Opposition Member of Parliament for Lembah Pantai and Vice President of Keadilan Nurul Izzah Anwar urged the Malaysian authorities to emulate Thailand’s and Indonesia’s Feed-in Tariffs (FiT) in a bid to help the local renewable energy industry.
In a question in Parliament, Nurul Izzah asked the Minister of Energy, Green Technology and Water about the uncompetitive pricing of Malaysia’s FiT.
She argued that FiT is an incentive system for electricity producers who leverage renewable energy sources, making our energy industry more competitive.
In his answer, KeTTHA minister Datuk Seri Maximus Johnity Ongkili ascertained that our FiT rates were determined with advice from external consultants. If that is the case, why do we not see an increase of investments in RE projects?
She said Malaysia’s renewable energy (RE) industry is uncompetitive.
“The key barrier is the high cost of generating electricity from renewables, as compared to the conventional fossil fuels in Malaysia which are subsidised. For the private sector to promote the growth of our limited RE industry, the investment costs must first be made reasonable — through a hike in Feed-in Tariffs (FiT),” she wrote on her blog.
With FiT, power utilities such as Tenaga Nasional Berhad (TNB) are obliged to buy electricity from companies which produce electricity using renewable energy sources at a fixed premium price.
But the plan failed since Malaysia targeted to achieve 985 MW[1] in renewable energy capacity, but the country only reached 300 MW[2] when the 10th Malaysia Plan expired in 2015.
She attributed this failure to the ‘dismally low’ FIT rates and the fact that Malaysia’s electricity industry is a monopoly, raising the the costs for renewable electricity producers to enter the market.
Renewable energy producers who leverage biogas, biomass, small hydro, and geothermal sources are only able to receive RM 0.24-0.47 per Kilowatt hour of energy generated (or 0.05-0.10 USD/kWh).
Nurul Izzah said: “Indonesia’s FiT rates (0.13-0.22 USD/kWh) is more than twice our country’s rates. Is it any surprise that Malaysia’s renewable energy industry is small, uncompetitive and growing at a lethargic pace?”
“Thus, Malaysia would do well to emulate Thailand, where the FiT rate was increased, and where RE consequentially grew. Due to a higher FiT, the proportion of renewable energy used in Thailand grew from 0.5% of all energy sources in 2006 to 8.5% in 2015.”
One benchmark in becoming a developed country that has escaped us too often is our renewable energy target.
By 2020, Malaysia should achieve 2080 MW[4] in renewable energy capacity. With three years remaining on the clock, will we be able to improve our performance by 700 percent ever since we achieved 300 MW in 2015?
“I urge the government to review our policies, specifically the FiT rates to mobilise private investment in renewable energy,” she said.