Clearly on the green track

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  • Saturday, 17 Nov 2018

Green energy: A solar power project in Sabah. Some RM2bil worth of projects will be up for bidding in January next year to produce 500MW of electricity via solar power. — Bernama

THE country’s aspiration for 20% of renewable energy (RE) in the power mix by 2025 has been made clear with a number of announcements recently, including large-scale projects, net metering and solar leasing.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin had announced that some RM2bil worth of projects will be up for bidding in January next year to produce 500MW (megawatt) of electricity via solar power.

The Large Scale Solar (LSS) Programme 3 projects, worth RM2bil, will be conducted through open tender in January next year

The projects are in addition to ongoing LSS projects to produce 958MW of electricity between the end of this year until 2020.

Another policy that the minister has announced to promote solar is the repair of the Net Energy Metering Programme (NEM).

Under NEM, electricity users installing solar panels on the roof for their own use receive a rebate from Tenaga Nasional Bhd (TNB) for electricity generated.

In a reply to StarBizWeek, the Sustainable Energy Development Authority of Malaysia (Seda Malaysia) says the take-up rate was low - until October 2018, there was only an application for 17MW of the 500MW quota provided, which was only 3%.

“This is because consumers have previously sold surplus solar energy to TNB at an ‘displaced cost’ of 31 sen per kWh, but buy on existing tariffs, most of which are more than 50 sen per kwh.

“This makes the NEM non-feasible for most users - domestic, commercial or industrial,” Seda says.

The ministry has reviewed the old policy of NEM and decided that beginning Jan 1, 2019, there will be no difference in the selling price and electricity purchase.

Basically, this means every 1kWh exported back to the grid will be offset against 1kWh consumed from the grid, instead of at the displaced costs previously.

Therefore, domestic and commercial users of solar power will enjoy cheaper electricity bills from Jan 1.

The government has also decided to improve and expand the Supply Agreement for Renewable Energy (SARE) programme to allow consumers to install solar panels in their homes under a solar leasing concept.

Under solar leasing, there will be zero upfront cost where individuals need not come out with any initial cost for installing solar panels.

TNB, through its unit, will be offering financing self-generation packages for solar PV panels for residential customers by year-end as the demand for green energy climbs.

These packages will be offered by TNB Renewables Sdn Bhd’s unit GSPARX Sdn Bhd which has started offering packages to commercial and industrials customers.

Interestingly, customers do not have to make any upfront payment but pay a lease as GSPARX will bear the cost for purchasing and installing solar PVs.

Customers will benefit from saving and hedging opportunities. Installers will benefit from the unlocking of business potentials of solar PV installation.

GSPARX targets to offer 1,500MW of self-generation for solar PV investment by 2025.

Its revenue stream comes from the sale of energy generated by the solar PV and utilised by the customers at a price agreed by both parties on a willing buyer and willing seller basis.

TNB has recently started supplying power from a part-completed 50MW solar power project in Kuala Langat, Selangor.

Analysts do not expect TNB to be hit but the investments for solar PV for residential consumers as TNB has the options to produce less electricity.

They say RE is also a way to tackle escalating global coal price. In July, the Australian thermal coal prices broke through the US$120-per-tonne level for the first time since 2012, driven by strong consumption in Asia.

Between July and October, the average coal price was US$116.43 per tonne as compared with an average of US$103.42 per tonne between January and June this year.

Spot prices for thermal coal from Australia’s Newcastle were quoted at US$104.15 per tonne on Friday.

Coal plays a big role in Malaysia’s energy scheme, with some 62% being imported from Indonesia, another 24% from Australia and the remainder from Russia (11%) and South Africa (2%).

Solar accounts for 67% of Malaysia’s RE capacity while biogas and biomass account for the second largest portion at 28%.

“Solar PV will be the main driver of growth and with the emerging renewable energy certificate (REC) market in Malaysia,” an analyst says.

It is also worth noting that prices have fallen tremendously bringing solar PV close to grid parity in several countries.

“Solar electricity generation is gearing towards grid-parity. This is because solar technology is becoming more mature with increasingly competitive costs, PV panel prices have fallen 80% since 2009,” Seda says, adding that since 2017 quota for solar PV is no longer offered under the Feed-in-Tariff (FiT) mechanism.

When asked if grid parity is seen in Malaysia, Seda says the winning bid tariffs for LSS programs are very close to the gas plant tariffs

In other words, solar has the potential to be a competitive alternative source of electricity compared to conventional sources.

Some players say the push for solar PV will also provide a boost to the solar PV panel industry.

Malaysia is one of the largest solar panel producing countries.

Some local companies have been impacted due to safeguard tariffs imposed by the US and India on the import of solar cells and modules from Malaysia.

It has been reported that Malaysia’s solar industry will be hit by another blow after India became the second country to impose safeguard duties on solar panel imports after a 30% tariff imposed by the United States.

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