The renewable energy industry receives much needed attention from both government and businesses in the country

As mentioned by Prime Minister, Datuk Seri Najib Tun Razak during the tabling of the 10th Malaysian Plan (10MP), the Malaysian government are putting an emphasis on further developing the renewable energy industry, as well as promoting the use of such energy.

Says Najib: “The Government will introduce the Feed-in Tariff and Renewable Energy Fund to encourage the implementation of renewable energy projects. Relevant guidelines, standards and laws will also be introduced to ensure efficient use of energy, and to reduce greenhouse gas emission.”

The increased attention towards the industry by the government is an opportunity in which businesses should take advantage of, as the country still lacks in renewable energy technologies. Thus, we see a hiking interest in this industry from businesses in the country.

To complement the rising interest, Malakoff Corporation Berhad (Malakoff) introduces its inaugural Malakoff Community Partnerships (MCP) Energy Expert Series earlier this year. Its first instalment discusses the opportunities and challenges in implementing Feed-in Tariff (FiT) for renewable energy in the country.

The company started out in 1975 as a plantation based company and then shifted its focus to power generation in the early 1990s.  It is now Malaysia’s largest independent power and water producer with a core focus on power generation, water desalination, as well as operations and maintenances services.

“Feed-in Tariff for Renewable Energy will be a key factor in encouraging the use of Green energies.  We, as a private sector leader in the energy sector in Malaysia, believes that the country and its energy sector should realise how pertinent it is to understand and adopt the global best practices in this area,” says Tan Sri Abdul Halim Ali, Chairman of Malakoff Corporation Berhad.

A FiT-ting Discussion

Discussing two different perspectives – local and global – on the current scenario of FiT implementation are two eloquent and knowledgeable speakers.

On the local environment, Ir. Ahmad Hadri Haris, National Project Leader of the Malaysia Building Integrated Photovoltaic (MBIPV) Project, Ministry of Energy, Green Technology and Water (KeTTHA) offered his thoughts, while the global standpoint was presented by Hans-Josef Fell, German parliamentarian and one of the key framers of Germany’s Renewable Energy Sources Act (EEG). Fell shares Germany’s successful implementation of the FiT concept and how it has benefitted the country.

According to Hadri, Malaysia’s FiT structure is a “polluters pay concept”. High electricity consumers will have to contribute more to cover their carbon footprints, while those with lower electricity consumption are relieved of contributing to the fund to support the programme.

Nevertheless, the concept is not meant for excessive profiteering, cautions Hadri. It aims to reduce long term cost barriers for the public to work together with the government to achieve energy security, alleviate climate change and energy independence, as well as encouraging a new economic activity.

Five of the most prominent resources we have in the country are solar, biomass, biogas, mini-hydro and solid waste, which can be channelled into various programmes and projects available to support Malaysia’s energy industry. One of the more notable programmes include the United Nations Development Programme – Global Environment Facility’s (UNDP-GEF) Biomass Power Generation and Demonstration (Biogen) Project and MBIPV Project, which the Malaysian government has joined hands in 2002 and 2005 respectively.

Malaysia’s renewable energy resources are plentiful but Hadri insists that it is still not optimised to its full potential. With the support and incentives available, the government hopes to push the industry further.

Nonetheless, like most things in life, there are still challenges the industry has to face. In order to implement FiT for renewable energy, the country would need to have a proper regulatory framework. Hadri shares that market failure can occur in the absence of regulatory framework and policies as it prevents the necessary legal actions from being taken.

Lessons from Germany

Agreeing that policies are important to make or break the renewable energy industry,

Fell relates Germany’s experience in this area. The European nation has been benefitting from renewable energy for more than a decade now.

Despite strong political oppositions, Fell drafted a Renewable Energy Sources Act (EEG), which was adopted by the government in 2000. Four years later, he was called again for drafting the amendments of the EEG.

Besides the EEG laying the foundation for the technological developments in photovoltaic, biogas, wind power and geothermal energy in Germany, it has also brought about other economic benefits to the nation.

“In Germany, the EEG has created more than 150,000 jobs in just a few years. In 1998 only approximately 30,000 people were employed in the whole German renewable energies industry. By the beginning of 2009, the country had about 280,000 people who earn their livelihoods producing and operating renewable energy systems,” says Fell. The country estimates by the year 2020, it will have 500,000 people working in the sector.

Already being emulated in dozens of countries worldwide, Malaysia is now taking a shot at the EEG herself. Taking a page out of the German act, the Malaysian government is drafting a bill on renewable energy to meet its goals of further developing the industry.

“The Renewable Energy Act is expected to be tabled in Parliament upon the approval of Cabinet in the later part of 2010. Should the Act be passed by Parliament within this timeframe, feed-in tariffs can be implemented by 2011,” adds Hadri.

Like in Germany, Hadri highlights the Acts’ potential impact by the year 2020 to include a minimum of RM2.1billion in savings of external cost to mitigate CO2 emissions, a minimum of RM70billion of renewable energy business revenues generated from renewable energy power plants operations, plus a minimum of 52,000 jobs created to construct, operate and maintain these power plants.

In fact, Fell believes that acceptance is important for passing laws and regulation in the country. While the acceptance for the EEG was high in Germany then, Fell feels this will not be the case in Malaysia.

It is common to see the general public grousing over increased energy or fuel prices as the government lowers subsidies. Fell hopes that in spite of the setbacks, the Malaysian government will encourage the increase use of renewable energies, while it gradually reduces subsidies for energy and fuel.

Unfortunately, the country still lacks in awareness and education in the subject of the importance of renewable energies and its advantages.  As Fell bluntly puts it that Malaysia spends more money in polluting the country by providing subsidies than improve its education and awareness in this matter.

In order to promote renewable energy in the country, Fell suggests the government to steadily abolish subsidies for intensive agriculture, as well as nuclear, fossil and chemical energies, while at the same time intensify its research and education for renewable and organic farming. Tax reliefs would also go a long way.