Energy Economics and Financing Mechanisms: Approaches to Energy

Efficiency and Renewable Energy

Mr. Mohd Hafdzuan AdzmiAssistant Secretary

Sustainable energy DivisionEnergy Sector

Ministry of Energy, Green Technology and WaterMalaysia

SECOND INTERNATIONAL ENERGY EFFICIENCY FORUM (IEEF2)

DUSHANBE, TAJIKISTAN

1

Presentation Outline

2

ENERGY SCENARIO IN MALAYSIA

3

Malaysia’s Oil And Gas Reserves

4

Trends In GDP, Primary Energy

Supply & Demand

5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1980 1990 1992 1994 1996 1998 2000 2002 2004

Perc

enta

ge

Year

Hydro

Coal

Oil & Distillate

Natural Gas

Power Generation Mix

In Malaysia

6

Overview Of Energy Pricing (2009)

SUBSIDIZED PRICE MARKET PRICE (DECEMBER 2009)

FUEL PRICE RM/MMBTU FUEL PRICE RM/MMBTU

EQUIVALENT

SUBSIDY ELEMENT

(RM/MMBTU)

Gas For Energy Sector RM10.70/MMBTU 10.70 RM41.16/MMBTU 41.16 30.46

Gas Large Users RM15.35/MMBTU 15.35 RM56.20/MMBTU 56.20 40.85

Gas for Gas Malaysia Sdn

Bhd

RM11.05/MMBTU 11.05 RM42.35/MMBTU 42.35 31.30

LPG RM1.75/kg 37.39 RM3.36/kg 71.71 34.32

Diesel

(agriculture/transport)

RM1.43/ltr 38.65 RM2.04/ltr 55.00 16.35

Diesel (pump price) RM1.70/ltr 45.95 RM2.04/ltr 55.00 9.05

Petrol Ron 95 (pump

price)

RM1.80/ltr 55.21 RM2.14/ltr 65.60 10.39

Petrol Ron 97 RM2.05/ltr 62.88 RM2.20/ltr 67.51 4.63

Oil - - AS$72.14/tong 39.58

Coal - - AS$102.16/MT 14.48

Need to address distortion in energy pricing from efficient use of

energy at the demand side through green practices and technologies

and(EE&RE)

7

SUSTAINABLE POLICIES AND FRAMEWORK

8

Development of Energy Policies in Malaysia

9

National Energy Policy

10

Malaysian National RE Policy

11

Strategic Thrusts of RE Policy

12

Key Success Factors for RE

13

National

RE Policy

National

RE Policy

FiTFiT

Implement

Cost

Legal

National RE Targets

Notes: RE capacity achievements are dependent on the size of RE fund

� Assumptions:

� Feed-in Tariff (FiT) in place

� 15.6% compound annual growth rate (CAGR) of RE power capacity from 2011 to 2030.

Year Cumulative RE Capacity

RE Power Mix (vs Peak Demand)

Cumulative CO2 avoided

2011 73 MW 0.5 % 0.3 mt

2015 985 MW 6% 11.1 mt

2020 2,080 MW 11% 42.2 mt

2030 4,000 MW 17% 145.1 mt

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The Strategic Approach for EE

15

EE Initiatives

16

Current Development:

Sustainable Policy and Framework

17

FINANCING

18

Fiscal Incentives For EE & RE

Projects And Products

19

Feed-in Tariff (FiT)

20

21

Technology / Source

FiT Duration

Range of FiT Rates

(RM/kWh)

Annual Degression

Biomass (palm oil waste, agro based) 16 0.27 – 0.35 0.5%

Biogas (palm oil waste, agro based,

farming)16 0.28 – 0.35 0.5%

Mini Hydro 21 0.23 – 0.24 0%

Solar PV & PP 21 0.85 – 1.78 8%

Solid waste & Sewage

16 0.37 – 0.45 1.8%

Feed-in Tariff (FiT) Rates

Source of Fund for FiT

22

1%

FiT Cost

Source of Funding

� 2011 - additional tariffs collection from electricity bills

� Every RM100/Month - RM1 for RE

� Additional 1% (proposed in 2012)

The size of RE fund will determine the RE target for Malaysia

Benefit

� polluters pay concept

� will not affect low income consumers (<300 kWh/mth)

� encourages EE and DSM

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Green Technology Fund Scheme

(GTFS)

Green Technology Fund Scheme

(GTFS)

FEATURES PRODUCER OF GREEN TECHNOLOGY USER OF GREEN TECHNOLOGY

Financing size Maximum: RM50 million per companyMaximum: RM10 million per company

Financing tenure Up to 15 years Up to 10 years

Eligibility criteriaLegally registered Malaysian -owned companies (at least 51%) in all economic sectors

Legally registered Malaysian -owned companies (at least 70%) in all economic sector

Any technology that is suitable for the identified project criteria

provided it is a proven technology

Any technology that is suitable for the identified project criteria

provided it is a proven technology

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Sector

Projects

Processed &

TabledCertified Rejected

Loan

Approval by

FI’s

Guarantee

Approval by

CGC

Energy 69 51 13 11 8

Water & Waste 35 30 4 9 6

Building 7 5 1 0 0

Transport 6 4 2 1 0

TOTAL 117 90 21 21 14

GHG Emission 4,898,157 tCO2-eq

Total Project Cost RM3.7 billion

Green Job Creation (Technical) 606

Green Technology Fund Scheme

(GTFS)

Other Financing Assistance

� 1) has high impact to the economic growth and has added value and high multiplier effects;

� 2) potential to create sustainable employment opportunities to Malaysian26

Promoting Green Vehicles

27

The Way Forward

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