Energy Efficiency for Malaysia-the way forward


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This is normally my story line whenever I was asked/requested/invited to share with audience on the way forward for energy efficiency industry in Malaysia when I was I the government trying to push for EE agenda..and my opinions and thoughts are still the same until today and look like for longer time

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Energy Efficiency for Malaysia-the way forward

  2. 2. Content Overview of Energy Resources and Trends Current Related Policies Energy Efficiency Potentials Key Government Lead Initiatives Fiscal And Financial Incentives Current Development and the way forward Proposed Strategic Plan & Implementation
  3. 3. Overview of Energy Resources andComparison of Trends
  4. 4. 4Net Import/Export-80%-60%-40%-20%0%20%40%60%80%100%2002 2010 2020 2030PercentageCoal Oil Gas Hydro Nuclear NRE Electricity Heat•Expected tobecome netimporter by2020Source: APERC2006
  5. 5. Power Generation MixIn Malaysia: Oil To Gas Dependency0%10%20%30%40%50%60%70%80%90%100%1980 1990 1992 1994 1996 1998 2000 2002 2004PercentageYearHydroCoalOil & DistillateNatural Gas
  6. 6. 050100150200250300350400450195519571959196119631965196719691971197319751977197919811983198519871989199119931995199719992001200320052007Fiscal year0100200300400500600Energy Conservation Actenacted in 1979IndustrialTransportationConsumer24.9%24.8%27.9%47.3%GDP (trillions of yenat 1990 values)Crude Oil Equivalent(million Kl)Source: METI/General Energy Statistics16.2%16.4%67.4%17.9%57.1%Trend of the Energy Conservation in JapanChanges in Final Energy Consumption and GDPECCJNote: consumer = residential + commercial1st oilcrisis2nd oil crisis
  7. 7. 705010015020025019731975197719791981198319851987198919911993199519971999200120032005Consumer sectorTransport sectorTotalIndustrial sector207210141103Change in Final Energy Consumptionby Sector In JapanIndex (1973=100)Source: General Energy Statistics (METI)ECCJ
  8. 8. Trend In Electricity Consumption By Sectors8Major users•Industrial•Residential & Commercial
  9. 9. Current Related Policies
  10. 10. 10National Energy PolicyPredicated on the following principles: Supply Objective To ensure provision of adequate, secure and cost-effective energy supplies by developingindigenous energy resources, both non-renewable & renewable, using least-costs options,& diversifying supply resources within & outside the economy; Utilisation Objective To promote the efficient utilisation of energy and the elimination of wasteful &non-productive patterns of energy consumption; Environmental Objective To minimise the negative impacts of energy roduction, transportation, conversion,utilisation & consumption on the environment
  11. 11. National Energy Policy11Predicated on the following principles:• Supply Objective– To ensure provision of adequate, secure and cost-effective energy supplies bydeveloping indigenous energy resources, both non-renewable & renewable, using least-costs options, & diversifying supply resources within & outside the economy;• Utilisation Objective– To promote the efficient utilisation of energy and the elimination of wasteful &non-productive patterns of energy consumption;• Environmental Objective– To minimise the negative impacts of energy roduction, transportation, conversion,utilisation & consumption on the environment
  12. 12. National RE PolicyPolicy Statement: To enhance the utilisation of indigenous renewable energyresources to contribute towards national electricity supplysecurity and sustainable socio-economic developmentObjectives: To increase RE contribution in the national power generation mix; To facilitate the growth of the RE industry; To ensure reasonable RE generation costs; To conserve the environment for future generation; and To enhance awareness on the role and importance of RE.12
  13. 13. Energy Efficiency Potentials
  14. 14. Global Energy Efficiency Potentials Oil and natural gas remainessential through 2030 but themost important “fuel” of all willbe energy saved throughimproved efficiency Potential gains will reach about300 quadrillions BTUs per yearby 2030(twice the growth ofglobal energy demand through2030) Gains in energy efficiencythrough 2030 will reduce globalenergy-demand growth byapproximately 65%Source: Outlook for Energy. A view to 2030 (
  15. 15. Energy Efficiency Market & Potentials in SEASource:
  16. 16. Saving Potentials (USD) in SEAClearly, the industrial and commercial sectors offers much higher savings potentialSource:
  17. 17. Energy Efficiency Potentials in IndustrialSectorIndustryTypeTotalPotentialEnergy Saving(GJ/yr)AnnualEnergy(GJ/yr)TotalPotential.EnergySaving(%)CapitalExpenditure(RM ‘000)PotentialCost Saving/yearPaybacPeriod(year)(RM‘000) % billFOOD 272,354 1,418,625 19.2 2,299 4,382 13.7 0.5WOOD 457,494 874,200 52.3 9,904 4,822 38.9 2.1CERAMIC 212,974 774,061 27.5 5,760 5,992 24.8 1.0CEMENT 4,887,239 14,956,56332.7 39,456 33,752 16.5 1.2GLASS 81,660 4,000,370 2.0 3,586 2,120 2.1 1.7RUBBER 97,215 460,913 21.1 5,079 3,063 22.6 1.7PULP &PAPER811,547 5,080,208 16.0 29,883 18,174 21.3 1.6IRON &STEEL270,053 4,215,761 6.4 4,443 5,247 3.4 0.817Malaysia Industrial Energy Efficiency Improvement Program (MIEEIP) by PTM, ended 2005
  18. 18. Energy Saving Potentials in BuildingsResidential Hotels ShoppingComplexesOfficesLighting 25.3 18.0 51.9 42.5Air-Conditioning 8.3 38.5 44.9 51.8Total 33.6 56.5 96.8 94.318 Energy Study-Malaysian Building Sector Distribution (%) of energy consumption in Malaysian Buildings(by PTM 2003)Energy efficiency potentials: 40% to 50% reduction of energy consumption of new buildings. 15% to 25% in reduction in energy consumption of existing buildings. shift of electricity demand for buildings from day to night to improving load factor
  19. 19. Problems/BarriersNumber of key barriers which prevent a wide spreadadoption of energy efficient practices which are: Lack of overall national plan for energy efficiency Lack of consistency in embarking on the energyefficiency Lack of legal and regulatory framework for energyefficiency Lack of champion to drive energy efficiency Low energy prices due to government subsidies Lack of funding & financing for energy efficiency
  20. 20. Key Government Lead Initiatives
  21. 21. Promoting Sustainable Energy Management The process of managing the energy use in theorganization to ensure that energy has been efficiently useby adopting Energy Management System(EMS) to achievedesired results and for continual improvement Covers all aspects of energy and involving the people andequipment in the daily operation of the facilitiesEnergy ManagementAll activities to ensure efficient useof energy in the organization
  22. 22. Typical EMS CycleENERGYMANAGEMENTPOLICYORGANIZINGPLANNING ANDIMPLEMENTATIONEVALUATIONREVIEW FORCONTINUALIMPROVEMENTPLANDOCHECKACTION•Commitment from the top management•SMART policy•Setting and sharing common goals•Commitment totake action•Organization andresponsibilities•Energy Manager•Allocation ofresources•Management Implementationplan and time frame•Energy auditing•Set baselines for measuringresults•Designation of responsibilities•Procedures and standards•Trainings•Implement Energy Saving Measures•Measurement and verification•Monitoring•Management Review to confirmSuitability, Adequacy& Effectiveness•Review targets•Communicate the progress•Actions to be taken•Reporting and presenting EPC
  23. 23. Energy Audits at Government Buildings By KeTTHABil Building Year PotentialSavings(RM)ImplementationCosts(RM)ROI(Year)1 MOH 2010 740,652.23 1,546,545.00 2.02 MAMPU 2010 254,500.64 964,737.20 3.83 MOHR 2010 195,146.20 405,180.00 2.14 JPA 2010 174,480.00 897,000.00 5.15 NRE 2010 316,440.20 963,500.00 3.06 MOF 2008 355,892.00 2,326,259.00 6.57 Hospital Selayang 2008 1,612,800.00 3,294,350.00 2.08 Hospital Kuala Lumpur 2008 2,538,705.00 8,423,740.00 3.329 Pusat Perubatan UM20084,477,067.00 622,500.00 0.1
  24. 24. Retrofitting By KeTTHABuilding Year PotentialSavings(RM)1ImplementationCosts(RM)1 MOF 2010 983,829.009,987,000.002 EPU 2010 154,887.00Total 1,138716.00110% potential saving of electricity bill based on 2 months actual bill(Jan-Feb 2011) with baseline year of 2010End of Dec 2011ProjectcompletedJan-Feb 2011Electricitysaving analysisOct-Dec 2010Retrofit work started-Upgrading BCS & re-lampingJun 2010Project started withselection of EnergySaving MeasuresFigure 1: BEI reduction for MOF &EPU
  25. 25. 1 Initiatives under Business & Services lab2 As per subsidy lab recommendation SOURCE: OGE NKEA Lab2▪ Give retailers incentives on sales of small capacity appliances to increasesales of energy efficient goods amongst low-middle income households▪ SAVE Program was announced by YAB PM on 13th June 2011▪ Will be launched officially on 7th July 2011 by YBM KETTHA▪ Introduce and/or enforce legislation (Efficient managementof electrical energy regulations 2008; MEPS - Minimum Energy Performancestandards)▪ Increase economic viability through review of tariff mechanisms with TNB▪ Improve legislation on insulation for new housing▪ Educate building owners on benefits of better insulation1▪ Government to lead by example on energy efficiency practices▪ “Push” for EE practices by running large-scale education campaigns1▪ “Pull” for EE by implementing electricity subsidy rationalization2Key Focus AreasInitiativesNewappliancesCo-generation3Buildinginsulation4Leading byexample1Transportefficiency5 ▪ Reduce tax rate on imported hybrid/ electric vehicles and/or offer cash rebateon purchase of locally manufactured hybrid/electric carEPP9: EPP9: Sustainability Achieved Via Energy Efficiency(SAVE) Program in ETPEnergy saved-127.3GWh/yearGNI- RM3.2 bilGNI- RM 5.1 bilSAVE Program: Rebate
  26. 26. SAVE Program: Government ToLead By ExampleEnergy savings ingovernment buildings1st workshop with 20 IPTAs(31st May 2011) Objective: to discuss implementation plan on energy saving in IPTAs Consensus from the workshop: Should be mandatory to all IPTAs to implement Energy Management System; Adopt EPC to implement energy efficiency in IPTAs; MOF to issue a circular on payment mechanism for shared-saving mechanism; and A standard EPC document developed by JKR for reference by IPTAs2nd workshop with 25 Ministries (22nd June 2011)• Objective: introduce & discuss the implementation of energy saving in Gov’t buildings• Target saving = 10% electricity bill saving annually• Implementation of EPC or internal budget allocation
  27. 27. Why Energy Performance Contracting inEnergy Management? effective measures to implement energy savingmeasures to promote energy conservation in governmentbuildings by market mechanisms-private investments urgent requirements to cultivate new strategic industrieswith active involvement and investments from privatesectors as outlined in ETP stimulate new economic growth, and objective needs tobuild resource-saving and environment-friendly society.
  28. 28. Shared –Saving mechanism in EPCAdaptation from US Dept. of Energy, Measurement & Verification Guidelines, Version 3.0,time(year)Electricity BillDuring EPC contractperiodLower ElectricityBillAfter EPC ContractperiodElectricitybill savedBefore EPC ContractPeriodElectricity billbefore EPCimplementationPayment toESCOGovernment’sSavingsSaving forGovernmentBaselineLowerElectricity BillSaving forGovernment
  29. 29. SAVE Rebate Program: Investment & Potential Savings2011 TOTAL TARGETENERGY SAVINGS127.3GWh Type ofAppliancesFridges Air -ConditionersChillers2011TargetSavings1Target # ofUnits100,000units65,000 units 72,000RTEnergy 24.9GWh 48.75GWh 53.6GWhCost RM5.4mil RM10.6mil RM16.8milEstimatedLifetimeSavings2RM38mil RM74.4mil RM252milAllocationOfferedRebatesPer UnitRM200 RM100 RM200TotalBudgetAllocationRM20mil RM6.5mil RM14.4mil1 Target energy and cost savings at current tariff rate2 Lifetime saving for fridge and air conditioner in 7 years; for chillers in 15
  30. 30. SAVE Rebate Program Official
  31. 31. Status 5 Star RatedEquipments:• Jan ’11- 5 brands• July’11 -12 brandsImplementation Period:• 07th July – 30thSeptember 2011AppliancesVoucherPrintedVoucherRedeemedRefrigerator 36,757 26,046A/C 30,344 19,160Total 67,101 45,206Application AppliedCapacity(RT)Chillers 20 24,465SAVE Rebate Status (7th July - Sep 2011)Household AppliancesIndustry Appliances
  32. 32. • Savings calculation is based on actualmarket sizeCO2 Reduction:45,747tonne*Cost Saving:RM16.34millEnergy Savings:66.3GWh(equivalent to annual electricityuse for 18, 417 houses using300kWh per monthCapacity Saving:26MWSAVE Program Updates - OUTPUT100,00065,00072,000*74,663*42,18124,465020000400006000080000100000120000Refrigerators Air-conditioners ChillersUnit/RTAppliances/EquipmentTargetActual13%12.44%7.03%8.0%35%11.05%Data is for the period of7th July – 30th Sept 2011Translatesinto
  33. 33. SAVE Rebate : Chiller Replacement Program Eligible for private business entities registered in Malaysia Comfort cooling for offices and commercial buildings only Must purchase a new eligible EE chiller or replace an existing chillerdue to lifespan (more than 15 years) and inefficient existing chillerwithin the specified periodNo. State/Region Total Targeted Quantityin 2011* (RefrigerantTon,RT)Percentage(%)1 Peninsular 50,400 702 Sabah 10,800 153 Sarawak 10,800 15Total 72,000
  34. 34. Demonstration ProjectsBuilding Targeted BEILow Energy Office (LEO) – MEGTC Completed in 2004100kWh/m2/yrGreen Energy Office (GEO) - MGTC Completed in 2008 Certified rating (GBI)65kWh/m2/yrDiamond Building – EnergyCommission Completed in 2010 Platinum rating (Green Mark & GBI)85kWh/m2/yr
  35. 35. Current Development andThe Way Forward
  36. 36. The Decision By The Green Technology and ClimateChange Council Meeting Meeting on 11th August 2011 decided on: To reset temperature at the minimum 24 degreeCelsius for all government buildings Implementation with technical guidelines andassistance from JKR
  37. 37. The Decision By Economic Council (EC) Meeting EC Meeting on 27th May 2011 decided on: KeTTHA & MOF to come up with suitable incentives toencourage energy saving initiatives for the public &private sectors; and for the public sector, the energy saving initiative wouldbe included as one of the KPIs for head of agencies
  38. 38. EE related Laws Amendment of Electricity Regulations 1994 to regulate EnergyPerformance for electrical appliances from 2011 (starting with lampsto phase out incandescent bulbs by 2014) To include EE and RE standards in Uniform Building By Law(UBBL) instages from 2011 by the Ministry of Housing and Local Government Drafting of the new Energy Efficiency and Conservation Act (Electricaland Thermal )by the Ministry of Energy, Green Technology and Waterto start in Q4 2011 and targeted to be enforced in 2014
  39. 39. The Proposed StrategicPlan & Implementation
  40. 40. The Strategic ApproachIntroduction of National EE&C Policy andImplementation of key initiatives under themaster plan
  41. 41. Key Elements Required to implement Sustainable EnergyEfficiency & Conservation Program for a long term(10years) at National Level• Creation of a Legal & Regulatory Framework tomanagement all energy using sectors at the demand side• Creation of a one stop center under one agency for theplanning, implementation and monitoring of energyconsumption for all sectors• Availability of Sustainable Funding sources & effectiveFinancial Mechanism• Capacity Building & Training to build and improvecompetencies required in EE&C Industry• To increase Research & Development for EE technology &application• On going Education & Awareness for all types of consumers
  42. 42. To have a national and sub sectors energysaving targetsElectricity savings(kWh)Power Plant Capacity savings(GW)Electricity bills savings(RM Mill)GHG avoidance(ktCO2-eq)Electricity consumption reductionor energy intensity reduction (%)
  43. 43. Capacity Building:EE&C Industry and Practitioners Certified Energy Managers Certified Auditors ESCOs EE professionals semi-professionals facilities managers Strengthening capacity building of Energy Managers, Energy Auditors &ESCOs Training of financial experts, other relevant professional e.g. engineers,architects, lawyers, semi-professional, etc
  44. 44. Capacity Building :Banks/Financial InstitutionsSharing of experiences in successfulinvestments in EE projects throughseminars/dialogues (results, payback period) from people in businesscommunities who have experienced it Criteria of viable EE projects Competency of ESCOsPromotion of incentives/taxexemptions for EE investment forcompanies
  45. 45. Promotion and Awareness Lecturers and teachers Students General public Education on EE&C from primary school level to allInstitutions of Higher Learning Campaign and promotion to create awareness of EE&Camong the general public
  46. 46. Supporting Measures required toimplement EE&C measuresTechnical Assistance& AdvisoryIncentives & FinancialAssistance SMEs & SMIs - energyaudit and guidance Measurement andverification ofperformance Technical assessmentfrom otherministries/agencies on EEprojects for financing/further approval Registration anddeployment of experts Fiscal incentives Low interest loans withgovernment guarantee Grant based on annualgovernment budget forspecified initiatives andawareness programs
  47. 47. Possible Organizational Structure for SustainableImplementation of NEEMPMEGTWIndustrialBuilding Equipment &AppliancesEducation &AwarenessGovernmentResearch &DevelopmentEE CentralizedAgencyData & Information EnforcementCommercial& ResidentialEE FundCompetency &AccreditationNew andexistingdesignatedbuildingDesignatedfactoriesSMEs &SMIsMEPS &LabelingESCOEnergyManagerEnergyAuditorRegistered EEExpertsOther Ministries/State GovernmentsUniversities,Schools SyllabusLecturers,TeachersCampaign &Promotion forpublicEETechnologyDevelopment&ApplicationsExisting(JKR,CIDB)Subsidiary legislation-regulations
  48. 48. Funding Requirements andFiscal Incentives
  49. 49. Funding & Financial Support The need of setting up of a Sustainable EE Fund for theimplementation and promotion of EE&C The administration and distribution of EE fund by thecentralized agency as a one stop center Need the Government’s commitment to provide the budget toimplement key EE initiatives under the Sustainable EnergyEfficiency & Conservation Program for a long term(10 years) atNational Level to compliment funds/investment expected tobe committed by the private sectors
  50. 50. • Need the Government’s commitment to provide thebudget to implement key EE initiatives under theSustainable Energy Efficiency & Conservation Program fora long term (10 years) at National Level to complimentfunds/investment expected to be committed by theprivate sectors
  51. 51. Proposed OptionsFor Government FundingNo. Option#1 Option#2 Option#31 Source FederalGovernment: Totalannual sales ofdiesel and petrolCombination of budgetfrom federalgovernment andothers(internationalorganization/foreigngovernments) - HybridTotal budget from federalgovernment2 Mechanism A portion fromevery subsidyremoval per liter(RM/liter)1. Annual allocationto the centralizedagency by thefederalgovernment.2. Approved amountby the fundingparty to thecentralizedagencyAnnual allocation to thecentralized agency by thefederal government.3 Distribution &administrationof fundThrough provisions in the act and its subsidiary legislations by thecentralized agency for EE &C
  52. 52. Options for Private FundingDistribution Mechanism2. External Sources Local and internationalcommercial banks With low interest loan forapproved applicants Approved/endorsed by thecompetent body appointedby the government1. Internal Sources: Companies’Internal Budget
  53. 53. Existing Fiscal Incentives For EE & REProjects Introduced by the government topromote EE & RE Companies implementing EE measuresin their premises (…2015) Investment Tax Allowance Accelerated capital allowance import duty exemption sales tax exemption GBI Certified Buildings(…2014) Implementing Agencies: MIDA – Business & Other ServicesDivision(Application) Energy Commission(Technicalassessment)
  54. 54. THE CONCLUSIONS• EE&C initiatives in Malaysia has been limited & slow• A Sustainable Energy Efficiency & Conservation Program needs to beimplemented comprehensively and holistically for efficient management of energyresources to ensure energy security• A sustainable funding sources and distribution mechanism must be provided forEE&C initiatives to be carried out smoothly to achieve the targets set at thenational and for each energy using sectors• Implementation budget allocated by the government will indicate the governmentis serious by leading the way to achieve the targets which need to be followed bythe private sector for greater benefits to the country• Key players of EE industry at the demand side have indicated their supports andgive positive feedbacks through seminars, workshops, dialogues, discussions andmeeting for the proposed implementation of NEEMP
  55. 55. 55 019 2152700 www.facebook/zaini.abdulwahab1 You & Let’s SAVE ENERGYfrom today!