Renewable energy alternative

by Gan Pei Ling / 24 February 2012 © Selangor Times

Malaysia has been slow to adopt renewable energy options  compared to regional counterparts Thailand and the Philippines.

Putrajaya only implemented the feed-in-tariff system last December in a bid to boost the renewable energy industries in Malaysia.

Pioneered in  Germany, the feed-in tariff scheme allows individuals and companies to sell energy produced from renewable sources such as solar photovoltaic, biogas, biomass and mini-hydro at a higher rate to Tenaga Nasional Bhd (TNB).

Currently, renewable energy sources contribute less than one per cent to our energy mix, with only 62.3MW capacity in 2010.

Malaysia targets to increase renewable energy sources’ contribution to 5.5 per cent in 2015, 11 per cent in 2020 and 25 per cent by 2050.

However by 2050, advanced countries like Denmark and Germany are aiming to source energy mostly, if not entirely, from renewable sources.

A recent report published in international journal Energy Policy claimed that the world can achieve 100 per cent renewable energy by 2030 if proper measures are taken.

Australian environmental expert Dr Mark Diesendorf, speaking at a public forum in Kuala Lumpur last Thursday, pointed out that Malaysia has huge potential to develop renewable energy.

“You receive more sunlight than Germany (where solar photovoltaic contributes to 3.5 per cent of its electricity production),” observed the associate professor and deputy director of the Institute of Environmental Studies, University of New South Wales.

He said Malaysia should hire independent energy experts to conduct a comprehensive study on the country’s renewable energy potential.

TNB chief executive officer Datuk Seri Che Khalib Mohamad Noh had told the 200-odd audience earlier that renewable energy options have limitations in Malaysia.

He cited cloud cover and high capital costs for solar energy, sparse location of palm oil mills for biomass, high installation cost for biogas, and remote locations for mini-hydro.

In addition, the energy supply from these sources fluctuates. Therefore, nuclear power is needed to produce stable and constant base-load electricity.

New way of thinking

But Indian activist and author Praful Bidwai argues that the world needs to move away from the model of a centralised electricity production system.

“We need a much more flexible, de-centralised power production system that can adapt according to changing demand,” said Bidwai.

He added that it was more efficient to install independent solar panels or micro-hydro system to supply electricity to remote areas, compared to connecting them to the national grid to receive power produced miles away at a power plant.

His remark was echoed by Diesendorf, who described the concept of base-load power plants as “redundant”.

He said a combination of renewable energy sources can be used to meet electricity demand by the hour, with higher production during the day and lower production at night.

In addition, Diesendorf highlighted that Malaysia could explore its geothermal potential if it wants a base-load power provider to support its renewable energy systems.

Meanwhile, Dr Feroz Kabir Kazi from the University of Nottingham Malaysia also highlighted our country’s biomass potential via his case study.

Our country produces around 18 million tonnes of palm oil per year and oil palm plantations cover 15 per cent of our land – 4.7 million hectares. The empty fruit bunches, tree fronds, trunks, fibres and shell can be burned to generate power.

His 10MW case study showed that biomass is profitable in the long-term with the introduction of the feed-in tariff system.

“Demo projects are essential. Renewable energy has a bright future in Malaysia and its growth provides opportunities for local employment,” said the Associate Professor from the Chemical and Environmental Engineering Department.

Finally, Diesendorf also commented that Malaysia should strengthen its electricity conservation and energy efficiency programmes.

With the use of efficient electrical appliance and mindful consumption habit, Malaysians can reduce our demand for electricity.

TNB’s Che Khalib noted that Malaysians usually take their electricity for granted as it is still subsidised and cheap, for now, but the country must find a way to stabilise power demand as the cost of power production is likely to rise in future.

Related post: Going nuclear: An option?

Going solar and renewable

by Gan Pei Ling / 18 April 2011 © The Nut Graph

Have you ever wanted to install solar panels at your home, but couldn’t afford the capital cost? Once the Renewable Energy Act comes into force, this dream could become a reality.

Passed by the Dewan Rakyat on 4 April 2011, the Act will allow individuals to sell electricity produced from renewable sources like solar photovoltaic at a higher rate than traditional power producers to Tenaga Nasional Berhad (TNB).

This incentive is expected to boost renewable energy industries and its current electricity generation share in the country from under one percent to 11% by 2020. But how will this work? Where will the funds come from? And will home-owning Malaysians be willing to be part of the new system?


Following the footsteps of pioneering country Germany and our neighbours Thailand and the Philippines, Malaysia will be implementing the feed-in-tariff (FIT) system.

Solar panels (© Raebo | Wiki Commons)

Electricity produced from four types of sources — solar panels, small hydro, biogas and biomass — will benefit from the FIT mechanism under the Renewable Energy Act.

Among these four, residential homes would benefit most from solar photovoltaic as a renewable energy source.

The other three sources — small hydro, biogas and biomass, would be more suitable for implementation by businesses as the capital expenditure could amount to millions. The table below demonstrates the different costs involved in setting up the different sources.

Solar PV Small Hydro Biomass Biogas
Installed capacity 6kW 10MW 10MW 4MW
Expenditure RM90,000 RM90mil RM90mil RM40mil

Source: Adopted from Malaysia Building Integrated Photovoltaic Technology Application Project leader Ahmad Hadri Haris’s March 2011 presentation


Going solar at home

Breaking down the numbers: How your 4kW system will pay for itself in around 15 years.

A normal household would usually need about 4kW capacity worth of solar panels, which would cost around RM72,000 to install. That’s about the price of a brand new Toyota Vios.

Too expensive to go green? Think again. Your Toyota Vios’s commercial value will be depreciating at a rate of about 10% a year, but not the income that you would be receiving from installing solar panels on your roof.

Under the FIT system, TNB will sign a 21-year agreement with households and pay at least RM1.49 per kWh electricity generated. Assuming production of 400kWh per month, this would amount to a payout of RM596 per month.

If a household’s electricity bill is RM200 a month, there would still be a steady monthly income of RM396 for the next 21 years, which could be used to repay the loan taken to install the solar panels. The 4kW system would pay for itself and start turning a profit within 15 years.

It is also worth highlighting that one will get paid more under the FIT mechanism if locally-manufactured or assembly solar inverters or photovoltaic modules are used, and/or used as part of building materials.

Granted, the scheme doesn’t bring about huge profits all at once, but I think most middle-class families would now be able to afford to install solar panels should they wish to.

However, it should also be noted that there will be an annual degression rate of 8% for the solar photovoltaic system. In other words, the later one joins the FIT scheme, the lower the FIT rate one will receive. This is based on the assumption that the cost of solar panels would go down once more people adopt it.

The degression rate will be reviewed every three years by the soon-to-be-established Sustainable Energy Development Authority to ensure the rates remain reasonable.

Making renewable energy commercially-viable

Residential homes aside, commercial renewable energy producers are the ones who are set to benefit the most from the FIT mechanism and who seem most excited about the new scheme.

Prior to the Act, TNB paid the same rate of RM0.21per kWh for energy whether or not it was produced from environmentally-friendly resources or from fossil fuel.

Under the FIT scheme, biogas and biomass electricity producers will finally be rewarded for their pioneering efforts and get paid at least 28% more than fossil fuel producers, as shown in the table below.

Biogas Basic FIT rate (RM) Biomass Basic FIT rate (RM)
Up to 4MW 0.32 Up to 10MW 0.31
Up to 10MW 0.30 Up to 20MW 0.29
Up to 30MW 0.28 Up to 30MW 0.27

Source: Renewable Energy Bill

They will be signing a 16-year contract with TNB and enjoy the same competitive rates throughout the period.

In addition, those who use locally-manufactured or assembled gas engine or gastification technology will enjoy a bonus of one sen on top of their basic FIT rate.

Biogas electricity producers who use landfill or sewage gas as a fuel source will further enjoy a bonus of eight sen. Biomass players will enjoy an additional 10 sen for using municipal solid waste as their fuel source.

Already, a 26ha renewable energy park is being built on a remediated landfill in Pajam, Nilai, which would consist of a 2MW biogas plant and 8MW solar power facility, and is expected to generate RM12mil gross national income in 2020.

Meanwhile, small hydro producers enjoy less incentive at RM0.23 to RM0.24 per kWh but their contract with TNB will last for 21 years under the FIT mechanism.

Renewable Energy Fund

The government or TNB will not be forking out its own money to pay the higher FIT rates. The funds will come from consumers. There will be a one percent hike in the current electricity tariff, expected in 2012, the revenue of which will be used to finance the Renewable Energy Fund needed to finance the FIT scheme.

In other words, if your electricity bill is RM200, you will be paying an additional RM2 and that amount will go into the Renewable Energy Fund.

However, the FIT mechanism is not meant to last forever.

It is expected that the cost of producing renewable energy will eventually be cheaper than electricity currently produced by fossil fuel producers. This is also given the fact that current energy prices do not reflect the true cost of production due to subsidies for natural gas and the government-controlled electricity tariff.  Once the cost of renewable energy drops below fossil fuel energy, the Renewable Energy Fund will cease to exist.

At that point, TNB would be able to directly purchase power from renewable energy producers as it would be cheaper than electricity produced from fossil fuel like gas and coal.

(© Indymedia | Wiki Commons)

In the meantime, for the FIT mechanism to be implemented successfully, the government will need to widely publicise the new scheme to home owners and commercial producers and for many to participate in it. Only then will Malaysia be able to increase its renewable energy production to meet and hopefully, surpass its target of 11% by 2020. If Malaysia can push its renewable energy industries forward and make them cost-effective, not only would we be reducing our reliance on fossil fuel and carbon emission, we could even drop the idea of going nuclear, too.

Gan Pei Ling is looking forward to installing solar panels in her own home.