GREEN ENERGYTECHNOLOGIES IN MALAYSIA

June 2016

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Country Characteristics

Economy• Maturing economy

real GDP growth avg. 1.6%

• Services: 53% of GDP

• Manufacturing: 23% of GDP

Politics• Constitutional

monarchy• Large state role in

resource and financial sector

• Key actor in market entry procedures

Workforce• Young and educated

workforce • Vocational &

professional skills development a top development priority

• Technology and non-technology jobs supporting sophisticated infrastructure

Civil Society• Active party system

with constitutional rights to speech and assembly

• State, however, having a heavy role in media and law enforcement

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Power Generation

Coal and natural gas make up over 80% of Malaysia's electricity generation

Government will work with TNB to make co-generation economically viable

Initiative is expected to generate RM1.3 billion (US$ 775 million) of GNI by 2020

Will require a review of the TNB tariff on three fronts:

1. Increasing the overall tariff by rationalising current subsidies to create a greater urge for more energy efficiency

2. Decreasing the stand-by tariff to encourage more users to use this option3. Increasing the buy-back tariff to make it more attractive for industries to co-generate

electricity and sell excess energy back to TNB

Overview

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Power Generation

The Energy Commission has so far issued licenses for 19 public and 23 private cogeneration plants, with capacities of 747MW and 550MW respectively

TNBR decided to continue and strengthen its R&D activities in specific areas of CCS - which are amine absorption and microalgae based technology

New coal plants being built as “capture ready” plants will significantly improve costs of retrofitting plants with CCS technologies

Opportunities

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Solar PV Ideal location for large scale solar power

installations 67% of RE production Leading manufacturer of PVs Influx of multinationals Successful PV home rooftop program

CSP Tropical setting might affect CSP

performance Lack of technical expertise No installed CSP plant

Overview

Solar

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Solar

Solar PV

Variety of entry channels Solid PV supply chain due to growing

domestic market Lack of human capital resources Extend PV home rooftop program to

public and commercial sector Integrate agricultural industry

CSP

High uncertainty high risk

Opportunities

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Aerothermal

Overview

At present, no market for aerothermalenergy can be identified in Malaysia

Future markets will need basic international expertise to most likely partner with government agencies in order to begin the integration of aerothermal into the market place

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Wind Power

Overview

Currently no wind farms

Malaysia experiences wind strength of 3-4m/s average annually

A “wind map” study is underway to determine if wind should be included as another renewable energy resource in the FiT scheme

Scattered locations throughout Malaysia do have wind speeds of 5-8 m/s: Saba’s Kudat district and on the ridge lines above the Kudat peninsula

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Wind Power

Opportunities

EU entry opportunities will depend on the outcome of wind map, and whether Malaysia will include wind energy in its feed in tariff scheme

If Malaysia decides to invest in wind power, there is potential for EU exporters of wind turbines

Exporters must be able to manufacture turbines capable of operating at low wind speeds

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Landfill and Biogas

Overview

Malaysia is the world’s number two palm oil exporter, and third regionally in municipal solid waste (MSW) waste generation per capita

By 2020, all palm oil mills shall install biogas facilities (or methane avoidance) and be connected to the national grid

Total GNI contribution estimated at RM 2.9 billion (~ US$ 1 billion)

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Landfill and Biogas

Opportunities In 2011, landfill gas was labelled eligible to

receive RE FiT

Off-grid and on-grid co-generation are two very realistic and economical strategies palm oil mills, project owners, and technology suppliers can employ

Currently, private palm oil mills contribute a significant portion of Malaysia’s 430 MW renewable off-grid capacity

Collectivised landfill sites to be the sole power producers for surrounding areas connected by decentralised or centralisedgrids

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Hydropower

Overview

Substantial amount of hydropower resources: potential hydropower is estimated at 29,000 MW

High initial capital investment required to develop hydropower facility and possible socio-economic issues

There are 58 mini-scale hydro power stations in Malaysia and 26 additional applications for mini hydro-power development

Small and mini-scale hydropower is managed by SEDA and is eligible for FiT

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Opportunities

Mini hydropower projects will be economically viable if combined with the additional benefits of flood and irrigation control

Small scale hydropower serves as the most flexible and adaptable markets for European entry

Small-scale hydropower development requires approval from SEDA and from local authorities

Hydropower

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Malaysia’s first geothermal power plant is being developed in Tawau by Tawau Green Energy (TGE)

It is projected to add 30MW to Sabah’s grid upon its completion in 2018

It will receive a tariff rate of RM0.45/kWh, and it is expected to offset 200,000 tonnes of CO² emissions annually

Though the construction cost of geothermalplant is high, its operational cost is lower than other power plants

Drilling preparation on site in Tawau

Overview

Geothermal

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Geothermal

Malaysia’s high geothermal potential means that it will likely continue to explore geothermal energy options Opening the door for European companies

TGE has been open to foreign investment: It is partially owned by Canadian firm Continental Energy Cooperation

Necessary for private firms with an interest in geothermal investments to seek cooperation with government entities for approvals (e.g. land clearance, FiTqualification)

Opportunities

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Biomass

High value added downstream activities utilising biomass could contribute an additional RM 25 billion (US$ 6.25 billion) to the GNI and create 66,000 jobs and reduce carbon emissions by 12% by 2020

Malaysia is expected to produce between 80 and 100 million dry tonnes of biomass annually from 2011 to 2020.

Overview

Source: http://www.academia.edu/6262440/Generating_Renewable_Energy_from_Oil_Palm_Biomass http://www.omicsonline.com

Share of biomass production by industry

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Biomass

Japanese model of bio-product market entry

Source: http://www.lsse.kyutech.ac.jp/~malaysia/pdf/presentation.pdf

Opportunities The technologies are mainly applied in power

and electricity generation and used in palm oil mills boilers and steam turbines or landfills through methane combustion technology

Other potential research and development application of biomass are biological conversion of biomass to energy, organic acids, bio-plastics, bio-compost, animal feed, and fine chemicals

Increasing numbers of companies in Malaysia are venturing into production of biomass pellets and briquettes for the export market such as Europe, Japan, Korea, and China

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Energy Efficiency

Source: SURUHANJAYA TENAGA (ENERGY COMMISSION), Malaysia Energy Statistics Handbook 2015”

Overview Malaysia has high per-capita energy

demand – three times the region’s average

Since 2000, Malaysia’s energy intensity ratios have consistently exceeded 1.0

Energy demand has increased from 50 to 89 Mtoe from 2000 to 2013. Per capita energy use has increased by 38% (to 2.98 toe) with transport being the leading cause

Examples of energy saving actions include: thermal insulation of buildings, efficient heating systems and industrial processes, energy saving cars and refrigerators, optimisation of ventilating and air-conditioning systems, installation of florescent light bulbs

End energy use in each sector in Malaysia in 2013

14%

15%

26%

43%

2%Non-Energy Use

Residential &CommercialIndustrial

Transport

Agriculture

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Energy Efficiency

Sectors Priority level Remarks

Industrial and SMEs High to medium Highest energy consuming sector will represent 40% of national

consumption in 2035 Need to develop a Monitoring and Verification (M&V) mechanism

Transport High to medium

Another top consumer of energy, expected to reach 30% of national consumption in 2035

Number of vehicles and other transportation equipment is increasing steadily

Need for regulatory and financial instruments to conserve energy in this sector

Energy generation Medium to low This sector is fairly well regulated Sufficient acts and regulations are in place

Building Medium to low Energy demand is expected to grow in this sector A Green Building Index has been developed, but still needs an

enforcement mechanism

Agriculture Low Very low consumption, and expected to remain low

Structure of priority sectors for energy efficiency in Malaysia

Source: UNEP (2015), “Accelerating energy efficiency: initiatives and opportunities - South East Asia”

Opportunities

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Biofuel

Overview

Malaysia has attempted to capitalise on the emerging biofuel market by promoting the production of palm oil–based biodiesel after Indonesia about production of crude palm oil (CPO)

Palm biodiesel in Malaysia under the B10 programme is at 1.2 million tonnesa year

Biodiesel is estimated to cost around RM 0.67 (US$ 0.20) per litre

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Biofuel

Opportunities

Companies that are at least 51% Malaysia owned, with export potential in the rubber, palm oil and wood-based industry are eligible for “Reinvestment Incentives for Resource-Based Industries”

Legal and financial frameworks have actively worked to promote private investment in biofuel

A company with pioneer status in biofuel is granted tax exemption on at least 70% of its statutory income for 5 yearsNew ownership and biodiesel process technology are

planned for the 75 MMgy Mission NewEnergy plant in Kuantan Port, Malaysia

Source: http://www.biodieselmagazine.com/articles/167841/benefuel-felda-jv-to-retrofit-75-mmgy-malaysian-biodiesel-plant

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Ocean Energy

Overview

Malaysia not yet producing ocean energy, but studies are being conducted in cooperation with US and French private partners to test and develop ocean energy capacities

Malaysia has the potential to generate hydrothermal energy in the future, particularly in Sabah Trough

Ocean energy has received less attention – and investments – from the Malaysian government compared to other RE sources

It is still smaller part of Malaysia’s RE plansDesign of possible Ocean Thermal Energy Conversion

system by French company DCNS

Source: http://www.biodieselmagazine.com/articles/167841/benefuel-felda-jv-to-retrofit-75-mmgy-malaysian-biodiesel-plant

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Ocean Energy

Opportunities Two new partnerships show promise for Malaysian ocean

energy:

1. Malaysian University - French company DCNS

2. Malaysian Green Power Solutions - US underwater power developer Current2Current

Joint ventures and PPPs are the most feasible options for EU companies to gain entry the Malaysian market

SEDA in particular, is an important stakeholder in the process with possibility of FiT inclusion

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Electric Vehicles

Overview

Cars have become the dominant form of personal transportation

93% of all households owning at least one car

54% of households own more than one car

From 2009 to 2013, total investments in the automotive industry increased from US$ 175 million to US$ 750 million, 23% of which being FDI

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Electric Vehicles

Opportunities The Malaysian Ministry of Energy has

created a transportation roadmap that outlines Malaysia as an “Electronic Mobility Marketplace”

The National Automotive Policy (NAP 2014) and NKEA Electrical & Electronics (EPP 18) are its two main policies driving initiatives to increase both public and private usage of electric vehicles

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FiT Rates (2015)Capacity of installation FiT rate (US$ per kWh) Effective Period

Biogas4-10 MW 0.075 16 years11-30 MW 0.07 16 yearsBiomassUp to 10 MW 0.077 16 years11-20 MW 0.072 16 years21-30 MW 0.067 16 yearsSmall HydroUp to 10 MW 0.06 21 years11-30 MW 0.05 21 yearsSolar PV 5-24kWp 0.18 21 years24-72kWp 0.17 21 years1-10 MW 0.13 21 years11-30 MW 0.12 21 years

Source: SEDA, (2015). “Status of Feed-in-Tariff in Malaysia.”

Regulations – Renewable Energy Act (FiT)

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Regulations

Getting legal support in Malaysia

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