Ahmad Hadri Haris, the chief technical advisor to Malaysia's Minister of Energy

1. Renewable Energy & Feed-in Tariff
Ir. Ahmad Hadri Haris
hadri(a)mbipv.net.my
Chief Technical Advisor
RE/MBIPV National Project Team
Ministry of Energy, Green Technology & Water
29th December 2010

2. Disclaimer
The information provided is within the context of the
National Renewable Energy Policy and the Renewable
Energy Bill currently tabled in the Parliament.
The information has been compiled in good faith.
However, the information may change without prior
notice.
2

3. Malaysia’s Renewable Energy Initiatives
8th Malaysia Plan (2001 – 2005)
RE as the 5th fuel
Implied 5% RE in energy mix
9th Malaysia Plan (2006 – 2010)
300 MW in Peninsular Malaysia
50 MW in Sabah
3

4. RE Support & Promotion Mechanisms
Support Mechanism Promotion Mechanisms
 Approvals & licenses  Pilot projects & case studies
 REPPA: RM/kWh 0.21 (biomass,  Capacity building & lessons
biogas); 0.17 (hydro), net-meter (PV)  Financing & policy developments
SREP (Small Renewable UNDP-GEF Biomass Power UNDP-GEF Malaysia Building
Energy Power) Programme Generation & Demonstration Integrated Photovoltaic
(Biogen) Project (MBIPV) Project
Launched in 2001 Launched in 2002
Launched in 2005
Objectives: Objectives:
To encourage Objectives:
To demonstrate biomass
production of RE by and biogas grid-connected To reduce unit cost of
small power generators power generation projects solar PV technology by
(10MW) and allow the 20% and increase capacity
sale of generated by 330% via PV
electricity to utilities applications in buildings
Fiscal incentives: Pioneer Status or Investment Tax Allowance;
import duties and sales taxes exemption. 4

5. Renewable Energy Status
8th Malaysia Plan (2001 - 2005)
RE as the 5th Fuel
Implied 5% RE in energy mix
9th Malaysia Plan (2006 - 2010)
Targeted RE capacity to be connected to power utility grid:
300 MW in Peninsular Malaysia, 50 MW in Sabah
Targeted power generation mix:
56% NG, 36% coal, 6% hydro, 0.2% oil, 1.8% RE
RE capacity as of 31st December 2009:
Connected to power utility grid: 55.5 MW
Off grid (private palm oil millers & solar hybrids): 440 MW
5

6. Key Issues Affecting RE
1. Market failure exists:
The RE market “fails” due to misuse of monopsony power and information asymmetries;
the RE market is also constrained by financial and technological factors.
2. Constraints:
Inherent factors that constrain the performance of the market: Economic, Financial,
Technological.
3. Arbitrary price setting:
RE prices set arbitrarily.
4. Tensions and trade-offs:
The predicament of expecting that the utility will bear the higher costs of RE power (due
to the higher RE price).
5. Absence of Regulatory Framework:
Market failure compounded by absence of a proper regulatory framework, which
prevents proper and legal action from being taken.
6. Poor governance:
Poor governance affects the participation of stakeholders and legitimacy of the action.
7. Limited Oversight:
No concerted oversight of implementation problems.
8. Lack of institutional measures:
Lack of proper institutional measures to meet informational and technological needs.
6

7. ‘Renewed’ Renewable Energy Initiative
8th Malaysia Plan (2001 – 2005)
RE as the 5th fuel
Implied 5% RE in energy mix
9th Malaysia Plan (2006 – 2010)
300 MW in Peninsular Malaysia
50 MW in Sabah
10th Malaysia Plan (2011 – 2015) & beyond
New RE Policy & Action Plan
7

8. RE Policy Development in Asia-Pacific (selected)
China: RE Law 2006 (FiT in 2010)
Chinese-Taipei: RE Law 2009 (FiT)
South Korea: Feed-in Tariff 2003
(4th largest PV market worldwide in
2008)
India: Feed-in
Tariff in some
states Japan: Re-initiation of
National PV programme, (net
feed-in tariff in 2010)
Australia: RE Law 2009 (RPS)
Feed-in Tariffs: Australian Capital
Territory, South Australia, New
South East Asia: South Wales, Western Australia,
 Thailand: VSPP Regulation 2006 (FiT - adder) Queensland, Victoria, Tasmania,
 Malaysia: SREP & Suria Programmes Northern Territory
 Singapore: Solar Capability Scheme
 Philippines: RE Law 2008 (FiT)
 Indonesia: Energy Law No.30 (RE) 2007
8

9. Shares of Renewable Energy World-Wide
9

10. New Power Generation Installed Capacity (EU: 2009)
10

11. Global Investment in Renewable Energy (2008-2009)
11

12. National Renewable Energy Policy
Approved by Cabinet on 2nd April 2010
Policy Statement:
• Enhancing the utilisation of indigenous renewable energy
resources to contribute towards national electricity supply
security and sustainable socio-economic development.
Objectives:
1. To increase RE contribution in the national power generation
mix;
2. To facilitate the growth of the RE industry;
3. To ensure reasonable RE generation costs;
4. To conserve the environment for future generation;
5. To enhance awareness on the role and importance of RE.
12

13. Definition of Renewable Energy
Renewable Energy (RE) is any form of primary energy from
recurring and non-depleting indigenous resources, such as
agricultural produce, hydro-power, solar, wind, solid-waste, etc.
13

14. National RE Resources and Potentials
Solar Biomass Biogas Mini-Hydro Solid Waste
MW (40% buildings)
-Status: Total 39 -Status: Total 4.45
MW under MW under
-Status: Total 30.3 -Status: Total 5.5
Construction as of Construction as of
MW under MW Commissioned
July 09 July 09
Construction as of on 1 August 2009
- Biogen Project - Palm Oil Mill
July 09 - waste collected in
- Palm Oil waste Effluent (POME),
- Run of the river Malaysia
(EFB), other Cassava waste,
with minimum Approximately
agricultural waste livestock, agro,
impounding 21,000 tonnes/day
(woodchips, paddy industrial waster
husks, etc) water
Others: Wind, Geothermal, Ocean-thermal, Tidal Wave, etc. 14

15. National RE Policy: Strategic Thrusts (Action Plan)
RE Policy & Goals
T2: Conducive T3: Human T4: RE R&D  RE Act
RE Business
Environment
Capital Action Plan  Feed-in Tariff (FiT)
Development
 RE Fund
 RE Authority
T1 (foundation): Regulatory Framework  Responsibilities and
obligations on power
utilities and RE
T5: Advocacy Programmes developers
15

16. Feed-in Tariff: Government Policy
• 10th Jun 2010: 10th Malaysia Plan (chapter 6)
• 15th Oct 2010: National Budget 2011 (paragraph 34)
• 25th Oct 2010: Economic Transformation Programme (chapter 6)
16

17. Choices of RE Support Mechanism
Policy Description
Net metering Any amount above what is consumed in the building is exported to the
grid. Any amount below what is consumed in the building is imported
from the grid (usually for PV produced electricity in home/building)
Direct capital support Cash rebate on a portion of grid-connected RE system costs
Feed-in tariffs (FIT) Premium price for electricity grid-connected paid to system owners by
utility or regulatory body. Price typically guaranteed for 20 years.
Renewable Portfolio Mandatory portion of grid-connected RE power in the generation mix.
Standard (RPS) Tradable certificates represents power that is produced.
Green Pricing Voluntary schemes where consumers pay a premium for grid-connected
power from utility or other electricity retailers.
Tax Incentives Reduction or elimination of tax paid in purchase of RE systems,
deduction of total cost of portion of system cost from business or
personal tax
17

18. RE Support Mechanism
Source: BSW 18

19. Verifications of FiT Effectiveness
• Stern Review Report:
 Sir Nicholas Stern stated that “Comparisons between deployment support
through tradable quotas and feed-in tariff price support suggest that feed-in
mechanisms achieve larger deployment at lower costs.”
• UNDP-GEF Report: Promotion of Wind Energy - Lessons Learned From
International Experience and UNDP-GEF Projects
 “Feed-In tariff policies have been very effective in Germany, Spain and Denmark,
leading to the world’s first, second and fifth installed wind energy capacities.”
• International Energy Agency: Deploying Renewables - Principles for Effective
Policies
 “Feed-in Tariffs are more effective and cheaper than quotas for RE”
• Ernst & Young Report: Renewable Energy Country Attractiveness Indices:
 “Feed-in Tariffs are cheaper than Trading System”
• Traditional RPS country/state moving towards Feed-in Tariff:
 Japan started by 1st Nov 2009, UK implemented Feed-in tariff in 2010. Feed-in
Tariff in USA: Gainesville (2009), Vermont (2009), SMUD (2010). South Africa
implemented Feed-in Tariff in 2009. 19

20. FiT: Proven Effectiveness (Germany)
Development of electricity generation from renewable energies
in Germany, 1990 - 2007 EEG 2009
100,000 ex 1 January 2009
90,000
New EEG 14% RE
Hydropower Wind energy 1 August 2004
80,000 Biomass* Photovoltaics
Electricity generation [GWh]
70,000 EEG
1 April 2000
60,000
50,000 Amendment to BauGB
November 1997
40,000
StrEG 4.8% RE
30,000 1 January 1991
20,000
10,000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
*Solid, liquid, gaseous biomass, biogenic share of w aste, landfill and sew age gas;
StrEG: Act on the Sale of Electricity to the Grid; BauGB: Constuction Code; EEG:Renew able Energy Sources Act;
Electricity from geothermal energy is not presented due to the negligible quantities of electricity produced;
Source: BMU-Brochure: "Renew able energy sources in figures – national and international development", Internet Update, KI III 1; Version: 15.12.2008; provisional figures
Source: BMU 20

21. Germany’s RESA: Impact to Industry
Source: BMU 21

22. Germany’s RESA: Impact to Industry
Total Turnover from Renewable Energy Sources
in Germany, 2007
Total: approx. € 25.5 billion
Wind energy
Geothermal
EUR 5,790 mill.
energy 1) (22.7 %)
EUR 680 mill.
(2.7 %)
Hydropower
EUR 1,270 mill.
(5.0 %)
Solar energy 2)
EUR 7,030 mill.
(27.6 %)
Biomass
EUR 10,700 mill.
(42.0 %)
1)
Large plants and heat pumps
2)
Photovoltaics and solar thermal energy;
Source: BMU-Brochure: "Renew able energy sources in figures – national and international development", Internet Update, KI III 1; Version: 15.12.2008; provisional figures
22

23. Germany’s RESA: Employments
Employees in the German renewable energy sector
2004, 2006 and 2007
84,300
Wind energy 82,100
63,900
96,100
Biomass 95,400
56,800
50,700
Increase: approx. 55 %
Solar energy 40,200
25,100
9,400
249,300
Hydropower 9,400
employees
9,500 235,600
160,500
employees
employees
4,500
Geothermal energy 4,200
1,800 2004 2006 2007
Public / Non-profit 4,300
Sector Jobs 4,300
nützige Mittel 3,400
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000
Figures for 2006 and 2007 are provesional estimate
Source: BMU Projekt "Kurz- und langfristige Auswirkungen des Ausbaus der erneuerbaren Energien auf den deutschen Arbeitsmarkt", KI III 1; interim report March 2008
23

24. FiT Implementation & Adaptation: World Wide (2009)
24

25. Critical Factors for Effective FiT Mechanism
Must be guaranteed via the RE Act, whereby:
• Access to the grid is guaranteed – utilities legally obliged to accept all
electricity generated by RE private producers.
• Local approval procedures are streamlined and clear.
• FiT rates must be high enough to produce a ROI plus reasonable profit
(not excessively) to act as an incentive.
• FiT rates will be fixed for a period (typically 20 years) to give certainty and
provide businesses with clear investment environment.
• Adequate "degression" for the FiT rates to promote cost reduction to
achieve “grid parity”
• Adequate fund is created to pay for the FiT rates (incremental cost) and
guarantee the payment for the whole FiT contract period.
• Implementation by a competent body in a professional manner that
includes constant monitoring, progress reporting and transparency.
25

26. Sustainable Energy Development Authority of Malaysia
(SEDA Malaysia)
Ministry of Energy, Green Technology & Water
Energy Green Technology Water
RE & EE Green Technology
Electricity Sector Water & Sewage Sector
Sector Sector
ST MGTC SPAN JBA JPP
SEDA
Regulator Implementing Green Technology Regulator Implementing Implementing
Authority promoter Department Department
26

27. Functions of SEDA Malaysia
• Advise the Minister & Government entities on all matters
relating to sustainable energy
• Promote & implement national policy objectives for renewable
energy
• Promote, stimulate, facilitate & develop sustainable energy
• Implement, manage, monitor & review the Feed-In Tariff system
• Implement sustainable energy laws including the Renewable
Energy Act & recommend reforms
• Promote private sector investment in sustainable energy sector
• Carry out / arrange research, advisory services & disseminate
information
• Implement measures to improve public awareness
• Act as focal point to assist the Minister on matters relating to
sustainable energy & climate change matters relating to energy
27

28. Source of Fund for FiT
Cost Breakdown for
Average Domestic Electricity Tariff
RE Fund: 1% in electricity
Subsidized Fuel for Power Generation
Generation Cost tariff at initiation of RE Act
Transmission & Distribution Cost How much is 1%?
FiT Levy
FiT Cost
Customer Service Charge
 Eg: 1% of TNB’s FY2010
revenue = RM 303 million
 In 2010, equivalent to 0.31
16% sen/kWh
1%
38%  For every RM100 per
20% month, RM1 goes to RE
 Will not affect low income
consumers (<200
25% kWh/month)
 Polluters pay concept
 Encourages EE and DSM
Note: Additional 1% (for RE target) + 1% (for ETP target) in subsequent tariff reviews 28

29. RE Funding Flow for FiT
Residential Commercial sector Industrial sector
sector
Electricity bills {RE Fund 1%}
100% (after tariff review) RE Fund
Power Utilities (SEDA)
{Revenue 99%} {(FiT – displaced cost) +fee}
SEDA
Government sets RE
goals and provides
{FiT payments} RE Law
Solar BIPV
SREP developers
buildings
29

30. RE Fund (FiT Cost Pass Through): Examples
Germany Italy Thailand Malaysia
2007 2009 2008 2009/2010
Retail Electricity 0.28 0.24 0.09 0.09
Tariff (average) US$/kWh US$/kWh US$/kWh US$/kWh
FiT cost to 1%
Incorporated
consumers 4.8% 7.3% + 1%
in tariff
(% of retail tariff) (+1%)
Germany: 2009
Source: BMU, GSE, ERCT 30

31. FiT Degression
 Promotes cost reduction towards grid parity
 Promotes early commissioning and rewards early birds
 Point of control for ‘high’ FiT rates
31

32. RE Grid Parity
Driver: Environment
& Energy Security
Electricity Prices ($/kWh)
GRID PARITY
2010 2020 Years
Source: BP, REC
Europe, USA, Japan Asia
32

33. Feed-in Tariff Rate for Biogas
Capacity of renewable energy Feed-In-Tariff Effective Initial annual
installation rate (RM-Sen period degression
per kWh) rate
Installed capacity up to and including 4 32 16 years 0.50%
MW
Installed capacity above 4 MW, and up to 30 16 years 0.50%
and including 10 MW
Installed capacity above 10 MW, and up to 28 16 years 0.50%
and including 30 MW
Additional for use of gas engine technology +2 16 years 0.50%
with electrical efficiency of above 40%
Additional for use of locally manufactured +1 16 years 0.50%
or assembled gas engine technology
Additional for use of landfill or sewage gas +8 16 years 1.80%
as fuel source
33

34. Feed-in Tariff Rate for Biomass
Capacity of renewable energy Feed-In-Tariff Effective Initial annual
installation rate (RM-Sen period degression
per kWh) rate
Installed capacity up to and including 10 31 16 years 0.50%
MW
Installed capacity above 10 MW, and up to 29 16 years 0.50%
and including 20 MW
Installed capacity above 20 MW, and up to 27 16 years 0.50%
and including 30 MW
Additional for use of gasification technology +2 16 years 0.50%
Additional for use of steam-based +1 16 years 0.50%
electricity generating systems with overall
efficiency of above 14%
Additional for use of locally manufactured +1 16 years 0.50%
or assembled gasification technology
Additional for use of municipal solid waste +10 16 years 1.80%
as fuel source
34

35. Feed-in Tariff Rate for Mini Hydro
Capacity of renewable energy Feed-In-Tariff Effectiv Initial
installation rate (RM-Sen e period annual
per kWh) degression
rate
Installed capacity up to and including 10 24 21 years 0%
MW
Installed capacity above 10 MW, and up to 23 21 years 0%
and including 30 MW
35

36. Feed-in Tariff Rate for Solar PV
Capacity of renewable energy installation Feed-In-Tariff Effective Initial annual
rate (RM-Sen period degression
per kWh) rate
Installed capacity up to and including 4 kWp 123 21 years 8%
Installed capacity above 4 kWp, and up to and 120 21 years 8%
including 24 kWp
Installed capacity above 24 kWp, and up to and 118 21 years 8%
including 72 kWp
Installed capacity above 72 kWp, and up to and 114 21 years 8%
including 1 MWp
Installed capacity above 1 MWp, and up to and 95 21 years 8%
including 10 MWp
Installed capacity above 10 MWp, and up to 85 21 years 8%
and including 30 MWp
Additional for installation in buildings or building +26 21 years 8%
structures
Additional for use as building materials +25 21 years 8%
Additional for use of locally manufactured or +3 21 years 8%
assembled solar photovoltaic modules
Additional for use of locally manufactured or +1 21 years 8%
assembled solar inverters 36

37. Basis of Determining FiT Rates:
Economic Viability of RE Projects
Factors Biomass Solid Waste Solar PV
IRR (based on typical rates for 6% - 13% 6% - 15% 3% - 12%
power generation sector)
Simple Payback Period (SPB) < 7 years < 7 years < 12 years
Positive cash-flow (financing period) Yes Yes Yes (or neutral)
Factors to calculate IRR Biomass Solid Waste Solar PV
Capital expenditure 6-9.6 RM/W 15-19 RM/W 12-19 RM/W
Loan rates & tenure 7-9%, 15 yrs 7-9%, 15 yrs 6-8%, 15 yrs
Fuel cost & transport RM/tonne N/a N/a
O&M cost, depreciation, insurance 11.4% of capex 11.3% of capex 1.4% of capex
Annual cost increment 3% 4% 3%
Revenues: FiT duration 16 yrs 16 yrs 21 yrs
Capacity factor 70% 70% 13-16%%
Other revenue N/a Yes N/a
37

38. FiT Rates = Empirical Value
Conducive
FiT rates
38

39. FiT Rate Comparison
39

40. FiT Implementation:
Accounts & Payments
2 separate accounts with TNB:
PV
Generator • Electricity consumption bill
(Consumption Meter): consumer pays
to TNB for kWh electricity consumed.
• FiT bill (Generation Meter): TNB pays
to consumer for gross kWh electricity
= Inverter
generated.
~
• Thus, 2 separate contracts with TNB.
kWh Meter
Generation
365.8
RM1.75/kWh
Load
kWh
RM0.31/kWh
417.2
Meter
Consumption
Public Grid
40

41. Case Study for Solar PV:
Financial Returns from FiT
BIPV System PV Rooftop
(Residential) (Commercial)
System capacity (kW) 4.00 1,000
System price (RM) 72,000 13,500,000
Down payment/ equity (RM) 7,200 3,375,000
Loan amount 64,800 10,125,000
Total loan repayment - 15 years (RM) 95,904 15,957,000
Insurance, O&M - 21 years (RM) 23,907 6,041,204
Total cost of ownership - 21 years (RM) 119,865 21,998,204
FiT rates - 2011 (RM) 1.74 1.44
Energy yield (kWh/kWp/year) 990 1,093
Total revenues - 21 years (RM) 144,698 33,037,200
IRR 5.4% 7.6%
Simple payback period (years) 11.3 9.3
41

42. Case Study for Other RE:
Financial Returns from FiT
Biomass Solid Waste
System capacity 10 MW 10 MW
System price (RM) 90 mil 192 mil
Down payment/ equity (RM) 18 mil 38 mil
Loan amount 72 mil 154 mil
Total loan repayment - 15 years (RM) 123 mil 262 mil
Insurance, O&M – 16 years (RM) 188 mil 483 mil
Total cost of ownership – 16 years (RM) 310 mil 744 mil
FiT rates - 2011 (RM) 0.34 0.44
Capacity Factor (%) 70% 70%
817 mil
Total revenues - 16 years (RM) 366.9 mil
(475 mil + 342 mil)
IRR 10.6% 9.2%
Simple payback period (years) 4.3 7
42

43. RE Learning Curves & Cost Reduction
43

44. Global Energy R&D Expenditures in USD-million (1974-2007)
44

45. FiT Degression: Towards Grid Parity
1.80
RE-FiT Rate vs Average Retail Electricity Tariff & Displaced Cost
1.70
1.60
1.50 Retail Tariff
1.40 Displaced Cost
1.30 FiT Biomas
1.20 FiT Biogas
1.10 FiT Mini Hydro
1.00
FiT Solid Waste
RM/kWh
0.90
FiT Solar PV
0.80 Grid Parity
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
45

46. Balancing Act: RE Fund VS FiT Transaction Cost
Annual RE Fund vs Annual FiT Transaction Cost
1,400 Final RE Fund
Annual RE Fund Collection
Annual FIT Cost (2030)
1,200
RE Fund The quota (MW) allocated for
start each RE technology for each
1,000
RE Fund year is based on the:
increment
• Availability of RE Fund
RM-million
800 • Cash flow management of
RE Fund.
2048
600
Last REPPA (FiT) (21 years)
400
200 First REPPA (FiT) (21 years)
-
2017
2039
2011
2012
2013
2014
2015
2016
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
46

47. Annual RE Capacity Target (Quota, MW/Year)
[RE Policy + EPP10]
Biogas- Biomass- Small
Year Biogas Biomass Solar PV Solar PP TOTAL
Sewage Waste Hydro
2011 20 5 90 15 60 9 20 219
2012 15 10 50 20 50 11 35 191
2013 15 10 60 30 60 13 50 238
2014 25 10 60 40 60 15 80 290
2015 25 10 70 50 60 17 110 342
2016 25 10 80 30 60 19 130 354
2017 30 10 90 30 50 21 145 376
2018 30 10 100 20 40 24 155 379
2019 30 10 100 20 30 28 165 383
2020 25 10 100 10 20 33 170 368
2021 25 - 90 6 37 30 188
2022 25 - 90 5 41 80 241
2023 20 4 80 47 130 281
2024 20 3 70 60 250 403
2025 20 60 80 250 410
2026 20 50 105 250 425
2027 20 50 135 250 455
2028 20 50 175 250 495
2029 220 250 470
2030 280 300 580
47

48. RE Policy & Action Plan: Goals
[Exclude EPP10]
25,000
Cumulative RE Installed Capacity (& Ratio to Peak Demand)
2050:
2050 21.4 GW (73%)
Solar PV 2030 11.5 GW GWh (24%)
44.2
20,000
Solid Waste 3.5 GW
2020
Mini Hydro
2.1 GW
15,000 Biogas
Biomass
MW
RE (RE Policy & Action Plan)
RE (Business as Usual)
10,000 2030:
4,000 MW (17%)
2020: 17.2 GWh (12%)
2,080 MW (11%)
2015: 11.3 GWh (9%)
5,000
985 MW (6%)
5.4 GWh (5%)
-
2038
2047
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2039
2040
2041
2042
2043
2044
2045
2046
2048
2049
2050
Year
48

49. Comparison of RE Targets
11% capacity, 9% energy by 2020
49

50. Displaced Cost of Electricity
Displaced Electricity Cost*
RE Technologies/ Resources
(RM/kWh)
Biomass – MV 0.2047
Biogas – MV 0.2047
Small Hydro – MV 0.2047
Solar Power Plant – MV 0.2047
Solar PV – LV 0.3131
* 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 renewable energy systems. The displaced cost
will increase proportionally to incremental rate of electricity tariff.
Annual Electricity Sales Avg Retail Tariff
Year Displaced Cost (RM/kWh)
(RM-million/ year) (RM/ kWh)
2007 20,690 0.26 0.17
2009 25,924 0.3131* 0.2047*
* Due to average 25% tariff increment in 2008 and 3.7% tariff reduction in 2009 50

51. Comparison to Fossil Fuel Generation Cost
TNB’s “Marginal” Generation Cost (Ir Lalchand – 2005)
Value of NG Subsidy in sen/kWh (at
Share of Rate equivalent oil price of US$ per
Assumed IPP Generation barrel)
GWh (sen/kWh)
At US$40 At US$60
• Combined cycle 1 40% 15 12.1 20.5
• Combined cycle 2 30% 16 12.1 20.5
• Coal 15% 18 0 0
• Steam (Gas) 10% 15 13.6 23.1
• Open Cycle Gas Turbine 1 2.5% 30 18.1 30.8
• Open Cycle Gas Turbine 2 2% 99 18.1 30.8
• Hydro 0.5% 12 0 0
Average 17.78
51

52. Comparison to Peak (Fossil Fuel) Generation Cost
Summary of Inferred Peak (Wholesale) Energy Price (First Principle - 2006)
With different orders of despatch, the following rates were derived:
 Inferred peak energy-only wholesale price of Port Dickson Power
87.99 sen/kWh*
Berhad’s supply (inclusive of gas subsidy)
 Inferred energy-only average cost of peak electricity to TNB
119.14 sen/kWh*
(inclusive of gas subsidy)
 Inferred peak energy-only wholesale price of Telok Gong Power
239.69 sen/kWh*
Station’s supply (inclusive of gas subsidy)
* Inferred peak energy-only wholesale prices are valid at the time of peaking which may only
be over a half-hour duration.
52

53. External Cost: Expected Carbon Price in IEA BLUE Map Scenario
Grid System Carbon Emission Factor What does this mean?
[t-CO2/MWh]
Peninsular Malaysia 0.63 Peninsular Malaysia
Sarawak 1.12 (2009) = 82.3 TWh
x 0.63 t-CO2/MWh
West of Sabah 0.65 = 51.8 mt-CO2
East of Sabah 0.80 x USD10/t-CO2
Malaysia (average) 0.69 = USD 518.3 million
= RM 1.6 billion
53

54. FiT Transaction Cost & RE Capacity (RE Policy only)
Cumulative Cost of FiT Payment (excludes displaced cost)
Year
Solid
Biomass Biogas Mini-Hydro Solar PV Total
Waste
2020 RM 2.4 bil RM 0.7 bil RM 22.4 mil RM 0.8 bil RM 2.3 bil RM 6.2 bil
2030 RM 5.5 bil RM 1.6 bil RM 22.4 mil RM 2.6 bil RM 5.4 bil RM 15.1 bil
2050 RM 5.7 bil RM 1.7 bil RM 22.4 mil RM 3.8 bil RM 6.6 bil RM 17.8 bil
Cumulative RE Capacity
Year
Biomass Biogas Mini-Hydro Solar PV Solid Waste Total
2020 800 MW 240 MW 490 MW 190 MW 360 MW 2,080 MW
2030 1,340 MW 410 MW 490 MW 1,370 MW 390 MW 4,000 MW
2050 1,340 MW 410 MW 490 MW 18,700 MW 430 MW 21,370 MW
54

55. Potential Impact of
National RE Policy by Year 2020
• Minimum RM 2.1 billion savings of external cost to mitigate CO2
emissions (total 42 million tonnes avoided from 2011 to 2020, on
the basis of RM 50 per tonne of external cost);
• Minimum RM 19 billion of loan values for RE projects, which will
provide local banks with new sources of revenues (at 80% debt
financing for RE projects);
• Minimum RM 70 billion of RE business revenues generated from
RE power plants operation, which can generate tax income of
minimum RM 1.75 billion to Government (on basis of 10% profit
value where income tax is 25% on profit);
• Minimum 52,000 jobs created to construct, operate and maintain
RE power plants (on the basis of 15-30 job per MW).
55

56. Paradigm Shift...?
Centralised VS Centralised + Decentralised Power
100%
300%
kWh
kWh
output
input
• Large power plants • Small-scale technologies
• Unidirectional power flows • Bi-directional power flows
• Monopolistic vertically integrated • Opportunities for all
structure
56

57. Thank You
More info on feed-in tariff is available from
www.mbipv.net.my