Issues and Challenges of Renewable Energy

Development: A Malaysian Experience

Thus, the green technology policy was launched to promote the utilization of low carbon
energy and technology of which RE has been identified as the promising green energy option.

Therefore, in order to meet the increasing demand, energy supply infrastructure will need to
be continuously developed and at the same time ensuring its long-term energy security and
mitigating carbon emission by intensifying energy efficiency initiatives and enhancing
development of Renewable Energy (RE) sources such as solar and biomass for sustainable
development. Although new alternative and renewable and more efficient technologies are
being developed and implemented every year, the strain caused by the rise in energy demand
and global consumption outweigh the benefits brought by these improvements. This concern
has led to major challenge facing the power industry that is to have a sustainable energy
policy and diversified sources of energy mix.
POLICY RELATED TO RENEWABLE ENERGY

The National Energy Policy

was introduced in 1979 with three primary objectives;
adequacy of supply, efficient utilization and minimize impact
on environmental.

The first objective is to ensure the provision

of adequate, secure, and cost effective energy supplies through
developing indigenous energy resources both non-renewable
and renewable energy resources using the least cost options
and diversification of supply sources both from within and
outside the country. The second objective is to promote the
efficient utilization of energy and to discourage wasteful and non-productive patterns of energy consumption, and
the last
objective is aimed to minimize the negative impacts of energy
through efficient energy utilization.

The Four-fuel Diversification Strategy was introduced in

1981 as an extension of the National Energy Policy. The
rationale for this policy initiative was to reduce over reliance
on oil, particularly in the electricity generation sector. This
policy aimed for a supply mix of natural gas, hydropower, oil
and coal.

Early initiatives taken towards rromoting renewable

energy in Malaysia appear during the 8t Malaysia Plan (8MP)
between 2001-2005. During that period, the strategy expanded
to include Renewable Energy as the fifth fuel to supplement
energy supply from conventional energy resources.

The 8MP had

targeted to generate 5% (600MW) of the country's electricity
from RE by 2005, but despite various incentives given by the
government, only 2 plants with a total capacity of 12MW were
commissioned.

The notion was further pursued under the 9th Malaysia Plan
(9MP) between 2006-2010 where efforts to utilize RE
resources and efficient use of energy were further promoted.
The government set a target of 300MW in Peninsular
Malaysia and 50MW in Sabah for power generation by 2010
to promote and provide more conducive environment to
support the implementation of RE projects
RE POTENTIAL IN MALAYSIA

Since domestic fossil fuel resources (oil, gas and coal) are
depleting, efforts to promote renewable energy as a fifth fuel,
especially for electricity generation has been intensified during
the 9MP.

Thus, the increase in the utilization of renewable energy will

minimize the negative impacts of energy generation,
transmission, conversion and consumption on the
environment.

A study undertaken by the Government revealed the vast

potential of renewable energy options in Malaysia such as
biomass, biogas, municipal wastes, solar and mini hydro as
shown in Table 1. Nevertheless, the contribution of renewable
sources of energy (excluding hydro) in the country's energy
mix is very small compared to its large potential. For example,
in 1995, the contribution of RE to Malaysia's total energy
supply was only 13 percent (3,544ktoe) whereas in Thailand
and Indonesia, biomass contributed about 20 percent
(l0,I57ktoe) and 29 percent (23,913ktoe) respectively.

GOVERNMENT INlTJATIVES AND INCENTIVES TO SUPPORT

RE

A. Small Renewable Energy Programme (SREP)

To facilitate the implementation of RE projects, a SREP

was implemented on 11 th May 2001. The programme was
among the steps being taken by the government to encourage
and intensifY the utilisation of renewable energy in power
generation. A SREP project can be more than 10 MW in size,
but the maximum capacity that will be allowed for power export to the distribution grid must not be more than 10
MW.
Under SREP, the utilisation of all types of RE, including
biomass, biogas, municipal waste, solar, mini-hydro and wind,
are allowed. As in 2010, 43 projects with target capacity of
286. l5MW have been approved by the government using
various types of renewable energy (Table 2 & Table 3), with
the most coming from biomass and mini hydro. However,
only ten 10 projects are currently in operation with a total
capacity of 56.7MW.

Under SREP, the previous Renewable Energy Power

Purchase Agreement (REPP A) ceiling price agreed upon by
the National Power Utility (TNB) for all RE grid connected
projects, ranged from 14-17 sen/kWh (US4.6 centslkWh).
However, the electricity tariff of 17 sen/kWh (US5. 6
centslkWh) seems not to provide high enough rate of return to
attract investors or project developers given the size of the
project under SREP.

B. Biomass Power Generation and Demonstration (BioGen)

Project

Biomass Power Generation and Demonstration (BioGen)

Project was then introduced in October 2002 with the ultimate
objective to promote and demonstrate biomass and biogas
grid-connected power generation project and redue. he
growth rate of GHG emissions from fossil. fuel by ut!l!zmg
excess oil palm biomass residues.

Some
of BioGen significant projects include the first 14MW (export
10 MW) power plant in Tawau, Sabah which uses oil palm
residues (empty fruit bunch, fibre and shell) that successfully
mitigate 40,000-50,000 tons of CO2 in 2004 and more
recently, a 46.2MW and 500 kW power plants are gridconnected
and commissioned in April 2009 and a total of
700MW off-grid electricity has been produced by private palm
oil millers.

C. Malaysian Building Integrated Photo voltaic Technology

Application Project (MBIPV)

Furthermore, in 2005 the 5-year Malaysian Building

Integrated Photovoltaic Technology Application Project
(MBIPV) was launched to reduce BIPV technology cost in the
Malaysian market and to generate widespread BIP."
applications by creating a sustainable BIPV market m
Malaysia. Over the lifetime of the project, the energy
generated is expected to be able to avoid 65,100 tons of CO2
emissions from the country's power sector. The MBIPV
programme has been successful in achieving a tremendos
increase in solar energy utilisation in the country through ItS
Suria1000 programme.

From
the awarded capacity, 1,084 kWp representing 65 systems
have been commissioned and connected to the TNB grid. The
unit cost of the grid-connected BIPV system has also reduced
to RM 19,120 per kWp from the baseline of RM 31,410 per
kWp in year 2005 which translates to 40 percent cost
reduction. In addition, a total of 1,070 tonnes of CO2
equivalent GHG emissions have been avoided through the
displacement of fossil fuel with the installment of the PV
system

D. Fiscal Incentives

Throughout the years, several initiatives and mechanisms

have been formulated by the Government to promote RE as to
ensure the long term reliability and security of energy supply
for sustainable social-economic development in the country.
RE promotion in Malaysia is based on SREP programmes.
Project developed under SREP programme are eligible for
Pioneer Status (PS) or Investments Tax Allowance (ITA).

These incentives have been provided by the Government to

boost the RE proliferation in Malaysia from 2001 but have
been enhanced over the years. However, despite various fiscal
incentives, only 10 plants of 56.7MW total capacity been
commissioned. Nevertheless, the rate of progress on RE
generation has increased significantly in the year 2008 due. to
the increase in electricity tariff for RE and also attracbve
incentives given by the government. Therefore, a more
proactive approach must be made to accelerate RE power
generation in the country.

V. ISSUES AND CHALLENGES OF RE

The RE development in Malaysia could be hampered by
several barriers which are financial, technical,
regulatory/institutional and informational in nature that .needs
to be addresses for the viability of RE development m the
country.

A. Financial barriers

Presently, many green energy projects are implemented

With the assistance of grants. This is because new
technologies bear a certain amount of uncertainty, thus it
creates a barrier for its development. This uncertainty results
in high financing costs for research, development and
deployment.

Renewable or green energy projects generally

face difficulty in getting financing and bank loan approval due
to the high risk involved and also the lack of technical
knowledge on the part of the financiers.

B. Technical barriers

Firstly, there are uncertainties in some technologies that

may not be suitable because of unreliable power supply of
some developing countries. Also, being unproven technology,
it may not be able to survive competitively with more
established options. Secondly, there is limited local expertise
on efficient practices and equipment handling. Thirdly, there
is uncertainty of securing the long term biomass supply and
price volatility.

C Institutional/regulatory barriers

Two points can be raised. Firstly, due to higher

commitments accorded to development or expansion plans,
renewable energy is given a lower priority by Malaysian
enterprises. There is a clear need for refocusing the energy
fuel mix in the country's energy equation to give importance
to renewable energy.

Secondly, lack of functioning institutional network on RE

could be overcome by encouraging joint-effort between
government agencies and private institutions in order to
explore the technical and commercial viability of energy
generation from renewable resources and enhancing capacity
building of key players such as government decision-makers,
industries and utilities on RE implementation.

C. Information barriers

There is a lack of information and awareness on the

benefits of renewable energy. Investment allowances and
capital allowances were made available for RE
implementation since 2008. However, not many companies
are aware of the special incentives. There is a clear need for
government agencies to help and advise applicants and
potential recipients how to go about applying for RE
incentives and the need for more channels for dissemination of
information.

VI. WAV FORWARD OF RE

A. Government Leadership

By making investments in the early stages of renewable

energy development, Malaysia is well positioned to prepare
towards the time when its own reserves of hydrocarbon energy
are depleted or become too expensive to exploit. Malaysia has
instituted various initiatives to promote renewable energy.

Meanwhile, the newly launched National Green

Technology (GT) Policy on 24 July 2009 helps to spearhead
Malaysia's transformation into a green nation and embrace sustainable development. This policy seems to
indirectly
accelerate the development of RE through its green
technology criteria (i) it minimizes the degradation of the
environment; (ii) it has zero or low greenhouse gas (GHG)
emission; (iii) it is safe for use and promotes healthy and
improved environment for all forms of life; (iv) it conserves
the use of energy and natural resources and (v) it promotes the
use of renewable resources. The policy covers four key main
sectors such as Energy, Buildings, Water and Waste
Management and Transport sectors. In promoting GT, the
Government has establish a fund called Green Technology
Financing Scheme (GTFS) amounting to RM1. 5 billion that
will provide soft loans to companies that supply and utilise
green technology.

B. Financial Tools

In terms of project fmancing that often hinders application

of RE technologies, Clean Development Mechanism (CDM)
appears as a tool that can provide financial contribution to
support RE projects from the sale of Certified Emission
Reductions (CERs). According to PTM study, the direct
benefits of CDM are linked to the income from the sale of
CERs.

C. RE Policy

Furthermore, the newly restructured Ministry of Energy,

Green Technology and Water, is at its final stage in
developing a comprehensive RE Policy that complements the
National Green Technology policy. The RE policy provides
the direction and funds to make RE an important component
of the country's energy mix, overcome technological barriers,
address existing market failures, and drive down costs.

D. Social Responsibilities

There are numerous issues of RE development at present

but reliable and implementable RE solutions is appropriate for
Malaysia in moving towards sustainable development. While
RE Roadmap Action Plan is a welcome move, the successful
policies require buy-in from all agencies and the general
public, of which it will require some time for it to be
implemented. The government agencies are not the only ones
who should make the efforts but the private sector should also
be more corporate social responsible and make compromises
for instance by accepting longer payback periods in RE
projects.

VII. CONCLUSION

In order to ensure the sustainability of energy supply and

subsequently of the country's sustainable economic
development, the government has to intensify further the
implementation of renewable energy and energy efficiency
programs. As seen in quite a number of successful countries in
promoting RE such as Germany, Denmark, and Japan, strong
and long-term commitment from the Government is crucial in
implementing any kind of policies which will lead to RE
development. Over the past 10 years, Malaysia has instituted
various efforts and initiatives to promote renewable energy.
The progress on RE generation has been slow but over time
the growth rate of RE in Malaysia has shown an upward trend
as more energy users took advantage of the incentives
provided by the government.

Introduction To Renewable Energy

Renewable energy is energy that tapped from the continually replenished sources, typically solar, biomass, wind,
tidal, and hydro. The potential of large hydropower in Sarawak is largely known with several studies undertaken
by government bodies, consulting firms and utility companies. However the potential of small renewable sources
comprising of solar, biomass, wind, tidal and small hydro is largely unknown and hence, these resources are
largely untapped.
Recognising the importance of utilising these small renewable energy sources in the State, the Government of
Sarawak incepted the Small Renewable Energy Master Plan in early 2009, which encompasses a spectrum of
major comprehensive study to determine the theoretical and economic potential of these small renewable
sources in Sarawak. This study conducted in the year 2009 to 2010, will then facilitate the mapping of these
resources and open the door to explore and identify their potential applications for fully utilisation in urban and
rural development. The master plan is overseen by a steering committee comprising of representatives from
Sarawak Energy Berhad (SEB), relevant government agencies of Ministry of Public Utilities, Ministry of Rural
Development, Public Works Department, and education institution of Universiti Malaysia Sarawak (UNIMAS).
The solar on-site survey has been carried out in several sites in Sarawak currently. These sites were installed
with the weather sensors for measuring the sun irradiance. The recorded data is used to calibrate the simulation
model or the satellite image data in order to increase the accuracy of the solar mapping in Sarawak.
Biomass is a collective term for all plant and animal material. A number of different forms of biomass can be
burned or digested to produce energy. In Sarawak, the agriculture sector remains as a major economy activities.
Agriculture waste such as palm oil biomass is still not optimally utilised, even though theoretically there is a
potential of 375 Megawatts (MW) of renewable energy from biomass and biogas based on current production
rate of oil palm in the State. There are many more agriculture biomass source options in Sarawak including
cocoa husk and sago wastewater, but the extent of production is not yet promising for power generation due to
the cost factor and the status of biological engineering in strain research makes algae cultivation for bio-fuel not
possible at this instant. Another opportunity for biomass power generation in Sarawak is the landfill gas and
sewerage. However, the energy conversion processes are crucial in utilising the biomass and biogas efficiently.
Acknowledging that the biomass also has other potential use which is yet fully developed, it is of the opinions and
the best interest of all aspects that the biomass produced from the agriculture sector shall be best utilised. The
policies and regulations including the establishment of standards that directs to the efficient utilisation of
agriculture waste and environment conservation as well as reasonable incentives for the plants and more
attractive electricity price are necessary to encourage the biomass utilisation.
The wind resource identified in the Sarawak wind resource map through the weather sensor installed in several
sites can generally be characterised as low wind resource, which is typical of many regions at this latitude. Areas
located at higher elevation and along the eastern side of Sarawak display the highest wind resources. However,
higher elevation and temperature can have an effect on the air density, which in turn affects the power that can
be extracted from the wind. A reduction in air density lowers the energy output from a wind turbine. Sarawak
contains areas with elevations from sea level up to 1600 m near the Bario region in the eastern mountainous
area.
Tidal power is the generation of electricity through extracting energy from the ebb and flow of tides. The
sustainability and predictability of the energy is sensible for tidal energy harnessing. In addition, it is a good
option for utilising the tidal energy for the in-situ activities at the vicinity of coastline with the merit of minimum
transmission losses.
The tidal study has examined the potential of tidal stream energy extraction for eight different sites at multiple
angles. The speed of the tidal stream at Muara Batang Lupar meets the 1.5m/s minimum requirement used to
justify if further investigation against the potential of generating power by extracting tidal stream energy.
The result from tidal study shows a relative consistency of the speed of tidal stream at the North West region of
areas offshore of Sarawak, stronger than those found at the North East region (Bintulu and Miri). Hence, the
continuing study of sites with potentially high tidal stream energy should be concentrated off the coast of the
Southern (Kuching) region and Middle (Sibu/Mukah) region of Sarawak. Although none of the locations in the
study shows good potential for tidal stream extraction, the advancement and evolution of technologies is making
its way for extracting energy from slow moving tidal streams.
Under the study of micro-hydro potential in Sarawak, there are over 100 sites in the State have been surveyed.
The focus is on rural villages that are currently not connected to the State Grid or to any of the local suburban
power networks. The survey is correlated to the projected power demand of the nearby villages. The survey and
mapping classified the power potentials into two categories which are the low head/low power potential and the
high head/high power potential. The survey shows that the greatest concentrations of micro hydro potentials
available are in Kapit and Limbang Division with vast networks of streams and tributaries on the rugged and
mountainous geographical topography. Some of these sites do show sufficient capacity to fulfil the demands of
the local population. Hence, a more comprehensive study shall follow to assess the reliability and sustainability of
the water resources at these sites for power generation.
The results from the studies of small renewable energy potentials indicate that biomass and biogas from palm oil
mills have the greatest potential for grid power generation. Micro-hydro facilities are suited mostly for small-scale
rural supply. Sarawak has considerable solar potential but solar is currently not competitive for utility scale grid
generation. Nevertheless, the prospective for solar Photo-Voltaic (PV) applications in the remote rural areas may
lie on long term viability. Sarawak also does not possess significant potential of wind power generation. The tidal
potential also appears to be limited at this stage of study and it is of the opinions that a more comprehensive and
systematic search for potential tidal stream energy shall be carried out in future.