“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

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”.

[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/