Pay­ing for clean power

The Star Malaysia - Star2 - - ECOWATCH - – TanCheng Li

PRO­DUC­ING en­ergy from re­new­able sources gen­er­ally costs more than from petroleum, gas and coal be­cause the fos­sil fu­els are highly sub­sidised. Which is why clean power pro­duc­ers un­der the Feed-in Tar­iff scheme get paid rates that are higher than nor­mal elec­tric­ity tar­iffs.

The money for this comes from the Re­new­able En­ergy (RE) Fund which is con­trib­uted by con­sumers through the sur­charge in their monthly elec­tric­ity – 1% since De­cem­ber 2011, and raised to 1.6% in Jan­uary.

The sur­charge is be­low those im­ple­mented by other coun­tries: 3% in China and Ja­pan, 18% in Ger­many, and 2% to 3% in Bri­tain. Many, how­ever, still ques­tion why con­sumers should foot this sur­charge.

“The 1.6% is not fair,” says for­mer Depart­ment of En­vi­ron­ment di­rec­tor-gen­eral Datuk Dr Abu Bakar Jaa­far.

“Why should con­sumers pay for it? It should be the ben­e­fi­cia­ries of RE, which are TNB (Te­naga Na­sional Bhd) and the Trea­sury. You are pro­duc­ing power dur­ing peak de­mand and sell­ing it to TNB, thus re­duc­ing its need to in­vest in more en­ergy in­fra­struc­ture. And the Govern­ment saves on the for­eign ex­change in­curred in the im­ports of coal and nat­u­ral gas. These sav­ings by TNB and Trea­sury should be shared with RE gen­er­a­tors. Or go by the ‘pol­luter pays prin­ci­ple’ … charge the 1.6% to fos­sil fuel-power gen­er­a­tors.”

The sur­charge is based on the “pol­luter pays prin­ci­ple” – we all are car­bon emit­ters, af­ter all, be­cause we all use elec­tric­ity. And the more elec­tric­ity one uses, the more one has to con­trib­ute to RE de­vel­op­ment through the RE Fund. Sus­tain­able En­ergy De­vel­op­ment Author­ity (SEDA) chief ex­ec­u­tive of­fi­cer Datin Badriyah Ab­dul Ma­lik says this will com­pel Malaysians and lo­cal com­pa­nies to con­serve en­ergy and use it ef­fi­ciently.

“The RE Fund is vi­tal to en­sure sus­tain­able growth of re­new­able en­ergy which has been iden­ti­fied as the al­ter­na­tive source of en­ergy for the coun­try in its ef­fort to re­duce over­re­liance on fos­sil fuel. The key to suc­cess­ful im­ple­men­ta­tion of the FiT mech­a­nism is the cre­ation of the RE Fund. It en­ables RE power pro­duc­ers to be paid pre­mium tar­iff for the elec­tric­ity gen­er­ated,” says Badriyah.

She says Seda – which has been ac­cused of a lack of trans­parency in its man­age­ment of the fund – pub­lishes the au­dited fi­nan­cial fig­ures in its an­nual re­ports (avail­able at www.

As of De­cem­ber, the (unau­dited) RE fund to­tals RM776.5mil (this in­cludes the ini­tial RM300mil govern­ment grant); RM73mil has been paid to FiT power pro­duc­ers and RM3.65mil as ad­min­is­tra­tive fees to Seda (which gets 3%) and TNB (2%). Be­tween RM8­bil and RM9­bil un­der the RE Fund is needed to pay FiT power pro­duc­ers over the ten­ure of their power pur­chase agree­ments with TNB (21 years for so­lar and hy­dropower, and 16 years for biogas and biomass).

Malaysian Green Tech­nol­ogy Cor­po­ra­tion chief ex­ec­u­tive of­fi­cer Ah­mad Hadri Haris says one ini­tial plan was to get TNB and in­de­pen­dent power pro­duc­ers (IPP) which now gen­er­ate elec­tric­ity from fos­sil fu­els, to con­trib­ute to the RE Fund. “But there was fear that they might pass on the cost to con­sumers … so we may end up pay­ing our con­tri­bu­tion and theirs, too.”

He says one promis­ing method that is em­ployed in some coun­tries to en­cour­age gen­er­a­tion of RE is the Re­new­able Port­fo­lio Stan­dard, whereby the Govern­ment man­dates that power gen­er­a­tors (TNB and IPPs) gen­er­ate a cer­tain per­cent­age of their en­ergy from re­new­able sources.

The Malaysian Pho­to­voltaic In­dus­try As­so­ci­a­tion says “car­bon tax” can be a source of fund­ing for re­new­able en­ergy. It says tax­ing car­bon pol­luters, which in­clude coal power plants, the trans­port sec­tor and in­dus­tries, will com­pel these sec­tors to cur­tail their car­bon emis­sions.

It says in 2011, TNB and IPPs gen­er­ated 45,160,000MWh of elec­tric­ity from their com­bined 7,000MW coal-pow­ered sta­tions, and emit­ted 40.6 mil­lion tonnes of car­bon diox­ide in the process (as­sum­ing that ev­ery MWh emits 0.9 tonnes of car­bon diox­ide). Im­pos­ing a car­bon tax of RM70 per tonne on emis­sions (us­ing the Aus­tralian bench­mark fig­ure of AUD$23/tonne), the Govern­ment could col­lect RM2.85bil an­nu­ally to fund re­new­able en­ergy in­stal­la­tions.

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