malaysia fit presentation dec 2010

Renewable Energy & Feed-in Tariff

Ir. Ahmad Hadri Harishadri(a)mbipv.net.my

Chief Technical AdvisorRE/MBIPV National Project Team

Ministry of Energy, Green Technology & Water

29th December 2010

Disclaimer

The information provided is within the context of the National Renewable Energy Policy and the Renewable

Energy Bill currently tabled in the Parliament.

The information has been compiled in good faith. However, the information may change without prior

notice.

2

Malaysia’s Renewable Energy Initiatives

8th Malaysia Plan (2001 – 2005)

RE as the 5th fuel

Implied 5% RE in energy mix


300 MW in Peninsular Malaysia

50 MW in Sabah

3

RE Support & Promotion Mechanisms

SREP (Small Renewable Energy Power) Programme

Launched in 2001

Objectives:To encourage

production of RE by small power generators (10MW) and allow the

sale of generated electricity to utilities

UNDP-GEF Biomass Power Generation & Demonstration

(Biogen) Project

Launched in 2002

Objectives:

To demonstrate biomass and biogas grid-connected power generation projects

UNDP-GEF Malaysia Building Integrated Photovoltaic

(MBIPV) Project

Launched in 2005

Objectives:

To reduce unit cost of solar PV technology by

20% and increase capacity by 330% via PV

applications in buildings

Support Mechanism Approvals & licenses REPPA: RM/kWh 0.21 (biomass,

biogas); 0.17 (hydro), net-meter (PV)

Promotion Mechanisms Pilot projects & case studies Capacity building & lessons Financing & policy developments

Fiscal incentives: Pioneer Status or Investment Tax Allowance; import duties and sales taxes exemption. 4

9th Malaysia Plan (2006 - 2010)

Targeted RE capacity to be connected to power utility grid:300 MW in Peninsular Malaysia, 50 MW in Sabah

Targeted power generation mix:56% NG, 36% coal, 6% hydro, 0.2% oil, 1.8% RE

RE capacity as of 31st December 2009: Connected to power utility grid: 55.5 MW

Off grid (private palm oil millers & solar hybrids): 440 MW

8th Malaysia Plan (2001 - 2005)RE as the 5th Fuel


Renewable Energy Status

5

Key Issues Affecting RE

1. Market failure exists:

The RE market “fails” due to misuse of monopsony power and information asymmetries;

the RE market is also constrained by financial and technological factors.

2. Constraints:

Inherent factors that constrain the performance of the market: Economic, Financial,

Technological.

3. Arbitrary price setting:

RE prices set arbitrarily.

4. Tensions and trade-offs:

The predicament of expecting that the utility will bear the higher costs of RE power (due

to the higher RE price).

5. Absence of Regulatory Framework:

Market failure compounded by absence of a proper regulatory framework, which

prevents proper and legal action from being taken.

6. Poor governance:

Poor governance affects the participation of stakeholders and legitimacy of the action.

7. Limited Oversight:

No concerted oversight of implementation problems.

8. Lack of institutional measures:

Lack of proper institutional measures to meet informational and technological needs.

6

‘Renewed’ Renewable Energy Initiative


RE as the 5th fuel



300 MW in Peninsular Malaysia

50 MW in Sabah

10th Malaysia Plan (2011 – 2015) & beyond

New RE Policy & Action Plan

7

RE Policy Development in Asia-Pacific (selected)

South Korea: Feed-in Tariff 2003 (4th largest PV market worldwide in 2008)

Japan: Re-initiation of National PV programme, (net feed-in tariff in 2010)

India: Feed-in Tariff in some states

China: RE Law 2006 (FiT in 2010)

Chinese-Taipei: RE Law 2009 (FiT)

Australia: RE Law 2009 (RPS)

Feed-in Tariffs: Australian Capital Territory, South Australia, New South Wales, Western Australia, Queensland, Victoria, Tasmania, Northern Territory

South East Asia: Thailand: VSPP Regulation 2006 (FiT - adder) Malaysia: SREP & Suria Programmes Singapore: Solar Capability Scheme Philippines: RE Law 2008 (FiT) Indonesia: Energy Law No.30 (RE) 2007

8

Shares of Renewable Energy World-Wide

9

New Power Generation Installed Capacity (EU: 2009)

10

Global Investment in Renewable Energy (2008-2009)

11

National Renewable Energy Policy

Approved by Cabinet on 2nd April 2010

Policy Statement:

• Enhancing the utilisation of indigenous renewable energy

resources to contribute towards national electricity supply

security and sustainable socio-economic development.

Objectives:1. To increase RE contribution in the national power generation

mix;2. To facilitate the growth of the RE industry;3. To ensure reasonable RE generation costs;4. To conserve the environment for future generation;5. To enhance awareness on the role and importance of RE.

12

Definition of Renewable Energy

Renewable Energy (RE) is any form of primary energy from

recurring and non-depleting indigenous resources, such as

agricultural produce, hydro-power, solar, wind, solid-waste, etc.

13

National RE Resources and Potentials

Solar Biomass Biogas Mini-Hydro Solid Waste

Others: Wind, Geothermal, Ocean-thermal, Tidal Wave, etc.

-Status: Total 39 MW under

Construction as of July 09

- Biogen Project- Palm Oil waste

(EFB), other agricultural waste

(woodchips, paddy husks, etc)

-Status: Total 4.45 MW under


- Palm Oil Mill Effluent (POME), Cassava waste, livestock, agro,

industrial waster water

-Status: Total 30.3 MW under


- Run of the river with minimum

impounding

-Status: Total 5.5 MW Commissioned on 1 August 2009

- waste collected in Malaysia

Approximately 21,000 tonnes/day

MW (40% buildings)

14

T5: Advocacy Programmes

T1 (foundation): Regulatory Framework

T2: Conducive RE Business

Environment

T3: Human Capital

Development

T4: RE R&D Action Plan

RE Policy & Goals

RE Act Feed-in Tariff (FiT)

RE Fund

RE Authority

Responsibilities and obligations on power utilities and RE developers

National RE Policy: Strategic Thrusts (Action Plan)

15

• 10th Jun 2010: 10th Malaysia Plan (chapter 6)

• 15th Oct 2010: National Budget 2011 (paragraph 34)

• 25th Oct 2010: Economic Transformation Programme (chapter 6)

16

Feed-in Tariff: Government Policy

Choices of RE Support Mechanism

Policy Description

Net metering Any amount above what is consumed in the building is exported to the

grid. Any amount below what is consumed in the building is imported

from the grid (usually for PV produced electricity in home/building)

Direct capital support Cash rebate on a portion of grid-connected RE system costs

Feed-in tariffs (FIT) Premium price for electricity grid-connected paid to system owners by

utility or regulatory body. Price typically guaranteed for 20 years.

Renewable Portfolio

Standard (RPS)

Mandatory portion of grid-connected RE power in the generation mix.

Tradable certificates represents power that is produced.

Green Pricing Voluntary schemes where consumers pay a premium for grid-connected

power from utility or other electricity retailers.

Tax Incentives Reduction or elimination of tax paid in purchase of RE systems,

deduction of total cost of portion of system cost from business or

personal tax

17

RE Support Mechanism

Source: BSW 18

Verifications of FiT Effectiveness• Stern Review Report:

Sir Nicholas Stern stated that “Comparisons between deployment support through tradable quotas and feed-in tariff price support suggest that feed-in mechanisms achieve larger deployment at lower costs.”

• UNDP-GEF Report: Promotion of Wind Energy - Lessons Learned From International Experience and UNDP-GEF Projects

“Feed-In tariff policies have been very effective in Germany, Spain and Denmark, leading to the world’s first, second and fifth installed wind energy capacities.”

• International Energy Agency: Deploying Renewables - Principles for Effective Policies

“Feed-in Tariffs are more effective and cheaper than quotas for RE”

• Ernst & Young Report: Renewable Energy Country Attractiveness Indices:

“Feed-in Tariffs are cheaper than Trading System”

• Traditional RPS country/state moving towards Feed-in Tariff:

Japan started by 1st Nov 2009, UK implemented Feed-in tariff in 2010. Feed-in Tariff in USA: Gainesville (2009), Vermont (2009), SMUD (2010). South Africa implemented Feed-in Tariff in 2009.

19

FiT: Proven Effectiveness (Germany)

Development of electricity generation from renewable energies

in Germany, 1990 - 2007

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Ele

ctr

icit

y g

en

era

tio

n [

GW

h]

Hydropower Wind energy

Biomass* Photovoltaics

*Solid, liquid, gaseous biomass, biogenic share of w aste, landfill and sew age gas;

StrEG: Act on the Sale of Electricity to the Grid; BauGB: Constuction Code; EEG:Renew able Energy Sources Act;

Electricity from geothermal energy is not presented due to the negligible quantities of electricity produced;

Source: BMU-Brochure: "Renew able energy sources in f igures – national and international development", Internet Update, KI III 1; Version: 15.12.2008; provisional f igures

EEG

1 April 2000

New EEG

1 August 2004

StrEG

1 January 1991

Amendment to BauGB

November 1997

EEG 2009

ex 1 January 2009

4.8% RE

14% RE

Source: BMU 20

Source: BMU

Germany’s RESA: Impact to Industry

21

Total Turnover from Renewable Energy Sources

in Germany, 2007

Geothermal

energy 1)

EUR 680 mill.

(2.7 %)

Wind energy

EUR 5,790 mill.

(22.7 %)

Hydropower

EUR 1,270 mill.

(5.0 %)

Solar energy 2)

EUR 7,030 mill.

(27.6 %)

Biomass

EUR 10,700 mill.

(42.0 %)

Total: approx. € 25.5 billion

1) Large plants and heat pumps2) Photovoltaics and solar thermal energy;

Source: BMU-Brochure: "Renew able energy sources in f igures – national and international development", Internet Update, KI III 1; Version: 15.12.2008; provisional f igures

Germany’s RESA: Impact to Industry

22

Employees in the German renewable energy sector

2004, 2006 and 2007

3,400

9,500

4,300

9,400

95,400

82,100

4,300

4,500

9,400

50,700

96,100

84,300

63,900

56,800

25,100

1,800

40,200

4,200

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000

Geothermal energy

Hydropower

Solar energy

Biomass

Wind energy

Figures for 2006 and 2007 are provesional estimate

Source: BMU Projekt "Kurz- und langfristige Auswirkungen des Ausbaus der erneuerbaren Energien auf den deutschen Arbeitsmarkt", KI III 1; interim report March 2008

Public / Non-profit

Sector Jobs

nützige Mittel

Increase: approx. 55 %

2004 2006 2007

160,500

employees

235,600

employees

249,300

employees

Germany’s RESA: Employments

23

FiT Implementation & Adaptation: World Wide (2009)

24

Must be guaranteed via the RE Act, whereby:

• Access to the grid is guaranteed – utilities legally obliged to accept allelectricity generated by RE private producers.

• Local approval procedures are streamlined and clear.

• FiT rates must be high enough to produce a ROI plus reasonable profit(not excessively) to act as an incentive.

• FiT rates will be fixed for a period (typically 20 years) to give certainty andprovide businesses with clear investment environment.

• Adequate "degression" for the FiT rates to promote cost reduction toachieve “grid parity”

• Adequate fund is created to pay for the FiT rates (incremental cost) andguarantee the payment for the whole FiT contract period.

• Implementation by a competent body in a professional manner thatincludes constant monitoring, progress reporting and transparency.

Critical Factors for Effective FiT Mechanism

25

Sustainable Energy Development Authority of Malaysia (SEDA Malaysia)

Ministry of Energy, Green Technology & Water

Energy Green Technology Water

Electricity Sector

ST

Regulator

SEDAImplementing

Authority

MGTC

Green Technology promoter

RE & EE Sector

Green Technology Sector

Water & Sewage Sector

SPAN

Regulator

JBA

Implementing Department

JPP

Implementing Department

26

Functions of SEDA Malaysia

• Advise the Minister & Government entities on all matters relating to sustainable energy

• Promote & implement national policy objectives for renewable energy

• Promote, stimulate, facilitate & develop sustainable energy• Implement, manage, monitor & review the Feed-In Tariff system• Implement sustainable energy laws including the Renewable

Energy Act & recommend reforms• Promote private sector investment in sustainable energy sector• Carry out / arrange research, advisory services & disseminate

information• Implement measures to improve public awareness• Act as focal point to assist the Minister on matters relating to

sustainable energy & climate change matters relating to energy

27

38%

25%

20%

1%16%

Cost Breakdown for Average Domestic Electricity Tariff

Subsidized Fuel for Power Generation

Generation Cost

Transmission & Distribution Cost

FiT Levy

Customer Service Charge

Source of Fund for FiT

RE Fund: 1% in electricity tariff at initiation of RE Act

How much is 1%? Eg: 1% of TNB’s FY2010

revenue = RM 303 million In 2010, equivalent to 0.31

sen/kWh For every RM100 per

month, RM1 goes to RE Will not affect low income

consumers (<200 kWh/month)

Polluters pay concept Encourages EE and DSM

FiT Cost

Note: Additional 1% (for RE target) + 1% (for ETP target) in subsequent tariff reviews 28

{RE Fund 1%}

Residential sector

Electricity bills 100% (after tariff review)

Solar BIPV buildings

Commercial sector

{FiT payments}

{(FiT – displaced cost) +fee}

Industrial sector

Power UtilitiesRE Fund (SEDA)

SEDA

SREP developers

{Revenue 99%}

RE Funding Flow for FiT

Government sets RE goals and provides

RE Law

29

RE Fund (FiT Cost Pass Through): Examples

30

Germany2007

Italy2009

Thailand2008

Malaysia2009/2010

Retail Electricity Tariff (average)

0.28 US$/kWh

0.24 US$/kWh

0.09 US$/kWh

0.09 US$/kWh

FiT cost to consumers

(% of retail tariff)

4.8% 7.3%Incorporated

in tariff

1% + 1% (+1%)

Source: BMU, GSE, ERCT

Germany: 2009

FiT Degression

Promotes cost reduction towards grid parity Promotes early commissioning and rewards early birds Point of control for ‘high’ FiT rates

31

Driver: Environment & Energy Security

Years

Ele

ctri

city

Pri

ces

($/k

Wh

)

GRID PARITY

Source: BP, RECEurope, USA, Japan Asia

2010 2020

RE Grid Parity

32

Capacity of renewable energy

installation

Feed-In-Tariff

rate (RM-Sen

per kWh)

Effective

period

Initial annual

degression

rate

Installed capacity up to and including 4

MW

32 16 years 0.50%

Installed capacity above 4 MW, and up to

and including 10 MW

30 16 years 0.50%


and including 30 MW

28 16 years 0.50%

Additional for use of gas engine technology

with electrical efficiency of above 40%

+2 16 years 0.50%

Additional for use of locally manufactured

or assembled gas engine technology

+1 16 years 0.50%

Additional for use of landfill or sewage gas

as fuel source

+8 16 years 1.80%

Feed-in Tariff Rate for Biogas

33

Feed-in Tariff Rate for BiomassCapacity of renewable energy

installation

Feed-In-Tariff

rate (RM-Sen

per kWh)

Effective

period

Initial annual

degression

rate


MW

31 16 years 0.50%


and including 20 MW

29 16 years 0.50%


and including 30 MW

27 16 years 0.50%

Additional for use of gasification technology +2 16 years 0.50%

Additional for use of steam-based

electricity generating systems with overall

efficiency of above 14%

+1 16 years 0.50%

Additional for use of locally manufactured

or assembled gasification technology

+1 16 years 0.50%

Additional for use of municipal solid waste

as fuel source

+10 16 years 1.80%

34

Feed-in Tariff Rate for Mini Hydro

Capacity of renewable energy

installation

Feed-In-Tariff

rate (RM-Sen

per kWh)

Effectiv

e period

Initial

annual

degression

rate


MW

24 21 years 0%


and including 30 MW

23 21 years 0%

35

Feed-in Tariff Rate for Solar PVCapacity of renewable energy installation Feed-In-Tariff

rate (RM-Sen

per kWh)

Effective

period

Initial annual

degression

rate

Installed capacity up to and including 4 kWp 123 21 years 8%

Installed capacity above 4 kWp, and up to and

including 24 kWp

120 21 years 8%


including 72 kWp

118 21 years 8%


including 1 MWp

114 21 years 8%

Installed capacity above 1 MWp, and up to and

including 10 MWp

95 21 years 8%

Installed capacity above 10 MWp, and up to

and including 30 MWp

85 21 years 8%

Additional for installation in buildings or building

structures

+26 21 years 8%

Additional for use as building materials +25 21 years 8%

Additional for use of locally manufactured or

assembled solar photovoltaic modules

+3 21 years 8%

Additional for use of locally manufactured or

assembled solar inverters

+1 21 years 8%

36

Basis of Determining FiT Rates:Economic Viability of RE Projects

Factors Biomass Solid Waste Solar PV

IRR (based on typical rates for power generation sector)

6% - 13% 6% - 15% 3% - 12%

Simple Payback Period (SPB) < 7 years < 7 years < 12 years

Positive cash-flow (financing period) Yes Yes Yes (or neutral)

Factors to calculate IRR Biomass Solid Waste Solar PV

Capital expenditure 6-9.6 RM/W 15-19 RM/W 12-19 RM/W

Loan rates & tenure 7-9%, 15 yrs 7-9%, 15 yrs 6-8%, 15 yrs

Fuel cost & transport RM/tonne N/a N/a

O&M cost, depreciation, insurance 11.4% of capex 11.3% of capex 1.4% of capex

Annual cost increment 3% 4% 3%

Revenues: FiT duration 16 yrs 16 yrs 21 yrs

Capacity factor 70% 70% 13-16%%

Other revenue N/a Yes N/a37

FiT Rates = Empirical Value

Conducive FiT rates

38

FiT Rate Comparison

39

=~

kWh

365.8

kWh

417.2

Inverter

PV

Generator

Meter Consumption

Meter Generation

Load

Public Grid

=~

kWh

365.8

kWh

365.8

kWh

417.2

kWh

417.2

Inverter

PV

Generator

Meter Consumption

Meter Generation

Load

Public Grid

RM1.75/kWh

RM0.31/kWh

FiT Implementation: Accounts & Payments

2 separate accounts with TNB:

• Electricity consumption bill (Consumption Meter): consumer pays to TNB for kWh electricity consumed.

• FiT bill (Generation Meter): TNB pays to consumer for gross kWh electricity generated.

• Thus, 2 separate contracts with TNB.

40

Case Study for Solar PV:Financial Returns from FiT

BIPV System (Residential)

PV Rooftop (Commercial)

System capacity (kW) 4.00 1,000

System price (RM) 72,000 13,500,000

Down payment/ equity (RM) 7,200 3,375,000

Loan amount 64,800 10,125,000

Total loan repayment - 15 years (RM) 95,904 15,957,000

Insurance, O&M - 21 years (RM) 23,907 6,041,204

Total cost of ownership - 21 years (RM) 119,865 21,998,204

FiT rates - 2011 (RM) 1.74 1.44

Energy yield (kWh/kWp/year) 990 1,093

Total revenues - 21 years (RM) 144,698 33,037,200

IRR 5.4% 7.6%

Simple payback period (years) 11.3 9.3

41

Case Study for Other RE:Financial Returns from FiT

Biomass Solid Waste

System capacity 10 MW 10 MW

System price (RM) 90 mil 192 mil

Down payment/ equity (RM) 18 mil 38 mil

Loan amount 72 mil 154 mil

Total loan repayment - 15 years (RM) 123 mil 262 mil

Insurance, O&M – 16 years (RM) 188 mil 483 mil

Total cost of ownership – 16 years (RM) 310 mil 744 mil

FiT rates - 2011 (RM) 0.34 0.44

Capacity Factor (%) 70% 70%

Total revenues - 16 years (RM) 366.9 mil817 mil

(475 mil + 342 mil)

IRR 10.6% 9.2%

Simple payback period (years) 4.3 742

RE Learning Curves & Cost Reduction

43

Global Energy R&D Expenditures in USD-million (1974-2007)

44

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

RM

/kW

h

RE-FiT Rate vs Average Retail Electricity Tariff & Displaced Cost

Retail Tariff

Displaced Cost

FiT Biomas

FiT Biogas

FiT Mini Hydro

FiT Solid Waste

FiT Solar PV

FiT Degression: Towards Grid Parity

Grid Parity

45

-

200

400

600

800

1,000

1,200

1,400

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

20

48

20

49

20

50

RM

-mill

ion

Annual RE Fund vs Annual FiT Transaction Cost

Annual RE Fund

Annual FIT Cost

Final RE Fund Collection

(2030)

Last REPPA (FiT) (21 years)

First REPPA (FiT) (21 years)

RE Fund start

RE Fund increment

20

48

The quota (MW) allocated for each RE technology for each year is based on the:

• Availability of RE Fund

• Cash flow management of RE Fund.

Balancing Act: RE Fund VS FiT Transaction Cost

46

Annual RE Capacity Target (Quota, MW/Year)[RE Policy + EPP10]

47

Year BiogasBiogas-

SewageBiomass

Biomass-

Waste

Small

HydroSolar PV Solar PP TOTAL

2011 20 5 90 15 60 9 20 219

2012 15 10 50 20 50 11 35 191

2013 15 10 60 30 60 13 50 238

2014 25 10 60 40 60 15 80 290

2015 25 10 70 50 60 17 110 342

2016 25 10 80 30 60 19 130 354

2017 30 10 90 30 50 21 145 376

2018 30 10 100 20 40 24 155 379

2019 30 10 100 20 30 28 165 383

2020 25 10 100 10 20 33 170 368

2021 25 - 90 6 37 30 188

2022 25 - 90 5 41 80 241

2023 20 4 80 47 130 281

2024 20 3 70 60 250 403

2025 20 60 80 250 410

2026 20 50 105 250 425

2027 20 50 135 250 455

2028 20 50 175 250 495

2029 220 250 470

2030 280 300 580

-

5,000

10,000

15,000

20,000

25,000

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

20

48

20

49

20

50

MW

Year

Solar PV

Solid Waste

Mini Hydro

Biogas

Biomass

-

5,000

10,000

15,000

20,000

25,000

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

20

48

20

49

20

50

MW

Year

Cumulative RE Installed Capacity (& Ratio to Peak Demand)

RE (RE Policy & Action Plan)

RE (Business as Usual)

2030 3.5 GW

2020 2.1 GW

2050 11.5 GW

2020:2,080 MW (11%)11.3 GWh (9%)

2030:4,000 MW (17%)17.2 GWh (12%)

2050:21.4 GW (73%)44.2 GWh (24%)

2015:985 MW (6%)5.4 GWh (5%)

RE Policy & Action Plan: Goals[Exclude EPP10]

48

49

Comparison of RE Targets

11% capacity, 9% energy by 2020

Displaced Cost of Electricity

* The displaced cost is the average cost of generating and supplyingelectricity through the utility’s supply line and up to the point ofinterconnection with the renewable energy systems. The displaced costwill increase proportionally to incremental rate of electricity tariff.

RE Technologies/ ResourcesDisplaced Electricity Cost*

(RM/kWh)

Biomass – MV 0.2047

Biogas – MV 0.2047

Small Hydro – MV 0.2047

Solar Power Plant – MV 0.2047

Solar PV – LV 0.3131

50

YearAnnual Electricity Sales

(RM-million/ year)Avg Retail Tariff

(RM/ kWh)Displaced Cost (RM/kWh)

2007 20,690 0.26 0.17

2009 25,924 0.3131* 0.2047*

* Due to average 25% tariff increment in 2008 and 3.7% tariff reduction in 2009

Comparison to Fossil Fuel Generation Cost

TNB’s “Marginal” Generation Cost (Ir Lalchand – 2005)

Assumed IPP GenerationShare of

GWhRate

(sen/kWh)

Value of NG Subsidy in sen/kWh (at equivalent oil price of US$ per

barrel)

At US$40 At US$60

• Combined cycle 1 40% 15 12.1 20.5

• Combined cycle 2 30% 16 12.1 20.5

• Coal 15% 18 0 0

• Steam (Gas) 10% 15 13.6 23.1

• Open Cycle Gas Turbine 1 2.5% 30 18.1 30.8

• Open Cycle Gas Turbine 2 2% 99 18.1 30.8

• Hydro 0.5% 12 0 0

Average 17.78

51

Comparison to Peak (Fossil Fuel) Generation Cost

Summary of Inferred Peak (Wholesale) Energy Price (First Principle - 2006)With different orders of despatch, the following rates were derived:

Inferred peak energy-only wholesale price of Port Dickson Power Berhad’s supply (inclusive of gas subsidy)

87.99 sen/kWh*

Inferred energy-only average cost of peak electricity to TNB (inclusive of gas subsidy)

119.14 sen/kWh*

Inferred peak energy-only wholesale price of Telok Gong Power Station’s supply (inclusive of gas subsidy)

239.69 sen/kWh*

* Inferred peak energy-only wholesale prices are valid at the time of peaking which may onlybe over a half-hour duration.

52

External Cost: Expected Carbon Price in IEA BLUE Map Scenario

53

Grid System Carbon Emission Factor [t-CO2/MWh]

What does this mean?

Peninsular Malaysia 0.63 Peninsular Malaysia (2009) = 82.3 TWhx 0.63 t-CO2/MWh

= 51.8 mt-CO2x USD10/t-CO2

= USD 518.3 million= RM 1.6 billion

Sarawak 1.12

West of Sabah 0.65

East of Sabah 0.80

Malaysia (average) 0.69

Year

Cumulative Cost of FiT Payment (excludes displaced cost)

Biomass Biogas Mini-Hydro Solar PVSolid

WasteTotal

2020 RM 2.4 bil RM 0.7 bil RM 22.4 mil RM 0.8 bil RM 2.3 bil RM 6.2 bil



Year

Cumulative RE Capacity

Biomass Biogas Mini-Hydro Solar PV Solid Waste Total

2020 800 MW 240 MW 490 MW 190 MW 360 MW 2,080 MW

2030 1,340 MW 410 MW 490 MW 1,370 MW 390 MW 4,000 MW

2050 1,340 MW 410 MW 490 MW 18,700 MW 430 MW 21,370 MW

FiT Transaction Cost & RE Capacity (RE Policy only)

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Potential Impact of National RE Policy by Year 2020

• Minimum RM 2.1 billion savings of external cost to mitigate CO2 emissions (total 42 million tonnes avoided from 2011 to 2020, on the basis of RM 50 per tonne of external cost);

• Minimum RM 19 billion of loan values for RE projects, which will provide local banks with new sources of revenues (at 80% debt financing for RE projects);

• Minimum RM 70 billion of RE business revenues generated from RE power plants operation, which can generate tax income of minimum RM 1.75 billion to Government (on basis of 10% profit value where income tax is 25% on profit);

• Minimum 52,000 jobs created to construct, operate and maintain RE power plants (on the basis of 15-30 job per MW).

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Paradigm Shift...?

• Large power plants

• Unidirectional power flows

• Monopolistic vertically integrated structure

• Small-scale technologies

• Bi-directional power flows

• Opportunities for all

Centralised VS Centralised + Decentralised Power

300% kWh input

100% kWh output

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Thank You

More info on feed-in tariff is available from www.mbipv.net.my