Government seeks to increase RE allocations

Sustainable Energy Development Authority (Seda) CEO Catherine Ridu

THE Government is looking at various means of increasing allocations for the country’s renewable energy (RE) fund to promote greater adoption of green energy.

According to Catherine Ridu (pic), the CEO of Sustainable Energy Development Authority (Seda), the idea is not so much to tap the government coffer directly for this move, but rather to come up with new ways to raise funds that could be pumped back into the RE fund.

Ridu says the idea is basically to make “polluters pay”, which is in line with international trends.

Hence among the ideas Seda is exploring include a carbon tax on fossil fuel power generators and a small levy from sale of natural gas and pumped petrol.

Ridu says there’s also the possibility of getting a one-for-one matching basis from the government base on its fund size.

“Also, Seda is considering reducing the quota allocated for solar photovoltaic (PV) for non-individuals and assigning more to individuals to encourage greater participation by the people in generating clean electricity,” she tells StarBizWeek.

Ridu says the RE fund has sufficient money to pay out all committed future payments to feed-in approval holders (FiAHs) and that the fund presently receives around RM625mil per annum from the levy that is charged to high energy consumers.

Recall that FiAHs are essentially individuals or entities holding feed-in approvals issued by Seda, allowing them to sell RE to distribution licensees such as Tenaga Nasional Bhd and Sabah Electricity Sdn Bhd.

Ridu says Seda is working with various bodies to develop the framework for “net energy metering” and “utility scale solar” – initiatives that will see more consumption of green energy in the country.

The net energy metering allows electricity generated from solar PV systems to be consumed in situ (self-consumption) and this reduces buying electricity from the grid.

A utility-scale solar facility is one which generates solar power ranging between 30MW and 50MW and feeds it into the grid, supplying a utility with energy.

Ridu says financial sustainability of the RE fund is important if more quotas are expected of the feed-in tariff (FiT) programme.

Ridu adds that if the public were to ask for more quotas especially for solar PV beyond what Seda has projected then it is difficult due to the limitation of the RE fund.

She says the limitation of the fund is because of the 1.6% contribution from electricity bills for consumers using more than 300kWh a month.

“The temporary downward revision of electricity tariffs (to end-June 2015) is not perceived to affect the RE fund severely unless the electricity tariff remains unchanged for a prolonged period and electricity consumers’ usage drop. Then this will see a reduction of contribution to the RE fund,” Ridu says.

Under the FiT programme, attaining grid parity (a point where developing technologies will produce electricity for the same cost to ratepayers as traditional technologies) will help ease the RE fund as Seda would then no longer be obliged to pay the FiAHs.

“However, if the tariff continues to remain low, then this process will only delay grid parity and extend the payment required from the RE fund,” she says.

At the recent 6th National Energy Forum, Energy, Green Technology and Water Ministry secretary-general Datuk Loo Took Gee raised the issue of how to increase the funding for the RE fund.

She posed this question to the audience ... Considering the lower oil price, are Malaysian’s willing to stomach a small increase in the green levy in their electricity bills in the name of promoting RE in the country.

In 2010, the Government had approved in principle to have a 2% green levy but as of now, consumers are only charged 1.6% after consuming 300kWh.

At the forum, Loo pointed out that she was not suggesting an immediate increase to the RE levy but added: “If the consumer is willing to pay more than the 1.6% contribution in the electricity bill, then why not?”

“This matter (on increasing 1.6% additional charge) is still being deliberated and a final decision has not been reached,” Ridu says.

Ridu says a total or RM229mil has been disbursed to FiAHs by end-February 2015.

As of Feb 28, Seda had approved RE capacity of 983.24MW from various RE sources while 264.85MW has achieved commercial operation.

About 68.5% or 181.51MW that achieved commercial operation is from solar PV while the rest is from biogass (11.73MW), biomass (55.9MW) and small hydro (15.7MW)

However, the bulk of the approved RE production is coming from solar PV sources. Hence the question that needs to be asked is... whether there’s too heavy dependence on this technology?

Ridu says that it is no surprise that solar PV, at least in the current situation, dominates the RE scene and that’s simply because the total risks (construction, financing and operational) are lower while the construction period is shorter. The technology is also relatively simple and although the internal rate of return for solar PV is lower compared with other RE sources under the FiT portfolio.

On the other hand, she says certain RE technologies (such as bioenergy) depend on commercial feedstock and the investor is not in full control of future price of the feedstock especially if the feedstock has other uses and is therefore competitive in pricing.

Another RE technology being explored in Malaysia is geothermal, which is essentially the heat from the Earth.

Ridu says geothermal projects have high exploration risks because, among other reasons, the quality of the resource is difficult to ascertain as it lies deep in the ground.

In the case of hydro power, while it is free from the constraints of having to secure commercial feedstock, it too has its own challenges.

Ridu explains that hydro power plants depend on a consistent supply of water as well as the composition of the water.

She says that for example, if there is a development upstream, the concern is that the water composition may be altered and this may affect the performance of the hydro system.

“We should not be overly obsessed with solar PV. Just as the hand requires the fingers and thumb to work together, in order for a country to achieve energy security, being energy independent will help increase energy security. Therefore a holistic mix of renewable energies will help boost RE in the total energy mix. Some of RE can provide stable electricity supply such as hydro, bioenergy, while solar PV can help with peak (electricity) shaving,” Ridu says.