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Ir Dr Ali Askar Sher MohamadChief Operating Officer

SEDA Malaysia

Malaysia: Renewable Energy PoliciesRenewable Energy Development in Malaysia

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RE Act gazetted in June 2011

FiT introduced in Dec 2011

Increased to 1.6 % on Jan 2014

Biomass target for 2015 is 330 MW

Solar PV target for 2015 is only 65 MW

Targets and more targetsREPAP Targets

Year Cumulative RE Capacity

RE Power Mix (vs Peak Demand)

2015 985 MW 5.5%-6%

2020 2,080 MW 11%

2030 4,000 MW 17%

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ASEAN Energy Minister’s meeting in Oct 2014 decided to:

1.Redefine large hydro and off-grid hybrid as renewable

2. Target 30 % of installed capacity to come from RE by 2020

ASEAN Ministers Target: 30 % of installed capacity by 2020

Expected installed capacity by 2020 30,000 MW

30 % RE 9000 MW

Existing and new large hydro and off-grid hybrid by 2020

4500 MW

Expected FiT installations by 2020 1500 MW

Shortfall: 3000 MW

The Reality – FiT statistics as at 30 APRIL 2015

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Applications approved Installations commissioned

Resource No Capacity (MW) No Capacity % (in terms of capacity)

Biogas 81 140.05 7 12.83 9%Biomass 34 324.79 6 62.90 19 %Small Hydro 36 284.84 5 15.70 5.5 %Solar PV 6601 313.36 3819 191.75 61 %

Total6,752

1,063.03 3,837 283.18

Points to Ponder 2015 Target under REPAP is 985 MW

30 April 2015 achieved only 285 MW

Today is about 300 MW

Best case scenario is 400 MW by end 2015 – only 40 % of target

2015 Target for PV was 65 MW Today achieved almost 200 MW

Expected to hit 300 MW by end 2015

2015 Target for biomass was 330 MW Today achieved only about 63 MW from 6 plants

If lucky, another plant will be commissioned this year, bringing the total to 7 plants and installed capacity of 75 MW

6 biomass plants achieved COD so far All 6 plants were already approved under SREP, then migrated to FiT

3 plants had already COD under SREP

3 plants COD under FiT but 1 plant already under receivership now6

Problems facing biomass RE developers

Most of these issues are not faced by PV developers!

Feedstock issues

Most biomass RE developers do not own the feedstock, they’re neither plantation nor mill owners

They are at the mercy of the feedstock owners who can raise the price anytime or withhold the supply

At least 2 plants at present are running at less than 50 % capacity due to feedstock issues

Long term feedstock contracts are a must for plants to be viable, but most feedstock owners will not sign for more than 1 or 2 years

Best case scenario is for feedstock owners to go into the RE business, or at least part of the feedstock should be their own

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Plant technical issues

Problems with boilers

Most boilers used in the plantation industry are designed to provide steam, and some power for internal use; they’re not designed to be efficient

Most imported boilers designed to generate power are designed for wood chips or other feedstock with low moisture and high calorific value

Boilers specifically designed to be highly efficient using EFB as feedstock with minimum maintenance are still being improved

Fuel handling

Critical to have effective fuel handling system with sufficient storage, shredding and drying, and proper feeding into the boiler

Many plants do not have sufficient space for storage, or an effective drying system, resulting in fuel with high moisture content being fed into the boiler

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Grid connection issues Distance from Grid; most plantations located away from the

Grid, making it uneconomical for grid-connection

Even when grid is available, remote location of the biomass plants, away from the load centres, lead to technical issues like voltage rise and reverse power flow, making grid-connection difficult. In some places, the utility existing fault current is too high to allow any more generator to be connected.

When everything else has been settled, there are often delays and other problems with utility connection at the local level

Finance Some pioneer failed and failing biomass plants have given a

negative perception of biomass RE

Long lead time and security of feedstock issues, leading to higher risk

Most commercial banks shy away from financing biomass plants, leaving only institutions with a specific mandate, like MDV, to provide the finance 9

Steps taken by SEDA to promote biomass RE

FiT rates for biomass (and biogas) All degression in FiT rates has been set to zero since 2014

Introduction of new bonus rates, e.g. locally fabricated boiler gets additional 5 sen/kWh

New higher rates have resulted in many new applications Biomass quota is exhausted as soon as its released

But no guarantee that any plants will commission and run successfully if they still make the mistakes described earlier.

Grid connection issues Ongoing discussions with utilities to allow for reverse

power flow back to Transmission levels

Proposal to developers to cluster their biomass plants together so that total capacity exceeds 30 MW

Facilitate connection to Transmission line 10

Based on the 1.6 % contribution to the RE Fund, Seda has set an annual new quota release of 20 MW for biomass and 15 MW for biogas until 2025.

This quota should be sufficient to provide for most of the plants that can be economically grid-connected

However, potential developers must be aware of the problems mentioned earlier, especially the feedstock and plant technical issues, before they rush into applying for quota

If the quota is exhausted, and there are still more plants to be connected, we’ll need to increase the contribution to the RE Fund to 2 %

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Some parting remarks