Energy

11 posts

“Big Boys” can use the direct negotiation process for renewable energy while the small players have to fight for smaller quotas among themselves

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 25 of April, 2014

“Big Boys” can use the direct negotiation process for renewable energy while the small players have to fight for smaller quotas among themselves

In a briefing given by Ir Dr Ali Askhar Sher Mohamad, COO of the Sustainable Energy Development Authority (SEDA) on the 11th of April 2014 regarding changes to the FiT application process, it was revealed that the online submission process will no longer be used for Solar PV quotas which are more than 425 kW and that this will be replaced by a manual application.[1] This proposed changed was due to instructions from the Ministry of Energy, Green Technology and Water (KeTTHA) and the exact details of the application process is still being reviewed by the Ministry.

While there may be some legitimate reasons for the applications to be submitted and reviewed manually – such as to check for compliance and to review the technical aspects of the application – the fact that SEDA and KeTTHA have not finalized the bidding and application process raises many concerns.

Will this lead to, for example, the Ministry having power to decide which companies to award the FiT quota to for large solar projects? Will this also lead to the possibility of directly negotiated projects between a project owner and the Ministry?

Table 1: New FiT Quotas from 2014 to 2017

In the same briefing given by the COO of SEDA, 30MW of quota for Geothermal Power is supposed to be awarded for the year 2016 (See Table 1 above). Is it mere coincidence that Tawau Green Energy (TGE) Sdn Bhd, the first geothermal power plant in Malaysia, is expected to be add 30MW to Sabah’s grid by the 2nd quarter of 2016?[2]

It was reported in March 2014[3] that:

“Last November, TGE signed a Renewable Energy Power Purchase Agreement (REPPA) for 21 sen per kilowatt hour with Sabah Electricity Sdn Bhd (SESB) to supply 30 MW to SESB’s grid from the geothermal power plant. They hope to migrate to the FiT with SEDA Malaysia approval.”

Does this mean that SEDA had already decided to award this 30MW FiT quota to Tawau Green Energy (TGE) through a direct negotiation and not via an open tender? Are the terms of this contract more lucrative than the 21 sen per kWh contract signed with the Sabah Electricity Sdn Bhd (SESB)?

In addition, 15MW of the FIT quota will be allocated to biomass (solid waste) in 2017. Is it also mere coincidence that 2017 is the expected commissioning date of the Waste to Energy (WTE) plant in Taman Beringin, Kepong? Does this mean that KeTTHA and SEDA already knows the technology which will be selected for the Waste to Energy plant in Kepong and that it will involve the direct burning of waste? (For example, if an anaerobic digestion system is proposed, it will use up the biogas rather than the biomass FiT quota)

Why is it that those who are bidding for smaller projects such as Solar PV FIT quotas for individuals must submit their applications online, obtain a queue number and then go through an open balloting process while the “big boys” are not forced to go through a similar process that is as open and transparent?

This development comes on the heels of the decision to award 1MDB a 50MW solar farm project in Kedah via a direct negotiation.[4] While this project is not funded by the FIT quota, one must take note of the fact that 50MW is more than the combined allocation for Solar PV for individuals, non-individuals and community projects for 2014 which only comes up to 40MW for 2014!

I call upon the Minister of Energy, Green Technology and Water to adhere to principles of openness and transparency for all the players and stakeholders in the renewable energy sector rather than giving priority and access to only the “big boys”.

Dr. Ong Kian Ming
Member of Parliament for Serdang


[1] http://seda.gov.my/?omaneg=00010100000001010101000100001000000000000000000000&s=27

[2] http://www.thestar.com.my/News/Nation/2014/04/07/Malaysias-first-geothermal-plant-set-to-boost-green-energy/

[3] http://www.greenprospectsasia.com/content/malaysia%E2%80%99s-first-geothermal-plant-takes

[4] http://www.thestar.com.my/Business/Business-News/2014/04/23/1MDB-and-US-firm-in-solar-tieup-Both-parties-will-jointly-invest-in-countrys-largest-50MW-solar-farm/

SEDA has only managed to commission 56% of the quota distributed in 2012 and 2013 but yet it has asked for the contribution to the Renewable Energy (RE) Fund to be increased from 1% to 1.6% starting in 2014

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 21st of April, 2014

SEDA has only managed to commission 56% of the quota distributed in 2012 and 2013 but yet it has asked for the contribution to the Renewable Energy (RE) Fund to be increased from 1% to 1.6% starting in 2014

According to the Sustainable Energy Development Authority 2012 Annual Report, the total approved capacity under the FiT scheme was 183.41MW in 2012 and 144.18MW for 2013 giving a total of 327.59MW for the years 2012 and 2013. (See “Exhibit 4” below)

Unfortunately, as of the 17th of April, 2014, only 100.71MW was installed for 2012 and 83.41MW was installed for 2013 giving a total of 184.12MW for 2012 and 2013.[1] (See “Operational Plants” below)

This means that only 56% (184MW out of 328MW) of the quota for 2012 and 2013 has been successfully installed.

SEDA’s Annual Report 2012 shows that the current assets of SEDA has increased from RM330 million in 2011 to RM561 million, an increase of RM231 million or a 70% increase. If SEDA cannot show that it can achieve installation of its distributed quota from 2012 and 2013, how can it justify asking for consumers to pay more by increasing the contribution to the Renewable Energy (RE) Fund from 1% to 1.6% for usage above 300kWh per month?

The increase in the RE fund in 2014 surcharge will only add to the cash reserves of SEDA without increasing SEDA’s ability to achieve its installation targets. Thus far, the results for 2014 have not been very positive. As of today, only 0.27MW of RE energy under the FiT scheme has been installed according to SEDA’s website. This represents a pitiful 0.3% of the 101MW allocated under the 2014 quota thus far.

SEDA needs to explain its poor performance and justify why consumers need to contribute more to the RE fund in 2014 and beyond in light of this poor performance.

Dr. Ong Kian Ming
Member of Parliament for Serdang