Energy surge

Posted on March 2, 2010. Filed under: Energy |


The new feed-in tariff rule will allow anyone to produce green energy and get paid for it.

HOW would you like to generate your own electricity, and make money from it? If things go according to plan, the impending introduction of a new feed-in tariff law that is set to revolutionise Malaysia’s renewable energy production will make it easy for everyone to generate renewable electricity and sell it back to the national power grid.

With the feed-in tariff (FIT), all you need to do is apply for an account and install a renewable energy generator such as a wind turbine or solar photovoltaic (PV) system, together with a special two meter system in your home.

Of the two meters, one will measure the electricity you use and the other, the renewable electricity you generate and contribute to the grid. When the Tenaga Nasional Berhad (TNB) meter reader comes by, you will receive two bills – one is the usual electricity bill you have to pay to the utility, and the other is for the electricity that it has to pay to you (both bills are kept separate and won’t cancel each other out, so if you don’t pay your bill, they won’t pay you in return).

Solar farms: Large-scale solar power plants are coming up all over the world. This one in Lujhu, Kaoshiung, Taiwan is touted as the largest highconcentration photovoltaic (HCPV) solar energy power plant in Asia. Its 141 panels produce up to one megawatt of energy, saving up to 670 tonnes of carbon emissions annually. HCPV power plants use sets of dish reflectors and concentrating optics to focus sunlight into greater densities, which allows solar power plants to be situated in smaller areas.

Doesn’t that sound good? But the best is yet to come. Under the FIT law, the electricity you generate is sold back to the utility at a premium rate.

“In a nutshell, the feed-in tariff will enable anybody, whether individual consumers or companies, to generate renewable electricity and sell it to the utilities at a premium price for a fixed period of time, usually 20 years,” said Ahmad Hadri Haris, head of the renewable energy unit at Pusat Tenaga Malaysia. Hadri also heads the feed-in tariff project team.

The feed-in tariff concept has been tried and tested in many countries, most effectively of all in Germany, which introduced it in 2000. Central to the success of FIT in Germany is Dr Herman Scheer, chairman of the World Council for Renewable Energy, and founder of the non-profit European Association for Renewable Energies, EUROSOLAR. Scheer, who was in Malaysia late last year for a conference on photovoltaics, is an elected member of the German Parliament since 1980, and was the prime initiator of the German Renewable Energy Feed-in-Tariff Law. All the same, even in Germany, where the FIT law is considered to be the best-implemented in the world, it was not smooth sailing at first.

According to Scheer, power companies were against the implementation of feed-in tariffs at the beginning and all four major power utilities in Germany tried to block the policy. “The structure of a conventional power centre is very centralised. They wanted to monopolise the electricity supply and the feed-in tariff caused them to lose this monopoly,” he said. To overcome the opposition, Germany declared the feed-in tariff a law, which in turn pressured the utilities to change their priorities and start investing in renewable energy or face the prospect of losing out to others who would be doing so.

Hadri faced the same problems with the utilities in Malaysia, with the main concern being loss of revenue. Another concern was that with so many individuals generating power, it would upset their planning as they plan the energy output 10 to15 years in advance to ensure there is enough power.

“They were not confident that renewable energy could generate enough power by 2015, which is fair comment, since we haven’t had a good success story of renewable energy in Malaysia,” said Hadri, stressing that the FIT proposal will address these issues.

“In terms of future planning, the law will state that each producer of renewable energy has a goal to achieve, and they must fulfil at least 80% of that obligation or be penalised. So there should be no problems of shortage in the future.” Another hurdle is that the technology is currently still too costly for most people to afford. This results in a Catch-22 – solar panel producers cannot lower their prices because demand is low, and at the same time, demand remains low because prices are still too high for consumers.

“You need a breakthrough to overcome this vicious cycle, and that means creating a market. You must force the industry to grow first. Once you have that, then the cost lowers,” said Scheer.

He said Germany overcame the Catch-22 situation by introducing the 100,000 PV Roofs Programme which saw solar PV installed in public buildings, universities, government buildings, hotels and schools.

Instead of roof tiles, solar cells are used on the roof of this car park of a supermarket outside Montpellier, southern France.

Malaysia has copied this strategy, running the Small Renewable Energy Power Programme since 2001, as well as the Suria 1000 programme since 2006, which offered subsidies to individuals who wished to install solar PV in their homes.

“Through these programmes, we have already conditioned the market. The price for solar PV has already gone down by 20% since we started Suria 1000, and we expect it to go down further once the FIT law is in place,” said Hadri.

He stressed that Suria 1000, meant to kick-start the industry here, focused only on small PV systems. To sustain the industry, he said bigger capacity generators and the feed-in tariff law were needed.

“The law will act like an umbrella that protects investors, by stipulating that the government will buy the renewable energy at a fixed price that is guaranteed for 21 years,” said Hadri.

And who will pay for the higher price of the renewable energy generated? Not TNB, but all of us. The additional cost of FIT will be added to our electricity bills. “About 2% of everyone’s bills will go into a fund. The utilities will pay consumers for the renewable electricity they generate, then claim the difference from the fund. We have calculated that the 2% collected is almost guaranteed to be more than the cost of sustaining the FIT,” said Hadri.

Now, before crying foul about the higher electricity bill, consider this: based on the current tariff, about 30 to 40% of every Ringgit paid to TNB is subsidised by the government. With plans to eventually remove this subsidy, the cost of electricity is set to go up. Factor in the cost of generating and transporting electricity to your homes, that 2% increase for the FIT is actually a tiny amount – less than 1 sen per unit, based on 2009 tariffs.

“Whether we like it or not, the cost of electricity will go up in the future,” said Hadri. “What we’re doing now is to give the public an opportunity to make an income to offset that cost.”

The low income group is insulated from future costs increase because those who use less than 200 units of electricity are still subsidised.

Hadri said the benefits of implementing FIT far outweigh the costs. “It has been proven in Germany that the cost to society will be far less than the benefits, especially in terms of the reduction of carbon dioxide emissions, energy savings, fossil fuel use, and infrastructure. And that’s not even taking into account the impact on the economy in terms of new jobs or manufacturing revenue.”

The proposal for FIT was completed last April. All that is needed now is for the Government to make the decision and pass the FIT law. Hadri warned that the longer the Government drags its feet, the more we stand to lose out.

“Taiwan passed their FIT law last April and endorsed it in June 2009, and many other countries are already implementing it. If Malaysia is slow to pass our law, then all the potential market and business will go to the other countries first. So the danger is that by the time we introduce our FIT, we might be left with scraps and leftovers.”

It is proposed that a dedicated agency be set up under the FIT law to manage the fund.

It will be like a one-stop centre to ensure FIT runs smoothly, handling everything from setting and achieving goals to collecting data, facilitating infrastructure, managing funds and rates, working with banks, and training small and medium scale enterprises.

“The agency has to be accountable and transparent. We are even putting in a clause in the act that makes it a criminal offence to misuse the fund,” said Hadri.


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