By Lee Wei Lian
source : http://www.themalaysianinsider.com
KUALA LUMPUR, Feb 18 — New power producers are emerging as Malaysia pushes to boost the renewable energy sector but mandatory purchases could burden Tenaga Nasional Berhad.
The government is aiming to have Malaysia derive 5 per cent of its energy needs from renewable sources by 2050, excluding hydro power, and is planning to table a renewable energy law in Parliament this year which is expected to take effect in 2011.
The law could introduce the so called feed-in-tariff (FIT) scheme, similar to that used in Germany, whereby Tenaga Nasional would be compelled to buy electricity generated from solar, wind and other renewable sources from households or companies at a premium price.
Berjaya Corporation Berhad’s wholly-owned subsidiary Berjaya Solar Sdn Bhd announced last week that it is planning to develop a RM180million 10MW solar photovoltaic (PV) power plant at Bukit Tagar, Selangor.
Another company, Red Solar Sdn Bhd, announced plans to collaborate with local authorities to install facilities that can feed cities, special economic zones, university campuses and villages with solar energy.
Tenaga already has a relatively high reserve margin, which is the amount of electricity it must hold in reserve, and is also contractually bound to buy electricity from independent power producers which produce power with natural gas subsidised by the government. A move to mandate that it also buys renewable energy at a premium could burden the utility giant even further.
OSK’s head of research Chris Eng says however that the proposal to boost the green energy sector by mandating that Tenaga Nasional buys renewable energy is unlikely to hurt the utility giant as the amount of electricity that can be generated from renewable sources would be minimal and not significant.
“We have too much cloud cover which affects solar power generation and we are in a dead wind zone and the wind is not strong enough to generate wind power,” Eng told The Malaysian Insider. “And we don’t have geothermal energy sources.”
The FIT schemes implemented around the world also tend to be not permanent but temporary incentives and FIT rates in countries such as Germany are reduced by about 5 per cent every year.
When contacted, Tenaga declined to comment for this story, saying that it wanted to wait for more details of the FIT to emerge.
Both Berjaya and Red Solar said that government support was important for the success of the renewable energy projects.
“The successful engagement of the project entails support from the government, primarily in terms of policies for renewable energy,” said Berjaya in a filing with Bursa on Feb 9. “In this context, the government’s approval of the Pusat Tenaga Malaysia (Malaysia Energy Centre) proposal for a new feed-in-tariff mechanism that provides preferential electricity tariffs as incentive for producers of renewable energy sources is imperative.”
Berjaya Solar is expected to commence development of the 10MW solar PV power plant in the second half of 2010, subject to approval of the FIT policy and the project, and it is expected to be commissioned by 2011.
The plant will be developed on a 50-hectare site, and will be capable of generating enough electricity for 3,000 homes. The power generated will be connected to the national grid to supply electricity nationwide.
Berjaya said that it has studied similar solar farms in Germany and Spain and has established relationships with PV manufacturers such as EQ Solar which is building a solar panel manufacturing plant in Johor.
Red Solar said it would be working with Silicon Valley-based TCTI Inc and the Perak State Economic Development Corporation.
Red Solar CEO Rais Hussin Mohamed Ariff cited Spain as an example of successful FIT implementation, saying that FIT rates in Spain were four times that of conventionally generated electricity and that sales of renewable energy soared from 600MW in 2007 to 2,511MW in 2008.
“At this point, Malaysia has to choose whether we wish to be a follower or a leader in this sector,” Rais was quoted by Bernama as saying in December. “In Malaysia all that the solar industry asks for is a workable policy on feed-in tariffs that reduce over time and are eliminated in three to five years so that Malaysia can meet its solar target of five per cent of overall energy generation.”
FIT incentives have helped solar power increase its share of the energy mix in Germany from 4 per cent to about 19 per cent currently but the country has been cutting down on subsidies in order to make the renewable energy sector more competitive and efficient and the German government proposed last month that the FIT be cut by 15 per cent.
A number of other countries are also looking at implementing FIT including Australia and China.
The Najib administration has said that it committed to making Malaysia a leader in green energy and technology as it would be a source of economic growth in the future.
Prime Minister Datuk Seri Najib Razak said in Abu Dhabi last month that current efforts would increase the availability of renewable energy in Malaysia from the current 50MW to 2,000MW by 2020.
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