Speech by Lim Guan Eng at CEO Speaks, PSDC Auditorium on Friday, 16^th December 2011 at 10 am: 

A "First-Come-First Serve" basis for applying for Feed-in-Tariff should be replaced by "Fit For All" basis  

Malaysia has at long last implemented the feed-in-tariff (FIT) as a means to encourage the generation of renewable energies, be it from the sources of solar, hydro, biogas / landfill or biomass / solid waste. For the general public, feed-in-tariffs (FIT) are payments per kilowatt-hour for electricity generated by a renewable resource. FITs are the thus far, the most successful policy mechanism for stimulating the rapid development of renewable energies in the world, today.

Germany, Spain, Denmark and over 40 other nations have pioneered policies and legislations, more popularly known as the FIT, since 1991, that have proven to promote the fastest, cheapest and widest growth of renewable energy. As FIT are meant for producers of renewable energy or to increase their production of renewable energy, both individuals and businesses will benefit from it.

FIT means additional source of income. The RE industry is estimated to generate at least RM70bil worth of revenue for the private sector and this will translate into tax revenue of at least RM1.76bil for the Government by 2020. In order to attract the RE industry for Penang, the state government is considering some form of land pricing incentives which will be announced early next month.

As for the utility companies, in Malaysia's case, TNB, it means that there will be lower portfolio generation costs for electricity by using free energy sources in the long-term. I should think that the non-governmental organisations (NGOs) would also be delighted with the implementation of FIT as selling back to the TNB means the electricity generated by the renewable energy producers will be connected to the national grid, thus does not require additional transmission lines.

Renewable energy today accounts for less than 1% of the power generation in Malaysia. Coal constitutes 40% while gas makes up 55%. It is the aspiration of the Malaysian Government to have renewable energy accounting for 5.5% of the entire energy mix by 2015 and 11% by 2020. The usage of renewable energy will lessen environmental damage from exploration and mining activities for fossil fuel such as oil, coal and natural gas.

The implementation of FIT is expected to create significant boost in the domestic economy, support environmental sustainability and promotes expediency in reaching 'grid parity' for the government. A 1% levy will be imposed on customers of TNB who consume 300 kwh or RM 77 per month for the purpose of funding the FIT. As Penang contributes nearly RM 20 million to this fund annually, it is unfair if Penang companies and individuals are unable or do not have the opportunity to benefit at least RM 20 million of these FIT.

SEDA envisions a scenario where anyone can become an IPP though a nano-IPP at that, by becoming a small clean and sustainable energy producer, generating green electricity (as opposed to fossil-fuelled electricity by the big IPPs) and distribution licensee (such as TNB) is obliged to purchase it. What all this means is that if you have a solar photovoltaic (PV) generator at home, you can apply to connect this generator to the grid, and get paid for selling the electricity generated to TNB over the next 21 years.

Solar energy is clean, environmentally friendly and has zero emissions. Solar and renewable energy is sustainable as it fulfills Penang state government's important requirement that resources used today are still available tomorrow. There is no depletion of natural resources and it is one of the fastest growing energy sources in the world.

The problem is the steps in obtaining a feed-in-approval is not as simple as it seems. Can it be done in 3 simples steps of obtaining quick feed-in approval from the newly-established Sustainable Energy Development Authority Malaysia (Seda Malaysia), sign a renewable energy power purchase agreement (REPPA) with TNB before we install the solar PV system on your rooftop. We hope today’s session can make it easier for all of us.

If we invest in a solar PV system now, we can expect a payback period of 8-9 years and lock in the premium rates offered for the next 21 eyars. The longer the sun shines, the more one can "export" electricity to the national grid during daylight hours (when power is urgently needed) and earn income. And I have been informed that Penang and Kota Kinabalu possesses the best direct sunlight in Malaysia! Is it not true that Penang has it all, not just food, heritage, hills and beaches but longest sunlight too!

On Dec 1 2011, Seda Malaysia invited the public including households, small and not-so-big IPPs (maximum size is 30 MW but only 5 MWp rated capacity for solar PV) to apply and book the amount of green electricity they intended to produce to sell it to the distribution licensee. There are fixed quotas for each of the four renewable energy sources namely biomass (including solid waste), biogas (including landfill), small hydro and solar PV. There was overwhelming response to solar PV especially for the non-individuals.

What is worrying is that the FIT may not be available to Penangites as approval is given on a first-come-first serve basis. As at Dec 7, Seda reported that the total unfulfilled quota for solar PV is 6,650 kW; 1,650 kW to be commissioned by the first half 2013, 2500 kW each for second half of 2013 and first half of 2014.

Translating these figures into households, it would mean that about 665 bungalow owners can avail themselves to the remaining capacity (assuming their average capacity is 10 kW). If all of the remaining capacity is taken up by semi-detached owners, the number will increase to 1,330 assuming their installed PV capacity is 5 kW. The figure for typical link houses, assuming an installed capacity of 3 kW, is 2,217 households. Only 2,217 household throughout Malaysia and only from 2013?

Nevertheless, my opinion is that the quota for solar, which accounts for 50MW of the 190 MW or 26% of the entire quota for renewable energy for 2011/2012 is inadequate as the entire quota for solar have been taken up except for some insignificant capacity allocated for individuals. Taking cognisance of the overwhelming response for FIT for solar, I would like to urge SEDA to increase the quota, so that we could expedite the achievement of 'grid-parity', thus making renewable energy the way of life.

A "First-Come-First Serve" basis for applying for feed-in-tariff (FIT) should be replaced by "fit for all" basis to ensure that all Malaysians benefit to become nano-IPPs according to 1% levy paid and the most efficient producer of renewable energy is chosen. With this, I would like to extend my warm welcome to our speakers today, Ms Chen Wei Nee and Mr Guntor Tobeng who will share with you their knowledge of FIT as well as solar farming / installation. Thank you.

*Lim Guan Eng, Penang Chief Minister