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Toward Cleaner Cities: Renewable Energy Initiatives in Malaysia

  • Nasrudin Abd Rahim
  • Hang Seng Che
  • Md Hasanuzzaman
  • Asiful Habib
Chapter

Abstract

As an oil-producing nation, Malaysia has long relied on fossil fuels for meeting the country’s energy demand. Nevertheless, understanding that over-relying on fossil fuel will have adverse effect to the environment and economy, Malaysian government began to look into potentials offered by renewable energy (RE) resources since the early 2000. Over the years, various policies have been drafted and implemented to grow the renewable energy sector in Malaysia. Recently in the Paris Convention, Malaysia together with other ratifying nations of COP21 has reinstated its commitments toward reducing greenhouse gas emission (GHG) and adopting cleaner energy. According to the Intended Nationally Determined Contribution signed, Malaysia has expressed the intention to reduce its greenhouse gas emission intensity of gross domestic product (GDP) by 45% by 2030 compared to that of 2005. Out of this pledged 45%, 35% is on an unconditional basis, while the remaining 10% will be fulfilled provided there is funding, technology transfer, and capacity building from developed nations (UNFCCC 2015).

Keywords

Sustainable energy Renewable energy Malaysia 

8.1 Introduction

As an oil-producing nation, Malaysia has long relied on fossil fuels for meeting the country’s energy demand. Nevertheless, understanding that over-relying on fossil fuel will have adverse effect to the environment and economy, Malaysian government began to look into potentials offered by renewable energy (RE) resources since the early 2000. Over the years, various policies have been drafted and implemented to grow the renewable energy sector in Malaysia. Recently in the Paris Convention, Malaysia together with other ratifying nations of COP21 has reinstated its commitments toward reducing greenhouse gas emission (GHG) and adopting cleaner energy. According to the Intended Nationally Determined Contribution signed, Malaysia has expressed the intention to reduce its greenhouse gas emission intensity of gross domestic product (GDP) by 45% by 2030 compared to that of 2005. Out of this pledged 45%, 35% is on an unconditional basis, while the remaining 10% will be fulfilled provided there is funding, technology transfer, and capacity building from developed nations (UNFCCC 2015).

It is expected that RE will play an important role in reducing the GHG emissions in Malaysia, and comprehensive policies that support the development of RE will be instrumental toward this cause. This paper intends to explain the various policies and their evolutions in Malaysia that contributes to the growth of RE sector. The contents of this paper are structured in the following manner: Sect. 8.2 first gives the general information of Malaysia, including some key economic and energy data as well as the governance structure concerning the RE sector and the policies development. Section 8.3 then explains the energy policies in Malaysia, focusing on the renewable energy policies and programs in chronological sequence. Finally, Sect. 8.4 relates the renewable energy scenarios in the Greater Kuala Lumpur region, highlighting the associated challenges and opportunities.

8.2 Scenarios in Malaysia

8.2.1 General Information for Malaysia

Since its formation in 1963, Malaysia has recorded steady socioeconomic growth over the past six decades. Geographically, Malaysia consists of two parts: West Malaysia (Peninsular Malaysia) and East Malaysia, separated by the South China Sea as seen in Fig. 8.1. As a federation, Malaysia constitutes 13 component states and 3 federal territories, out of which 11 states and 2 federal territories are located in Peninsular Malaysia, while another 2 states (Sabah and Sarawak) and 1 federal territory are within East Malaysia.
Fig. 8.1

Satellite map of Malaysia (Google map, retrieved 17th Jan 2018)

Kuala Lumpur is the capital city of Malaysia, while Putrajaya is the administrative capital, both situated on the west coast of Peninsular Malaysia. Located at the heart of the Selangor state (Fig. 8.2), the economic and social functionality of Kuala Lumpur intertwine with its neighboring parts of the state of Selangor. As a matter of fact, Kuala Lumpur district was part of Selangor prior to the formation of Malaysia in 1963, which encompassed the current Federal Territory of Kuala Lumpur, Ampang, Batu Caves, Gombak, Ulu Klang, Petaling Jaya Puchong, and Sungai Buloh. In 2010, the term Greater Kuala Lumpur (GKL)/Greater Klang Valley was introduced under the Economic Transformation Program (ETP), to describe the Metropolitan Kuala Lumpur which includes ten municipalities under the Federal Territory of Kuala Lumpur, Putrajaya, and the state of Selangor, as shown in Fig. 8.3. These include Klang, Kajang, Subang Jaya, Petaling Jaya, Selayang, Shah Alam, Ampang Jaya, and Sepang from the state of Selangor, together with Federal Territory of Kuala Lumpur and Putrajaya. It is estimated that the GKL region covers an area of 2793 km2, contributing to approximately 37% of the whole country’s GDP (SPAD 2013).
Fig. 8.2

Map showing the location of Kuala Lumpur, Putrajaya, and Selangor (Derkommander0916 2015)

Fig. 8.3

Local authorities within the Greater Kuala Lumpur urban agglomeration

As of 2017, the population of Malaysia stood at 32 million (DOSM 2016b), with approximately 7.25 million or 22.7% of the total population residing in Greater Kuala Lumpur region (UN 2014) and only 1.79 million in Kuala Lumpur city itself (DOSM 2016a). The population trend for Malaysia and Greater Kuala Lumpur from 1970 to 2017 is shown in Fig. 8.4.
Fig. 8.4

Population trend for Malaysia and Greater Kuala Lumpur (DOSM 2016b; UN 2014)

Fig. 8.5

Malaysia GDP and GDP per capita for 1979–2015 (DOSM 2016a)

As one of the most politically stable country in the region, Malaysia has been enjoying a consistent grow in gross domestic product (GDP) over the years, recording a GDP of RM 1230.12 billion or GDP per capita of RM 38,853 for the year 2016 (MEC 2016b; DOSM 2016a). In terms of energy consumption, the final energy demand and electricity demand for Malaysia from 2005 to 2015 have been shown in Fig. 8.6 (MEC 2010, 2011, 2012, 2013, 2014, 2015). The final energy demand has increased 33.6% from 32,195 ktoe in 2005 to 43,011 in 2015, while electricity demand rose 49.7% from 6366 ktoe in 2005 to 9531 ktoe in 2015. For the year 2015, transport sector makes up the largest chunk of final energy usage, i.e., 45.2%, followed by industrial (27.0%) and then residential and commercial (14.6%). A sudden dip in final energy demand can be observed in 2009 due to the global economic crisis, after which the energy demand slowly picks up. The sources of primary energy supply in Malaysia are shown in Fig. 8.7, where it can be observed that natural gas constitutes the largest share of primary energy source in Malaysia, followed by crude oil, petroleum products and others, coal and coke, and lastly hydropower (MEC 2015).
Fig. 8.6

Final energy demand and electricity demand trend in Malaysia (UN 2014; DOS 2018; DOSM 2016a; MEC 2010, 2011, 2016b

Fig. 8.7

Primary energy sources by type in Malaysia for 2005–2015 (MEC 2015)

In terms of fuel types for final energy consumption, petroleum products and others are the highest which is 56% of the total final energy consumption in 2015, a 4% drop from 2005 level. Electricity, on the other hand, is the fastest-growing form of final energy consumed, rising from 15% in 1995 to 18% in 2005 and eventually reaching 22% in 2015 (MEC 2015).

Due to the geographical reason, the East and West Malaysia have their own electrical supply networks and are not interlinked. Apart from the generation sector where there are several independent power producers (IPPs) involved, the electricity generation, transmission, and distribution businesses in Malaysia are almost monopolized by the three main utilities, namely, Tenaga Nasional Berhad (TNB), Sarawak Energy Berhad (SEB), and Sabah Energy Corporation Sdn Bhd (SESB) for Peninsular Malaysia, Sarawak, and Sabah, respectively.

The installed generation capacity in Malaysia for the year 2015 was reported to be 30.439 GW, with the energy consumption being 132,199 GWh. Out of these figures, Peninsular accounts for around 74.9% or 22.810 GW from the total installed capacity and records an energy consumption of 110,770 GWh (83.8%) and a peak demand of 16,822 W (MEC 2015). As seen in Fig. 8.8, gas-powered generation makes up the largest portion (44.4%) of installed capacity, followed by coal-powered plants (28.1%) and hydropower plants (18.8%). The collective contribution of other REs, i.e., solar, biomass, and biogas, stood at 3.9% of the total installed generation capacity as of the end of 2015.
Fig. 8.8

Installed capacity by type for Malaysia (as of 31 Dec 2015) (MEC 2015)

According to the Peninsular Malaysia Electricity Supply Industry Outlook 2017 (MEC 2017), the total licensed capacity of RE in Peninsular Malaysia for the year 2016 is 392 MW, which is 7.1% increase from the 366 MW recorded in 2015. Out of this licensed capacity, solar PV is the largest (235 MW), followed by biomass (89 MW), mini hydro (34 MW), and biogas (34 MW).

8.2.2 Governance Structure

As mentioned earlier, Malaysia is a federation consists of 13 states and 3 federal territories. While the governing power of the country, as a whole, lies in the hand of the federal government, each state has its own state government holding a certain level of legislative powers. The partitioning of legislative powers between state and federal government is defined under Schedule 9 of the Federal Constitution as shown in Fig. 8.9. The powers are classified into three lists: the Federal list, the State list, and the Concurrent list, with the federal law prevailing over the state law in the event of any inconsistency. Within each state, there are several municipalities with their own governing local authority which are controlled by the state government, except for the municipalities within the federal districts.
Fig. 8.9

Partitioning of legislative powers according to Schedule 9 of the Federal Constitution of Malaysia

In Malaysia, the federal government controls the main economic revenues in the country and hence is more dominant over the state government in deciding policies and their implementation. In terms of energy, “electricity, gas and gas works; and other works for the production and distribution of power and energy” are under the Federal list in Schedule 9.

At the federal government level, the Ministry of Energy, Green Energy and Water (KeTTHA) is the custodian to energy development in Malaysia. Under KeTTHA, several statutory bodies and agencies such as Energy Commission (EC), Sustainable Energy Development Authority (SEDA), and Malaysia Green Technology Corporation (MGTC) were formed to assist KeTTHA on energy issues in Malaysia. At the higher level, the Economic Planning Unit (EPU) under the Prime Minister’s Office influences the general direction of the development of energy sector in Malaysia through the high-level policy making, including the formulation of Malaysia Plans (MPs) every 5 years. Under EPU, there is an Energy Section dedicated for drafting policies and strategies for the sustainable development of the energy sector, promoting oil and gas industries development and the utilization of renewable energy and energy efficiency in the energy sector, and providing fiscal allocation for energy-related development programs (Yatim et al. 2016).

8.2.2.1 Ministry of Energy, Green Technology and Water (KeTTHA)

Previously known as the Ministry of Energy, Water and Communication, KeTTHA was formed in 2009 by replacing the “communication” function with “green technology.” Since then, KeTTHA is responsible for the planning and implementation of policies and programs related to green technology in Malaysia. The functions of KeTTHA on the aspects of energy, green technology, and water are as follows:

Energy

  • To formulate policies and strategies as well as to implement planning for the electricity supply industry

  • To promote the use of renewable energy and energy efficiency

  • To study the tariffs imposed by electricity utilities

  • To monitor the service level of the electricity utilities

  • To administer the Malaysian Electricity Supply Industry Trust Account

  • To monitor energy implementation projects

Green Technology

  • To develop and review the Green Technology Policy which guarantees sustainable development to improve the quality of life and preserve natural resources and the environment

  • To be the secretariat to the National Green Technology Council and the coordinator for the committees under the council

  • To create legal frameworks and regulations that assist in the development and application of green technology

  • To plan, implement, and monitor innovative green products, systems, and services to drive the country’s economy

Water

  • To decide the overall policy direction and strategy of the water services industry (including water supply and sewerage)

  • To establish and review the regulatory framework of water services industry in order to be enforced by regulatory bodies

  • To promote water savings through efficient water use

  • To plan, evaluate, and monitor infrastructure development projects

  • To manage and be a secretariat to the Secretariat of the National Water Resources Council and various high-level committees on water services established by the federal government

8.2.2.2 Energy Commission (EC)

Energy Commission (EC) is a statutory body established under the Energy Commission Act 2001 which serves as the regulator for energy sector in Peninsular Malaysia and Sabah. The main functions of EC are to ensure regulations on the economic, technical, and safety aspect of the electricity and gas energy, as described below (MEC 2018b):
  • To promote economy in the generation, transmission, distribution, supply, and use of electricity and in the reticulation and use of gas

  • To promote competition, enable fair and efficient market conduct, and prevent the misuse of monopoly or market power in the electricity and piped gas industries

  • To ensure security, reliability, efficiency, and quality of supply and services in the electricity and piped gas supply industries

  • To protect the industry, consumers, and public from dangers arising from the generation, transmission, distribution, supply, and use of electricity and the distribution, supply, and use of piped gas

While the role of promoting renewable energy largely falls within the scope of SEDA, EC has been an active player in the area. Since 2016, EC has been entrusted to handle Large-Scale Solar (LSS) after the discontinuation of feed-in tariff for solar energy. It should be noted that EC’s jurisdictions are restricted to Peninsular Malaysia, Sabah, and Labuan only, with similar regulatory functions in the state of Sarawak are governed by the State Electrical Inspectorate under the Sarawak state government instead.

8.2.2.3 Sustainable Energy Development Authority

SEDA is a statutory body established under the Sustainable Energy Development Authority Act 2011 and is entrusted with the responsibility to manage the implementation of feed-in tariff (FiT) under the Renewable Energy Act 2011 (SEDA 2018a). Compared to EC, SEDA focuses more on sustainable energy which includes developing, promoting, implementing, and monitoring of sustainable energy-related policies. One of the most important roles of SEDA since its inception is the handling of feed-in tariff and later Net Energy Metering (NEM).

8.2.2.4 Malaysia Green Technology Corporation

In 1998, Malaysia Energy Centre (or Pusat Tenaga Malaysia, PTM) was established as a center for energy research and studies in Malaysia. Its responsibilities were to conduct planning and research on energy and energy efficiency, to perform studies related to the development or demonstration of energy technologies, as well as to collect related energy data (KeTTHA 2018). Later PTM was restructured and renamed as Malaysia Green Technology Corporation (MTGC) to spur the development of green technology in Malaysia, in line with the National Green Technology Policy 2009. Focus is placed on helping to achieve the objective of the National Green Technology Policy, via four flagship programs, i.e. (MGT 2018):
  1. 1.
    Green Malaysia Plan
    • MGTC together with KeTTHA lead the development of the Green Technology Master Plan.

    • The Green Technology Financial Scheme (GTFS) was introduced to help finance companies that venture into green businesses.

    • The Green Investment Tax Incentives was introduced where tax allowance is given to companies purchasing green technology-related assets or undertaking qualified green technology projects, while tax exemptions are given to companies providing green product and services.

     
  2. 2.
    Green Procurement
    • Under this flagship program, MGTC established the MyHijau Mark and directory to help identify and promote product and services that meet international environmental standards.

     
  3. 3.
    Electric Mobility
    • MGTC is spearheading the development of electric mobility including the installation of electric vehicle chargers around Malaysia.

     
  4. 4.
    Sustainable Living
    • Together with KeTTHA, MGTC is in-charged of initiative to assess and guide the development of townships/cities based on Low Carbon Cities Framework (LCCF), toward the awarding of the Diamond Rating Certificate by KeTTHA.

    • Apart from the LCCF, MGTC also handles the Energy Management Gold Standard certification process.

     
Figure 8.10 show the recorded installed capacity for commissioned RE plants under FiT for the years 2012–2016. Based on the data from SEDA (SEDA 2018b) up to 2017, the total installed capacity of commissioned RE plants stood at 533.84 MW, with 354.5 MW of solar PV (66.4%), 96.8 MW of biomass (18.1%), 52.24 MW biogas (9.8%), and 30.3 MW of small hydro (5.7%).
Fig. 8.10

Installed capacity (in MW) of commissioned RE plants under FiT for 2012–2016 (SEDA, 2018b)

8.3 Energy Policies in Malaysia

Due to the governance structure explained in the previous section, the policies and their implementation in Malaysia are often done in a top-down manner, where the federal government decides the direction of developments. The most important central government policy in Malaysia is the Malaysia Plan, presented every 5 years to outline the general directions for the nation’s development and influence the funding allocations for the subsequent 5-year duration. On top of the Malaysia Plan, policies will be developed and implemented, sometimes as general guidelines or masterplans and sometimes enforced as Acts.

The direction of energy usage in Malaysia was set forth in the 1970s where Malaysia relies mainly on fossil fuels as its primary source of energy (Bujang et al. 2016). In 1979, the National Energy Policy was introduced in the wake of the oil price crisis in the 1970s, covering the following objectives: (1) ensure an adequate and cost-effective supply, in essence maximum use of domestic resources, (2) utilize energy efficiency and conservation and eliminate wasteful consumption, and (3) protect the environment or achieve the other two objectives without degrading Malaysia’s rich ecological and social heritage. Shortly after, the Four-Fuel Diversification Strategy was introduced in 1981 to strategize the source of energy based on four main resources, namely, oil, natural gas, coal, and hydro.

8.3.1 Renewable Energy Policies and Programs in Malaysia

8.3.1.1 Five-Fuel Diversification Policy

An official focus on renewable energy was first when the Five-Fuel Diversification Policy was introduced under the 8th Malaysia Plan (8MP, 2001–2005). Under this policy, the government intended to include renewable energy as the fifth fuel to diversify the fuel mix in Malaysia and reduce reliance on fossil-based energy. By the end of 2005, the installed RE in Malaysia fell short from the targeted 500 MW, with only 12 MW reported. The effort was continued in the 9th Malaysia Plan (9MP, 2006–2010), with the target revised to 350 MW. Nevertheless, by the end of 2009, only 58.1 MW were achieved from 8 RE projects (out of 17 projects with combined capacity of 116.4 MW) commissioned (Petinrin and Shaaban 2015).

One of the key programs introduced under the Five-Fuel Diversification Policy is the Small Renewable Energy Power (SREP) program debuted in 2001, with the objective to spur the implementation of renewable energies in Malaysia through generation incentive. Under the SREP, small power generation plants are allowed to sell electricity generated from biomass, biogas, municipal solid waste, solar photovoltaics, and mini hydro to electricity distributors, for up to 10 MW. The power producer would negotiate a Renewable Energy Power Purchase Agreements (REPPA) with the utility company based on “willing seller willing buyer” concept to obtain a 21-year license after the plant has been commissioned. A target was set to achieve 5% of RE in energy mix by the year 2005, and the Special Committee on Renewable Energy (SCORE) was formed to handle the program and evaluate the applications. Nevertheless, SREP did not attain the good response initially anticipated, reaching only mere 2.4% of its initial goal by 2005 (KeTTHA 2008). The failure was mainly due to obstacles in the financial, institutional, and technical aspects, such as low tariff, lack of long-term fuel supply, lack of competitive financing and government incentives, limited local expertise and technology, etc. (KeTTHA 2008). In particular, the tariffs given for RE generation under the SREP were around 14–17 sen/kWh for solar and hydro and up to 21 sen/kWh for biogas and biomass, which are considered too low to yield reasonable return on investment.

Biogen Full Scale Model (Biogen FSM) Demonstration Project was introduced in 2002, alongside with SREP, with the specific target of promoting and demonstrating biomass and biogas grid-connected power generation projects. Focus was given to the use of oil palm waste residues, particularly the empty fruit bunches (EFB) and the palm oil mill effluent (POME) as sources for biomass and biogas power generation, respectively. Two demonstration projects were implemented, i.e., the Bandar Baru Serting Biomass Project (by MHES Asia) and the FELDA Besout POME Biogas Project. However, the Biogen FSM projects were not well received by the market due to the low return of investment, and even the MHES Asia biomass project encountered problems with securing of loans and disbursement of funds during the project (KeTTHA 2008).

In 2005, the Malaysian Building Integrated Photovoltaic (MBIPV) program was introduced. Financed by GOM-UNDP (GEF), the 5-year program aimed to promote the use of solar photovoltaic (PV) technology in buildings (Chua and Oh 2010). Through its “Suria 1000” program, grants were provided via bidding system to partially finance the equipment and installation costs of PV systems for companies and homeowners. Compared to other RE programs, the MBIPV Suria 1000 program has achieved substantial progress in driving the use of solar photovoltaic energy in Malaysia. Over the project duration, an increase of BIPV capacity by 539% was observed, while the average unit price for PV system has dropped by approximately 50% compared to the initial targets of 330% increase in capacity and 20% drop in price (Basri et al. 2015; Wong et al. 2015).

8.3.1.2 National Biofuel Policy (NBP)

In 2006, the National Biofuel Policy was announced, promoting the use of palm oil as a renewable energy source to relief Malaysia’s dependence on fossil fuel. The key initiatives of the NBP were:
  1. 1.

    To produce a biodiesel fuel blend of 5% processed palm oil with 95% petroleum diesel.

     
  2. 2.

    To encourage the use of biofuel by giving incentives for providing biodiesel pumps at fueling stations.

     
  3. 3.

    To establish industry standard for biodiesel quality under Standard and Industrial Research Institute of Malaysia (SIRIM).

     
  4. 4.

    Setting up of a palm oil biodiesel plant to relief Malaysia’s dependence on fossil fuels.

     
  5. 5.

    The implementation of NBP had encountered some challenges due to issues such as relative high cost of biofuel due to the subsidized fossil fuel price, concern of engine performance with biofuel blend, low public interest, and unclear government policy (Bujang et al. 2016).

     

8.3.1.3 National Renewable Energy Policy and Action Plan

Gathering the experience from SREP, Biogen, and MBIPV, the National Renewable Energy Policy and Action Plan (NREPAP) was presented in 2009 to address the challenges faced by preceding policies/program and to provide a forward-looking RE policy to spearhead the development of RE in Malaysia. Five objectives were outline in the NREPAP as follows (KeTTHA 2008):
  1. 1.

    To increase RE contribution in the national power generation mix

     
  2. 2.

    To facilitate the growth of the RE industry

     
  3. 3.

    To ensure reasonable RE generation costs

     
  4. 4.

    To conserve the environment for future generation

     
  5. 5.

    To enhance awareness on the role and importance of RE

     

The target was to achieve cumulative RE capacity of 975 MW or 5% of the total energy mix by 2015 and subsequently 11,544 MW or 13% of the total energy mix by 2050 (KeTTHA 2008). The formulation of NREPAP provided good insights to the strengths and shortcomings of previous RE projects, particularly SREP and MBIPV, and provided a good platform for the development and implementation of the new RE policy.

8.3.1.4 The New Energy Policy and FiT

As a continuation from the previous efforts, New Energy Policy was introduced in 2010 under the 10th Malaysia Plan (10MP, 2011–2015). Five main pillars have been identified as follows (Basri et al. 2015):
  1. 1.

    Energy pricing

    Rationalize energy pricing gradually to match market price, taking into account the current economic condition and affordability of the citizen.

     
  2. 2.

    Energy supply

    Strategic development of energy supply, by diversifying energy resources, including renewable energy and potentially nuclear energy.

     
  3. 3.

    Energy efficiency

    Accelerate the implementation of energy efficiency initiatives in the industrial, residential, and transport sectors.

     
  4. 4.

    Governance

    Improve governance to support the transition to market pricing while providing assistance to mitigate impacts to the low-income group.

     
  5. 5.

    Change management

    Ensure that the New Energy Policy is implemented based on an integrated approach and according to the schedule to achieve energy supply security.

     

In 2011, the feed-in tariff (FiT) scheme was unveiled with the introduction of two important Acts, i.e., the Sustainable Development Authority Act 2011 and the Renewable Energy Act 2011. The former gives the legal standing for the formation of SEDA as the authority to handle the FiT scheme, while the latter provides for the establishment and implementation of a special tariff system for RE generation, which forms the basis of FiT scheme.

Under the FiT scheme, companies and homeowners are allowed to sell the electricity generated from four RE sources, namely, solar PV, biomass, biogas, and mini hydro, to the electric utility company. Based on the findings from NREPAP, the tariffs offered under the FiT scheme have been designed to be more attractive than SREP, as shown in the table below
Table 8.1

Comparison of RE tariffs under the SREP and FiT schemes (KeTTHA, 2008; Wong et al. 2015)

RE

SREP (RM/kWh)

FiT – 2011 (RM/kWh)

2002

2006

2007

Solar

0.17

0.17

0.17

0.85–1.78

Biogas

0.17

0.19

0.21

0.27–0.45

Biomass

0.17

0.19

0.21

0.28–0.43

Mini hydro

0.17

0.17

0.17

0.23–0.24

Table 8.2

Comparison of prevailing displacement cost (for NEM) and existing electricity tariff

RE connection point

Prevailing displacement cost (effective May 2014)

TNB existing tariff (as of Jan 2018)

RM/kWh

RM/kWh

Peninsular Malaysia

Sabah

Peninsular Malaysia

50–230 kV

0.210

Industrial

0.202 (off-peak) 0.337 (peak)

1–50 kV

0.238

0.220

Commercial

0.224 (off-peak) 0.365 (peak)

Industrial

0.337

0.219 (off-peak) 0.355 (peak)

<1 kV

0.310

0.300

Domestic

0.218–0.571

Commercial

0.435–0.509

Industrial

0.380–0.441

Table 8.3

List of shortlisted bidders for 2017–2018 LSSPV bidding

Company

Capacity

Location

Ditrolic Sdn Bhd and Integrated Logistics Solutions Sdn Bhd

3.000

Klang

Selangor

Ditrolic Sdn Bhd and Integrated Logistics Solutions Sdn Bhd

5.990

Klang

Selangor

Fairview Equity Project Sdn Bhd

5.000

Mersing

Johor

Hong Seng Assembly Sdn Bhd

1.000

Seberang Perai Utara

Penang

Jentayu Solar Sdn Bhd

5.990

Pokok Sena

Kedah

Scope Marine Sdn Bhd

5.000

Setiu

Terengganu

Asia Meranti Sdn Bhd, Atlantic Blue Sdn Bhd, and Ocean Solar Energy Sdn Bhd

9.900

Larut dan Matang

Perak

Asia Meranti Sdn Bhd, Atlantic Blue Sdn Bhd, and Ocean Solar Energy Sdn Bhd

9.990

Kinta

Perak

Asia Meranti Sdn Bhd, Atlantic Blue Sdn Bhd, and Ocean Solar Energy Sdn Bhd

9.990

Kinta

Perak

Coral Power Sdn Bhd

9.990

Manjung

Perak

Fairview Equity Project Sdn Bhd

9.990

Kluang

Johor

Ikram Greentech Sdn Bhd, Icon Energy Solutions Sdn Bhd, and KIP Management Sdn Bhd

6.800

Alor Gajah

Melaka

Maju Solar Sdn Bhd and Kara Power Engineering Sdn Bhd

9.900

Kuala Muda

Kedah

Naza Power Sdn Bhd and Komitmen Mantap Sdn Bhd

9.990

Pasir Mas

Kelantan

Naza Properties Sdn Bhd and Kara Power Engineering Sdn Bhd

9.000

Rawang

Selangor

Sun Energy Ventures Sdn Bhd and Baywa R.E. Solar Pte Ltd

9.972

Klang

Selangor

Wawasan Dengkil Sdn Bhd and Pristine Multi-Vision (M) Sdn Bhd

9.980

Kuala Langat

Selangor

BGMC Corporation Sdn Bhd and Bras Ventures Bhd

30.000

Kuala Muda

Kedah

Fumase (Malaysia) Sdn Bhd and Scatec Solar Malaysia B.V.

30.000

Kerian

Perak

Gaya Dunia Sdn Bhd, Enertra Sdn Bhd, and Ambang Fiesta Sdn Bhd

30.000

Sik

Kedah

Greencells Majulia Joint Venture (Majulia Sdn Bhd and Greencells Gmbh)

30.000

Pekan

Pahang

Hasilwan (M) Sdn Bhd and IDIQA Holding Sdn Bhd

30.000

Machang

Kelantan

Kenyir Solar Park Sdn Bhd and Gunkul Engineering Public Co Ltd

29.990

Dungun

Terengganu

Konsortium Beseri Jaya Sdn Bhd and Hanwha Energy Corporation Singapore Pte Ltd

30.000

Kangar

Perlis

Leader Energy Sdn Bhd

20.000

Kuala Muda

Kedah

Nippon Bumijaya Sdn Bhd and B&Z Mechanical and Electrical Sdn Bhd

30.000

Empangan Kelinchi

Negeri Sembilan

Revenue Vantage Sdn Bhd and Cypark Renewable Energy Sdn Bhd

30.000

Empangan Terip

Negeri Sembilan

RE Gebeng Sdn Bhd

29.916

Kuantan

Pahang

Tenaga Nasional Berhad

30.000

Kuala Muda

Kedah

UiTM Property Management Sdn Bhd

25.000

Pasir Gudang

Johor

Total

506.388

  
.

The source of funding for the FiT scheme comes from the 1% surcharge on electricity sold to the end users by the electricity utility companies, with the exception for users who consume less than 300 kWh/month where they are exempted from this surcharge. In 2014, this levy was increased to 1.6% and a further hike to 2% is expected (Oh et al. 2017).

It is worth mentioning that the implementation period of FiT coincided with the Economic Transformation Program (ETP) launched by the Malaysian government in 2010. Under the ETP, 12 National Key Economic Areas (NKEAs) have been identified to be focused on as the key drivers for the country’s economic growth. Under each NKEA, several Entry Point Projects (EPPs) have been listed to support the growth in the respective NKEA. Out of the listed EPPs, several are related to the development of RE in Malaysia (PEMANDU 2018):
  • NKEA: Electrical and Electronics

  • EPP7: Increasing solar module producers

  • EPP16: Development of Balance of System for solar photovoltaics

  • NKEA: Palm oil and rubber

  • EPP5: Developing Biogas Facilities at Palm Oil Mills

  • NKEA: Oil, Gas and Energy

  • EPP10: Building Up Renewable Energy and Solar Power Capacity

  • EPP12: Tapping Malaysia’s Hydroelectricity Potential

  • NKEA: Business Services

  • EPP4: Jump-starting a Vibrant Green Technology Industry

All these initiatives have helped to encourage the development of RE sector in Malaysia, particularly the solar industry. Compared to other RE resources, solar PV is considered to be the most successful RE.

8.3.1.5 Net Energy Metering (NEM) and Large-Scale Solar Photovoltaic (LSSPV)

The FiT scheme for solar ended in 2016 and is replaced by two separate schemes, i.e., the Net Energy Metering (NEM) and the Large-Scale Solar (LSS) schemes. In the 11th Malaysia Plan (EPU 2016), the Malaysian government has highlighted the use of NEM as a mechanism to increase the percentage of RE in the energy mix. The implementation NEM scheme is handled by SEDA, as a replacement to the discontinued solar FiT program. Under the NEM scheme, the energy generated by the PV system will first be consumed within the facility of its installation before any excess is exported and sold to electricity utility company at the prevailing displaced cost prescribed by the Energy Commission (SEDA 2016). The displaced cost is defined as “the average cost of generating and supplying one kilowatt hour of electricity from resources other than renewable resources (i.e. fossil fuels) through the supply line up to the point of interconnection with the RE installation” (SEDA 2017). A comparison of the prevailing displacement cost and the existing electricity tariff are shown below (SEDA 2017; TNB 2018):

The net billing of the customer is calculated based on the following formula (MEC 2016c):
$$ \mathrm{Net}\ \mathrm{billing}=\left(\mathrm{Energy}\ \mathrm{consumed}\ \mathrm{in}\ \mathrm{kWh}\times \mathrm{Gazetted}\ \mathrm{Tariff}\right)-\left(\mathrm{Energy}\ \mathrm{exported}\ \mathrm{in}\ \mathrm{kWh}\times \mathrm{prevailing}\ \mathrm{Displacement}\ \mathrm{Cost}\right) $$

where, any positive net billing will be given in the form of credit that can be rolled to the subsequent months for only up to 24 months. Unlike the FiT scheme, there is no cash transaction involved under the NEM scheme, and the costs of the NEM meters are to be borne by the installers (MEC 2016c).

Under the NEM scheme, a 500 MW capacity quota is set over a duration of 5 years, i.e., from 2016 to 2020, with 45%, 45%, and 10% for the industrial, commercial, and the residential sectors, respectively. The later stage of NEM will see the implementation of the New Enhanced Dispatch Arrangement (NEDA), which is currently under its second phase trial run (MEC 2017).

It is interesting to note that while SEDA controls the NEM program as a continuation of its FiT scheme, the Large-Scale Solar Photovoltaic (LSSPV) scheme has been placed under the governance of EC. Apart from the difference in governing body, the allowed installed capacity also differs for the two schemes: NEM caters for installations up to 1 MW, while LSSPV covers installation from 1 to 50 MW. The LSS scheme targets to achieve an installed capacity of 1000 MW by 2020, with annual capacity limit (subjected to periodical review) of 200 MW for Peninsular Malaysia and 50 MW for Sabah and Labuan (MEC 2016a). For Peninsular Malaysia, a total of 30 bidders have been shortlisted for the 2017–2018 bidding, amounting to 506.388 MW. For Sabah and Labuan, there are 11 shortlisted bidders, with combined capacity of 55.6 MW (MEC 2018a).

8.4 Renewable Energy at Greater Kuala Lumpur (GKL) Region

As the center of administrative and economic development in Malaysia, the implementation of renewable energy and energy efficient measures in the GKL region is important. Nevertheless, gathering energy data specific for GKL region appears to be a challenging task due to the following reasons:
  1. 1.

    Lack of a single governing body for GKL

    As explained in the Sect. 8.1, the Greater Kuala Lumpur encompasses multiple municipalities under the Selangor state government as well as the federal government. As a result, there is a lack of single administrative entity that caters for the policy making and implementation specific for the GKL region.

    Currently, development of RE in GKL is subjected to the same central policies explained in the preceding sections. On the policy level, there is no clear focus toward or away from GKL, such that the final decision lies on the implementing agencies or RE installers based on subjective considerations for, e.g., cost and convenience.

     
  2. 2.

    Lack of data collection specific to GKL region

    Being officially coined during the introduction of the Economic Transformation Program in 2010, the definition of GKL is relatively new. As of now, data related to RE are collected based on different classifications of regions depending on the data collection agency. Data collected are usually classified according to region (Peninsular, Sabah, and Sarawak) or based on states. Since GKL contains part of the, but not entire, state of Selangor together with Kuala Lumpur and Putrajaya, extracting data specific for GKL remains challenging.

     
In terms of RE installation (under the FiT scheme) within the GKL region, data can be manually extracted from the RE Capacity Map from SEDA (n.d.). Apart from solar PV systems, only limited amount of biogas and biomass plants have been installed in the region, as shown in Table 8.4.
Table 8.4

Company, location, and installed capacity for biogas and biomass RE under FiT scheme

RE type

Company

Location

Capacity (MW)

Biogas

Solar Path Sdn Bhd

Kuala Lumpur, W.P. Kuala Lumpur

0.064

Biogas Sulpom Sdn Bhd

Dengkil, Selangor Darul Ehsan

2.5

Jana Landfill Sdn Bhd

Puchong, Selangor Darul Ehsan

1.9572

Jana Landfill Sdn Bhd

Kuala Selangor, Selangor Darul Ehsan

1

Sime Darby Industrial Power Systems Sdn. Bhd.

Bestari Jaya, Selangor Darul Ehsan

1.6

Total

7.1212

Biomass

Tenaga Sulpom Sdn Bhd

Dengkil, Selangor Darul Ehsan

7

Tex Cycle (P2) Sdn Bhd

Klang, Selangor Darul Ehsan

2.5

Comintel Green Technologies Sdn Bhd

Gombak, Selangor Darul Ehsan

2.2

Total

11.7

Due to the geographical reason, mini hydropower is not possible within the GKL. Among the four main types of Res, solar PV remains the most feasible RE source in GKL. Under the new NEM scheme, it is anticipated that solar PV installation will continue to grow in GKL area. However, for LSSPV, the potential for installation in GKL is not high due to (i) high land cost and (ii) relatively lower solar potential compared to other parts of Malaysia, particularly in the Northern region.

Nevertheless, since GKL draws its electricity power supply from the same supply network in Peninsular Malaysia, installation of any grid-tied RE within the Peninsular will practically benefit the GKL region in terms of GHG reduction.

Instead of relying on direct RE installation, the effort toward developing cleaner and greener GKL should consider other measures such as through improving the energy efficiency and embracing greener mode of transportations.

8.5 Conclusion

This paper gives an outline of the RE policies in Malaysia, explaining the chronology of RE development within the country. While there has been great progress achieved over the past two decades, there are still plenty of works to be done. As of now, RE remains a relatively small percentage of the total energy mix in Malaysia. The continuation of FiT scheme, together with new policies like the NEM and LSSPV, will likely continue to drive the development of RE sector in Malaysia, particularly solar energy. Nevertheless, it is well aware that the high penetration level of intermittent RE resource like solar will bring new challenges, particularly to the electricity generation, transmission, and distribution players. It is also highlighted in this paper that the current data collection and classification approaches do not favor the extraction of information for the GKL region. To quantify the progress of RE development and its impacts on GKL remains an interesting topic for future work.

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Copyright information

© Springer Nature Singapore Pte Ltd. 2019

Authors and Affiliations

  • Nasrudin Abd Rahim
    • 1
  • Hang Seng Che
    • 1
  • Md Hasanuzzaman
    • 1
  • Asiful Habib
    • 1
  1. 1.UMPEDACUniversity of MalayaKuala LumpurMalaysia

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