Are we paying too much for Renewable Energy fund?

From the few briefings conducted by the utility company (SESB), and other seminars in which SEDA Malaysia took part, I gathered that many feedbacks on the quantum of RE surcharge in the consumers electricity bills point towards disagreement.


Earlier article pertaining to the revision of surcharge from 1% to 1.6% effective Jan 1, 2014


Some say that we should maintain the 1% rate introduced in 2012. Some say we should not be charged anything at all.

At one of the briefings, the president of the Federation of Sabah Industry (FSI) argued that, while agreeing with the government effort  in promoting green technology, we should not be asked to pay the levy, having already hit hard by the electricity tariff hikes effective Jan 1 this year. Instead, the government should allocate budget for the purpose. To this, I tend to agree; the government should not stop at the RM300 million it contributed when the fund was set up at the end of 2011.

Are we paying too much, relatively? Paying 1.6% more for your utility bill may be a bit burdening but let's look at what are the rate in other countries implementing FiT mechanism:

COUNTRY		SURCHARGE IMPOSED
Germany	-	19%
Italy	-	8%
Portugal	-	5.6% (industrial), 6.2% (residential)
Thailand	-	2% (2013), 8% - 10% once 7GW of RE project is operational in few years time
China	-	3%
Japan	-	3%
United Kingdom	-	2% to 3%
Australia	-	2.4%
Malaysia	-	1.6%

*Data obtained during presentation by SEDA's Dr. Wei-nee Chen in Kota Kinabalu.


We have the lowest surcharge

Compared to others, we are actually paying much less. SEDA is looking at 2% but this, according to Dr Wei-née Chen, was not approved by the cabinet. I have no qualm if it will eventually be approved, but the government should also look at other ways of funding the RE, including setting aside some fund from its coffer.

Malaysian Photovoltaic Industry Association, MPIA's suggestion to make “carbon tax” as a source of funding for renewable energy is also interesting and is worth looking into.

By taxing carbon polluters, which include coal power plants, the transport sector and industries, these sector would be compelled to curtail their carbon emissions. An incentive may be given to those who make effort in reducing carbon emission, in the form of lower surcharge. The quantum is to be calculated after a careful study.

Notwithstanding, we should support the effort to promote sustainable energy in Malaysia.

SEDA responded to concerns raised on the revised 1.6% surcharge

This is an excerpt of the press statement by Sustainable Energy Development Authority (SEDA) Malaysia in respond to the concerns raised by YB Mr. Lim Guan Eng, the Chief Minister of Penang and YB Dr Ong Kian Ming, a Member of Parliament for Serdang, on the achievements by SEDA Malaysia to justify the revision of the surcharge on electricity bills for renewable energy (RE) fund from 1.0% to 1.6%.


Beginning January 1 next year, consumers in Peninsula Malaysia, Sabah and Labuan will be levied with 1.6% surcharge in their electricity bills.


Effective date of the revised rate

The revised surcharge is effective from 1st January 2014 and affects electricity consumers of Tenaga Nasional Berhad (TNB) and Sabah Electricity Sdn Bhd (SESB); however domestic consumers with 300 kWh and less of electricity usage per month are exempted from such contribution.


Achievement and milestones

According to the CEO of SEDA Malaysia Datin Badriyah Abdul Malek, since the Feed-in Tariff (FiT) mechanism was implemented on the 1st December 2011, 2,686 applications have been approved out of which 89.1% of the applications were for solar photovoltaic (PV) for the individuals, 8.9% for solar PV for non-individuals and 2% collectively for biomass, biogas, and small hydro.

SEDA Malaysia has approved RE capacity of 482 MW (expected to achieve commercial operation by 2015), comprising:

Solar PV      - 40.2%
Biomass      - 27.7%
Small hydro  - 27.2%
Biogas         - 4.9%

Under the previous Small Renewable Energy Power (SREP) programme which was launched on 11th May 2001, only 61.2 MW of RE capacity was connected to the grid as at the end of 2010. Hence, the FiT mechanism which has been operational for only 2 years has achieved more RE capacity than the previous SREP which spanned nearly a decade.


Justification

By 2014, the projected job creation for the RE industry under the FiT programme is 11,412 whilst the total investment on the approved RE capacity is estimated to be RM 7.3 billion. Citing the solar PV industry as an example, in 2006, there were only 8 PV service providers in the country providing grid connected PV services. Today, more than 100 PV service providers have emerged in Peninsular Malaysia alone. With the opening of the FiT to Sabah and FT Labuan, SEDA expects the solar PV service providers to grow in numbers in the coming years.

The RE targets meted out under the National RE Policy and Action Plan was on the basis of collection of 2% surcharge imposed on electricity bills. SEDA said that for the past 2 years, only 1% surcharge was collected and without a revision of the surcharge, the RE industry and market growth in the country under the FiT will come to a grinding halt.


The Green Mechanics' 2 cents:

So, the RE targets in the National RE Policy was based on collection of 2% surcharge imposed on electricity bills? Why then the consumers alone are made to shoulder the burden? I have said my piece of mind before and I will say it again:-

The current 1% surcharge is correct and sufficient. The government just need to top it up with another 1% to make the endeavour a joint participation by both the government and the public. If SEDA revise the rate to 1.6%, the government should match it with 1.6%.

Furthermore, SEDA was not transparent (or perhaps overlooked) in giving out facts and figures in its press statement, especially the revolving fund size and the the projected amount it needed to keep the RE industry going. If I was asked to donate to certain organisation, I'd need to know where my money is going, and how much money is already in the organisation's coffer.

Would you not ask questions if your brother asks for certain amount of money, even if you could afford it?