPPO), March 2012, http://www.eppo.go.th/index-E.html

Kementerian Tenaga, Teknologi Hijau and Air (KETTHA), National Renewable Energy Policy & Action Plan, 2011.

Datuk Loo Took Gee, Ministry of Energy, Green Technology & Water Malaysia (KETTHA), “International sustainable energy summit 2012: An overview of the national sustainable energy framework”, 7 November 2012

Sustainable Energy Development Authority Malaysia (SEDA) website