Feed in Tariff, Make Money from It, Go Green!

Currently in the buzz concerning energy sector in Malaysia, is the soon-to-be-implemented Feed in Tariff (FiT).As an Energy planner, i`m in the loop and support this

Malaysian citizens are to be imposed with this new tariff should everything go as planned.FiT forms part of Renewable Energy Act, scheduled to be tabled before Parliament by year-end and expected to come into force by next year. So now...what is feed in tariff? Feed in tariff is a special tariff imposed by government as a mechanism to boost and accelerate the development of Renewable Energy sources in Peninsular. Feed in Tariff (FiT) is a mechanism adopted by many countries and it has successfully accelerated the RE generation. How it works? Under FiT, individuals and power companies will be able to sell electricity generated from RE sources such as solar, biomass, biogas, mini hydro, etc back to the grid. TNB as the main utility company will buy this generated energy at premium prices , or above-market prices for a specific duration. This would serve as a great incentives for people to invest. Even us, the ordinary person can make money you know! Where does TNB get the funding for this?

6 - 7 months prior to the launch of this mechanism, a special fund has to be established in which the depositors are Malaysian citizens themselves. In our monthly bill, approximately 1% , as the rate of what government is contemplating , will be channeled to RE fund. This funding will be used to fund this power purchase. But! An important declaration here: TNB is not making extra profits here! All the money from the fund will be spent to pay the the electricity generated either from individuals or power companies. And more, not all, but only the extra costs after avoided costs has been taken into accounts.

You know, under FiT, layman, like us can make money! How? By installing solar panel on top of our roof, when there is abundant sunlight which produces some kWh, you can sell it to the grid and earn money from TNB! But wait, don`t think that this will offset your monthly 'bil api'. As I recall, there will be two kinds of bill. One is your normal consumption bill, and another is the total electricity you have sold to TNB, in which TNB will pay you. So, they are separated. What`s the fuss of having RE in Malaysia?

According to statement from Minister of KeTTHA, Peter Chin: " Based on the United Nations Framework Convention for Climate Change, we are not doing that good. Our carbon emission rate is among the highest in the word" . Thus, a way to mitigate this high CO2 emission problem is by going green, which is to generate electricity from green sources. Power generation does indeed contribute a considerable portion to the total CO2 emission in Peninsular Malaysia. You know, Co2 contributes to global warming! So we need to do something. Less CO2 comes from less fossil fuel burned. Less fossil fuel burned means more green sources to supplement. To date, dismissing hydro as RE source, RE constitutes only <1% of total generating capacity in Peninsular. Government has targeted to reach 5.5% by 2015. This has been listed as one of Entry Point Projects for Oil Gas and Energy sector under Economic Transformation Program. Neighboring countries such as Thailand has taken step ahead of us in this FiT.

Malaysia has expressed its vision to Go Green about 4 years ago when Fifth Fuel Policy is introduced under 8th and 9th Malaysia Plan, making way for RE to contribute as another source for electricity generation, the last in the list so far. Malaysia has a long history of generating electricity from oil, until 1984, when natural gas was discovered. Natural gas has become main fuel since then. It constitutes the generation mix of 54% in FY0910, followed with coal, at 40.2%, then hydro at 6%. Now, RE sources are setting off in Peninsular Malaysia. In promoting the RE, Govt has implemented Small Renewable Energy Program (SREP) in 2001 when Fifth Fuel Policy became effective, under which Renewable Energy Power Purchase Agreement (REPPA) was introduced. But these purchase prices are not good enough. This, couple with lack of mechanism in place contributes to slow take up of RE in Peninsular. FiT is the answer, as proved in advanced countries.