Malaysia increases surcharge to fund FIT program

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Malaysia’s Sustainable Energy Development Authority (SEDA) has announced that it will increase the country’s renewable energy surcharge from 1% to 1.6% in the new year in order to fund its burgeoning feed-in tariff (FIT) program.

The country’s minister of Energy, Green Technology and Water gave the green light for the increase of the Renewable Energy (RE) fund this week, which will affect distribution licensees, such as Tenaga Nasional Berhad (TNB) and Sabah Electricity Sdn Bhd (SESB).

The RE Fund was created to support Malaysia’s FIT scheme, which was introduced in December 2011. Those customers that consume less than 300 kWh of electricity are exempt from contributing to the RE Fund, and the increase is anticipated to affect just 29% of mainland Malaysian consumers, and 38% of those from Sabah – a Malaysian state located on the northern tip of the island of Borneo.

SEDA chairman, Datuk Yee Moh Chai, said: "The implementation of the FIT mechanism since December 1st 2011 has been a resounding success. Under the previous Small Renewable Energy Power (SREP) program, only 61.2 MW of RE capacity was connected to the grid at the end of 2010.

"After 24 months of implementation by SEDA Malaysia, the FIT mechanism has a total approved RE capacity of 482 MW, which constitutes of 40.2% for solar PV, 27.7% for biomass, 27.2% for small hydro, and 4.9% for biogas. After 24 months of implementation, the country now has a cumulative total of 119 MW of renewable energy capacity connected to the grid, which represents an increase of 94% on the initial baseline."

By the end of October 2013, a total of 775 homeowners with solar panels fitted to their roofs had benefited from the FIT scheme: a figure that Datuk Yee hopes will swell as public support for solar continues to increase. During the initial tender for FIT projects, the allotted quota of 1,500 kW was snapped up by homeowners within the first hour. In total, there have been 2,279 approved applications for residential rootop FIT schemes, with 8.98 MW already in production and a total of 24.43 MW in the pipeline.

The increased surcharge means the FIT scheme can be expanded to Sabah’s residential consumers, although the state of Sarawak will abide by its own legislations and so will not be introducing FIT in the immediate future.

Malaysia’s growing renewable energy landscape was recognized in 2010 as the most-improved among 18 countries in a study by Vermont Law School, Institute for Energy & the Environment, fuelled largely by the government’s introduction of a national RE Policy and Action Plan.

SEDA, however, admits that there is still some way to go, and that continuous efforts at improvement are currently in place. "As a country’s economy is strongly pegged to price of energy, the ability to achieve a certain level of energy autonomy will help to create a more robust and resilient economy," said Datuk Yee.