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A Decade of Renewables Growth in Malaysia, Where Do We Go From Here?

Renewable energy (RE) has grown exponentially over the last decade. This is set to grow even more in the coming years as the aftermath of the COVID-19 pandemic. The growth could easily be tracked by establishing several policies such as the Five-Fuel policy and Renewable Energy Act (REA 2011) and later the Sustainable Energy Development Authority (SEDA) Act 2011, that have become an essential catalyst to the generation of RE in Malaysia.

We had the opportunity to speak to YBhg. Dato’ Hamzah bin Hussin, CEO of Sustainable Energy Development Authority (SEDA) Malaysia, sharing SEDA’s milestones in the past decade as well as current and future efforts on Malaysia’s renewable energy transition.

EW: What are some notable milestones that SEDA has achieved throughout the decade (2011-2021)?

YBhg. Dato’ Hamzah: While SEDA’s role in promoting the growth of renewable energy sector in Malaysia is concerned, the glory in growth itself does not belong to SEDA alone, as we have other implementing agencies – Energy Commission for the Large Scale Solar program, our national utility company Tenaga Nasional Berhad for large hydro, alongside our two programs, Feed-in Tariff (FiT) and Net Energy Metering (NEM). Together we have contributed to a 12.1% compound annual growth rate (CAGR) in terms of installed renewable energy capacity from 2012 to 2019; from 3.7GW to 8.2GW.

As the implementer for FiT and NEM, we have also seen a tremendous growth of installed capacity from 101.73MW in 2012 to 839.08MW in August 2021, considering the resource type of these two programs – FIT for solar PV, small hydro, biogas and biomass while NEM is for solar PV alone.

Following the NEM 3.0 announcement by YB Datuk Seri Dr. Shamsul Anuar bin Haji Nasarah on 23 December 2020, the uptake for all 3 categories has been encouraging. As of 16 August 2021:

  • All quota has been applied for from the 300MWac offered for NEM NOVA since its launch in April 2021
  • 12.04MWac quota approved for NEM GoMEN
  • 12.94MWac quota approved for NEM Rakyat

This would not be achieved without the support from our Registered PV Service Provider (RPVSP) and Registered PV Investor (RPVI), whose number has grown from 298 in 2020 to 332 in 2021.

In terms of Energy Efficiency, recently we have been actively promoting the SAVE2.0 program in which was announced during the Budget 2021 speech last year and expected to benefit over 150,000 households, whereby a RM200 rebate is to be given to purchase energy efficiency electrical appliances (airconds and refrigerators). As of August 2021, 69,908 claims have been made and with more promotion and awareness messages, I believe this number will increase.

The EACG program has helped to raise awareness of potential energy savings and electricity costs in both sector

SEDA also conducts RMK-11 Energy Audit Conditional Grant (EACG) for Industrial and Commercial Sector, to facilitate systematic energy savings program. The EACG program provides grant to industrial and commercial buildings to do energy audit in order to identify the potential savings and applicants agree to implement the energy saving measures (ESM) as recommended by the Energy Service Company (ESCO).  The program has helped to raise awareness of potential energy savings and electricity costs in both sector and further promote energy efficient practices at every level of management. Due to the positive response by the public, and its impact to the overall sustainable energy agenda, the programme is continued under the 12th Malaysia Plan (2021-2025). The programme was approved with a total allocation of RM86.73 million under the 12th Malaysia Plan.

Another initiative provided by SEDA’s in-house experts is the Voluntary Sustainable Energy Low Carbon Building Facilitation and Assessment Programme which offers technical services to building sectors such as consultancy and project management on Energy Efficiency/Energy Management programme that could be coupled with RE system, monitoring and verification (setting target and annual assessment), low carbon green building design input (new and retrofitting buildings), and Voluntary Sustainable Energy Low Carbon Building Assessment GreenPASS.

EW:  Could you share some pertinent lessons learnt from a decade’s experience of rolling out renewable energy in Malaysia?

YBD HH: “A journey of a thousand miles begins with a single step.” The deployment of RE in Malaysia starting from the SREP in 2001 until the establishment of REA 2011 was the beginning for the RE industry in Malaysia. The starting is always challenging but over the years, we have seen the impact to the nation such as heightened awareness among the public on the importance of green energy and the establishment of RE industry that has contributed to Malaysia’s economy.  In addition, we also believe that working together brings greater result. A combined effort with the Ministry of Energy and Natural Resources (KeTSA) and various agencies over the years has helped to propel the RE industry towards greater heights.

EW: We have seen a monumental shift in phasing out fossil fuel and shifting towards renewable energy from other countries and big corporations. How would you characterise Malaysia’s transition from fossil fuel to renewable energy?

YBD HH: Malaysia’s energy transition is moving progressively albeit cautiously from fossil fuel to renewable energy.

Conventionally, the Electricity Supply Industry (ESI) is heavily dependent on fossil fuels – mainly natural gas and coal. Approximately 90% of the electricity demand in Peninsular Malaysia is supplied by fossil fuels currently. However, due to this reliance to fossil fuels, energy sector itself has been one of the industries that contribute the most to carbon emission and impacts to the environment. In view to national commitment to Paris Agreement 2015 and decarbonisation agenda, the needs to shift to renewable energy (RE) have become more imminent.

Transitioning from fossil fuels to RE is driven by the implementation of several governance, including the Five-Fuel Policy and Renewable Energy Act (RE Act 2011). Lesson learnt from other countries with high RE penetration and several concerns arise from the integration of RE into the existing grid system has been identified which includes technical and commercial impact. To ensure Malaysia can harness the RE potential without disrupting the reliability & affordability of the existing ESI, a detailed and careful approach has been taken into consideration from the start of the planning phase.

EW: Could you explain further on some of the mechanisms that promotes renewable energy (RE)?

YBD HH: Several mechanisms towards promoting RE and assessing its impact to the ESI have been in place. Beginning with Small Renewable Energy Power (SREP) back in year 2001 and the introduction of Feed-in-Tariff (FiT) mechanism in year 2011, Malaysia has managed to catalyze the RE industry mainly on the following four resources – solar, hydro, biomass and biogas. Seeing the good response from the market players, more mechanisms that includes Large Scale Solar (LSS) & Net Energy Metering (NEM) have been introduced to further boost the RE industry, particularly on solar at PV market.

With all the current mechanisms in place – FiT, NEM, LSS, Self-Consumption (SELCO), and New Enhanced Dispatch Arrangement (NEDA), we anticipate that we are on the right track towards realising the national target. Continuous monitoring and improvement will be conducted by the respective stakeholders to ensure the development and performance of the RE plants in line with best practises and are able to address the energy security accordingly.

EW: How impactful has SEDA and Renewable Energy Act (REA) 2011 been to our push towards a greener future?

YBD HH: From the early phase of the introduction of RE into the legislation during the Small Renewable Energy Power (SREP) until now, we are 8% away from the targeted total installed RE capacity in 2025. The establishment of the two programmes; FiT and NEM, together with other initiatives from Suruhanjaya Tenaga (ST) and Tenaga Nasional Berhad (TNB), has contributed to the growth of the RE industry in Malaysia.

As of June 2021, the FiT mechanism saw a total of 639.02MW from 10,344 Feed-in Approval Holder (FiAH) have started operating with 708.78MW from 116 projects are in construction and expected to be completed before 2025.

As for NEM scheme, up until NEM2.0, 200.06MW from 3,526 projects have been operating with another 294.80MW from 1,892 projects in construction (expected to be completed by 2022). While the contribution from NEM program seems little compared to other RE sectors, the scheme has managed to positively affect the public awareness on the renewable energy, especially on solar. And that is not a small feat.

These two schemes are vital in the RE landscape – contributing more than 15% from the total targeted installed renewable energy capacity by 2025.

EW: The recent onset of the COVID-19 pandemic came as an essential lesson for the RE energy sector in Malaysia. The pandemic presented multiple challenges in terms of how people interact, and business functions. How has COVID-19 impacted the future of renewables in the country?

YBD HH: The pandemic has imparted the lesson that we need to change the way we do business, starting with leveraging on digital transformation. SEDA Malaysia has initiated the first implementation of an e-bidding exercise for FiT program back in 2018, which has been proven to be practical throughout the pandemic.

As for the renewable sector, the growth of the installed capacity in Malaysia is not affected by the pandemic as the work for most of the projects has been initiated before the pandemic started to impact Malaysia.

Taking solar as an example, SEDA has reported in IEA PVPS Annual Report 2020 that the solar PV manufacturing sector in 2020 did not show a trend of decline in terms of production rate compared to 2019 as the benchmark and is expected to increase in 2021.

We have also seen more installed capacity this year with more uptakes from the domestic sector with the recent announcement of NEM 3.0, this could indicate more awareness on energy management and initiatives done by our registered service provider on engaging potential customers.

EW: Will we see better renewables deployment in the new normal?

YBD HH: The new normal might have impacted the development of the RE but we believe it is for the greater good of the country, to fully do our part to combat the Covid-19 pandemic that affect the country in all aspects. However, the event from 2020 gave us a slight advantage to prepare the industry in the new normal. With strict SOP and adherence to the Government’s prerogatives, we believe the RE industry could recover sooner and adapt to the new normal.

EW: Are the regional and national goals for renewable energy attainable given the current circumstances?

YBD HH: I believe Malaysia is on the right track to achieve our national goal of 31% by 2025 and 40% by 2035, looking at our current trajectory of ~23% installed mix capacity as of 2020. With the on-going programs such as FiT, NEM, LSS, among others, we are positive towards attaining the set target.

With the on-going programs such as FiT, NEM, LSS, among others, we are positive towards attaining the set target.

The regional goal was set under the ASEAN Plan of Action for Energy Cooperation (APAEC) Phase 2 which will be implemented during the period of 2021 until 2025. When ASEAN Energy Ministers agreed to the new target of 35% RE in installed power capacity by 2025, each of us have then agreed to do our best to contribute to the goal while upholding the bigger focus towards energy transition and a sustainable energy future.

EW: What kind of support is needed from the Government and private sector to keep the renewable energy vision alive and why is it important for them to do so as well?

YBD HH: We appreciate the support from the government in the continuation of programs that have been proven effective to drive the sustainable energy (SE) vision such as FiT, NEM, and SAVE2.0. The Government’s support for the RE industry is the key to reach the National target of 31% RE installed mix capacity by 2025 and 40% by 2035. The goal was set as a part of the bigger agenda of achieving energy security for the country and producing cleaner energy that contribute to reducing the carbon emission as per 2015 Paris Agreement. After all, it is for the betterment of future generation that we conserve the environment starting from today.

As for the private sector, their participations and support on the programs that we ran are much needed as they are one of the target audience of our initiatives along with the public. Their support will complete the ecosystem of the RE industry, thus bringing positive impact to the country. Additionally, the adoption of SE in businesses has been proven to reduce the operating cost for the company, on top of demonstrating a sustainable and responsible business practice to their stakeholder.

EW: Each Malaysian citizen has a duty to play to spur the development of the nation’s energy transition. What can ordinary people do under these circumstances to help move the national renewables agenda along?

YBD HH: One of the ways is through the adoption of the NEM Rakyat program. The users of the NEM Rakyat program will be entitled to an offset rate of “one-to-one” for ten years. They get to practice the concept of self-consumption after the period ends, whereby the electricity generated is for their own usage. NEM Rakyat targets to reduce the electricity bill for about 10,000 to 25,000 Tenaga Nasional Berhad (TNB) domestic account holders or between 40,000 and 100,000 households in Peninsular Malaysia.

The public are also encouraged to practice energy management (EM) at home, including the very basic of EM hierarchy, energy saving by behavioural changes and sustainable living (adjusting your day-to-day behaviours). No cost/medium cost EM measures that may include energy efficient practices/design for both passive and active features. This includes the purchasing of energy efficient appliances such as through our SAVE2.0 program. The program is offering a RM200 e-rebate to users who purchase locally made refrigerators and air conditioners that have a four- or five-stars energy rating in 2021. The usage of four to five stars electrical appliances will help households to significantly reduce their electricity bill from the efficient usage of electricity. With the tagline save money, save energy, and save the environment, SAVE2.0 is one of the initiatives that the public could participate to contribute to the greener energy agenda.

EW: As the newly appointed CEO of SEDA, we believe you’d have many plans to lead the team to further push for sustainable energy initiatives. Could you share SEDA’s plans for the future of renewable energy initiatives in Malaysia?

YBD HH: The Government recently announced the opening of the FiT e-bidding quota in June 2021 for biogas, biomass, and small hydro with the total of 188MW. The e-bidding mechanism was first introduced in 2018 to enhance the FiT mechanism via competitive e-bidding to improve price discovery. The success of the program encourages the Government, through SEDA Malaysia to continue to offer FiT quota through e-bidding exercise.

As for the NEM3.0 scheme that was opened in phases from February 2021, it will continue to run till December 2023. SEDA Malaysia aims to follow through the project and ensure its successful implementation.

We will also continuously monitor and promote the SAVE2.0 program that will end in December this year. It is our utmost hope to see the e-rebate is completely taken up and thus benefitting the public with the savings.

In addition, the EACG program which has seen positive impact to the overall sustainable energy agenda is continued under the 12th Malaysia Plan (2021-2025).

With the advances and integration of EE and RE system in the building sector, SEDA Malaysia is currently collaborating with the Japanese Business Alliance Smart Energy Worldwide (JASE-W). The Authority is tasked to provide awareness and technical facilitation on zero energy building (ZEB) development, aligning with the global development of super sustainable energy low carbon building initiative, to support the low carbon or future carbon-neutral development program.

The roadmap is hoped to provide a clear direction of transition from fossil-fuel dependent to RE.

The Authority is also finalising the Renewable Energy Transition Roadmap (RETR) 2035. The roadmap is planned to formulate strategies towards achieving the Government’s committed RE target by 2025 and develop possible RE scenarios for 2035. The publication is timely to demonstrate a socially just energy transition towards a more environmentally sustainable future. RETR 2035 also intends to provide guiding principles in achieving national RE aspirations and the strategic pillars towards directing initiatives on the viable path. The roadmap is hoped to provide a clear direction of transition from fossil-fuel dependent to RE.

With all the implementations in place, SEDA has proven to be a vital catalyst in spearheading Malaysia toward its RE goal in the past and the upcoming decade.


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