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The Kajang WastetoEnergy Facility near Kuala

Lumpur in Selangor

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Contents

Execuve Summary 2

Introducon 4

Conceptual and Research Methods 4

The Malaysian Electricity Sector 10

The Small Renewable Energy Power (SREP)

Programme 12

Challenges to Implementaon 18

Conclusions 23

Appendix A: List of Research Interviews 24

Appendix B: Small Renewable Energy Power

(SREP) Programme Guidelines 26

References 27

Acknowledgements 28

About the Authors 29

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2

The Small Renewable Energy Power (SREP) Programme was the premier

policy mechanism implemented by the naonal government of Malaysia to

promote renewable electricity facilies less than ten megawas (MW) in ca-

pacity from 2001 to 2010. The SREP aimed to install 500MW of total renew-

able energy capacity by 2005, or about ve percent of naonal electricity

capacity. Although eligible technologies included a wide array of renewable

resources, SREP managed to install only 12MW by December 2005, less than

three percent of its original goal. Moreover, most of these projects focused

on only three types of renewable resources: byproducts from the palm oil

industry, small-scale hydroelectric dams, and waste-to-energy facilies such

as the one shown in Figure 1. Malaysian planners therefore modied and ex-

tended the SREP for another ve years and lowered its target to 350MW by

2010. However, by the end of December 2010 only 11 projects constung

61.7MW of capacity had been installed.

This study invesgates what happened. It explores the history of the SREP in

Malaysia, its drivers and benets, and the challenges planners faced when

implemenng it. It nds that the SREP largely failed to meet its targets be-

cause of technical, economic, and instuonal barriers. Obstacles were part-

ly technical, dealing with actual renewable electricity power plant design

and training issues; in part due to an economic worldview in Malaysia that

priorised low electricity taris, unaracve nancing rates, and connued

subsidies to fossil fuel producers; and partly instuonal, involving aws in

programme design, resistance, and regulatory failures.

It concludes with overall lessons for energy development and policy more

generally. SREP was weakened by capacity caps, a lengthy approval process,

lack of monitoring, exclusion of stakeholders, and few (if any) pre-feasibil-

ity studies. Its ecacy was diluted by fragmentaon and lack of cohesion

with other Malaysian energy policies. Relying on the dominant state-owned

electric ulity Tenaga Nasional Berhad proved to be a mistake, as was the

willing seller, willing buyer model of renewable energy power purchase

agreements. Electricity taris under SREP did not match true producon

costs, were not based on sound economics, and did not provide cost recov-

ery for project developers. Rather than abandon their renewable energy ef-

forts, Malaysian planners seem to have learned from the dicules facing

the SREP and are in the process of implemenng a progressive set of new

policies. Though it is uncertain if such new policies will achieve their goals,

the move is a sign that if you dont succeed at promong renewable energy

at rst, try, try again.

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3

Figure 1: The 8.9MW Kajang Waste-to-Energy facility converts trash from around the Kuala Lumpur area into

electricity and other recycled products

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4

The Malaysian Small Renewable Energy Power (SREP)

Programme aempted to install 500MW of qualied

biomass, biogas, municipal solid waste, solar photovol-

taics, and mini-hydroelectric facilies by 2005, but end-

ed up achieving only 12MW of capacity by that date.

Malaysian planners altered the SREP by lowering its tar-

get to 350MW and extending it for another ve years,

but by the end of 2010 just 11 projects and 61.7MW of

capacity had been built.

This report asks: what in the world happened? It ex-

plores the history of the SREP in Malaysia, its drivers and

benets, and the challenges planners faced when imple-

menng it. It then discusses what the experiences with

the SREP tell us about how to design future energy proj-

ects in developing economy contexts such as Malaysia.

The SREP was a central component of Malaysian energy

policy, and thus it provides an ideal situaon to explore

the dynamics at work within naonal energy planning.

The SREP was specically the cornerstone of the coun-

trys Fih Fuel Diversicaon Plan and also featured

prominently in the Eighth Malaysia Plan (2001 to 2005)

and the Ninth Malaysia Plan (2006 to 2010). Invesgat-

ing the drivers, benets, and challenges facing SREP of-

fers a deeper understanding of the pressures and inter-

ests related to Malaysian policymaking.

To understand the impediments facing the SREP, and

to be consistent with the other case studies, the au-

thors selected a qualitave case study methodology to

gain the richest possible level of insight into the dy-

namics of the SREP in Malaysia. As methodological

scholar Robert Yin has noted, such approaches allow

researchers to aain deep knowledge about a given

phenomenon and develop a highly descripve com-

prehension of the subject under study.1 Aer conduct-

ing a preliminary literature review of documents re-

lated to the SREP to provide context, plans were made

to conduct semi-structured research interviews and

site visits.

In designing the interview quesons, the authors em-

ployed an inducve approach to minimise interpreta-

ve bias caused by researchers trying to force answers

into preset cognive categories.2 We implemented this

approach by asking ve inial quesons for each inter-

view and then allowing interview subjects to elaborate in

as much detail as they wanted. The ve quesons were:

1. What are the primary energy policy and security

challenges facing Malaysia?

2. What were the drivers behind the SREP in Malaysia?

3. What were the major benets arising from the SREP?

4. What were the signicant challenges to implementa-

on?

5. What lessons or insights does the SREP oer for the

study of energy policy design and implementaon

more generally?

The authors supplemented these ve quesons with

probing response techniques when claricaon or

elaboraon was sought and reecng response tech-

niques in order to elicit reecon when warranted.3 Be-

cause of these interviewing strategies, parcipants oen

introduced new topics into the conversaon not anci-

pated by the authors. Interviews lasted between thirty

and ninety minutes with the average me of 45 minutes.

In total, 89 parcipants from 38 instuons from four

Malaysian provinces Sarawak, Selangor, Johor, and

Kedeah were interviewed over the course of March

2010 to February 2011. Those interviewed were se-

lected to represent the broadest possible array of stake-

holders associated with the SREP, and included mem-

bers of:

Engineering and consulng rms such as the Ber-

jaya Corporaon, Renewable Energy Berhad, Re-

cycled Energy Berhad, Core Competencies Berhad,

and Eco-Ideal Consulng;

Government and regulatory agencies such as the

Malaysian Energy Commission (Suruhanjaya Tena-

ga), Ministry of Energy, Green Technology, and Wa-

ter (Kementerian Tenaga, Teknologi Hijau dan Air),Malaysia Energy Centre (Pusat Tenaga Malaysia),

and the Economic Planning Unit in the Prime Min-

isters Department;

Energy companies and electric ulies, including

Petronas, Sime Darby, Tenaga Nasional Berhad,

Sarawak Energy Berhad, and Syarikat Sesco Ber-

had (formerly known as the Sarawak Electricity

Supply Corporaon);

Research instutes, civil society organisaons, and

trade organisaons including the Centre for Envi-

ronment, Technology, and Development Malaysia,

Malaysian Palm Oil Board, and United Naons De-

velopment Programme Malaysia.

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Figure 2: Researcher Ira Marna Drupady at the Malaysian Palm Oil Board

Figure 3: Researcher Ira Marna Drupady and Dr. Benjamin K. Sovacool at the Sungai Kerling Minihydro Plant

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Figure 4: Researcher Drupady speaks with a manager of the Bell Palm Oil Mill

Figure 5: Dr. Sovacool speaks with workers at the TDM Palm Oil Estate

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7

Parcipants were guaranteed anonymity to encourage

candor, respect condenality, and adhere to instu-

onal review board guidelines at the authors instu-

on; however, Appendix A lists all instuons visited.

Figures 25 depict some of these visits and interviews.

To ensure a degree of triangulaon and reliability, the

literature review and interviews were augmented with

direct observaon and site visits to thirteen renewable

energy facilies in Malaysia over the course of July 2010

to February 2011, some of them shown in Figures 610.

Table 1: Summary of Malaysian renewable energy site visits

Name Type of facility Capacity Owner / Operator Locaon Connecon

Directly

supported by

SREP / 5th Fuel

Policy

Date

visited

Batang Ai

Hydroelectric

Staon

Hydroelectric 108MW Sarawak Energy

Bhd.

Batang Ai,

Sarawak

On-grid No Jul

2010

Bakun

Hydroelectric

Project

Hydroelectric 2,400MW Ministry of

Finance/Sarawak

Hydro Bhd.

Bakun,

Sarawak

On-grid No Jul

2010

Murum

Hydroelectric

Project

Hydroelectric 944MW Sarawak Energy

Bhd.

Murum,

Sarawak

On-grid No Jul

2010

Kg. Mudung

Abun

Microhydro

Plant

Microhydro 25kW Mudung Abun

Community

Denang,

Sarawak

O-grid No Jul

2010

Long Lawen

MicrohydroPlant

Microhydro 10kW Long Lawen

Community

Long Lawen,

Sarawak

O-grid No Jul

2010

Lubok Antu

Palm Oil Mill

Palm Oil 1MW Salcra Sdn. Bhd. Sri Aman,

Sarawak

O-grid No Jul

2010

Sungai Kerling

Minihydro

Plant

Minihydro 2MW Renewable Power

Sdn Bhd.

Kerling,

Selangor

On-grid Yes Jan

2011

Langkawi Cable

Car Solar-

Diesel Hybrid

Solar

photovoltaics /

Diesel

109.5kW Langkawi

Development

Authority and

Tenaga Nasional

Bhd.

Pulau

Langkawi,

Kedah

O-grid Yes Jan

2011

HybridIntegrated

Renewable

Energy System

Solar / Wind /Diesel

400kW State Governmentof Terengganu and

Tenaga Nasional

Bhd.

PulauPerhenan,

Terengganu

O-grid Yes Jan2011

TDM Palm Oil

Estate

Palm Oil 1.0MW TDM Plantaon

Sdn. Bhd.

Dungun,

Terengganu

O-grid No Jan

2011

Kajang Waste-

to-Energy Plant

Waste

Incineraon

8.9MW Core Competences

Sdn. Bhd., Recycle

Energy Sdn. Bhd.

Semenyih,

Selangor

On-grid Yes Jan

2011

Bukit Tagar

Sanitary

Landll

Landll Gas

Capture

1MW Kub-Berjaya Enviro

Sdn. Bhd.

Bukit Tagar,

Selangor

On-grid Yes Jan

2011

Bell Palm Oil

Mill

Palm Oil Mill

Euent (POME)

Methane

Capture

and Empty

Fruit Bunch

Incineraon

1.7MW gas

capture,

10MW

Combuson

(under

construcon)

Bell Eco Power

Sdn. Bhd. and Bell

Palm Industries

Sdn. Bhd.

Batu Pahat,

Johor

On-grid Yes Feb

2011

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Figure 6: The 2MW Kerling Minihydro Plant

Figure 7: The 8.9MW Kajang Waste-to-Energy Plant

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Figure 8: The 1MW Bukit Tagar Landll Gas Capture Plant

Figure 9: The 1MW Lubok Antu Palm Oil Mill

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As Table 1 summarises, these included a mix of hydro-electric, palm oil estate, landll gas capture, waste in-

cineraon, and hybrid solar-diesel and solar-wind-diesel

facilies that were both o-grid and on-grid, large and

small in size, directly supported by the SREP and not sup-

ported, throughout the states of Johor, Kedah, Sarawak,

Selangor, and Terengganu. The authors also aended a

Renewable Energy Power Purchase Agreement (REPPA)

negoaon, the Bengkel Bersama Stakeholders Bagi Pe-

nyediaan on January 27, 2011, hosted at the Marrio

Hotel in Putrajaya, Malaysia.

To beer understand the drivers pushing the creaon

of the SREP, it is necessary to briey introduce readers

to the Malaysian electricity sector. Though Table 2

shows that prominent naonal policies related to en-

ergy have existed since 1949, four are the most per-

nent: the countrys Naonal Energy Policy of 1979, the

1981 Four-Fuel Diversicaon Strategy, the Electricity

Supply Act of 1990, and the Fih Fuel Diversicaon

Policy of 2001.

The Naonal Energy Policy of 1979 came aer the oilshocks of the 1970s, when Malaysia was heavily depen-

dent on imported oil. It spulated three main objec-

ves: (1) ensure an adequate and cost eecve supply,

in essence maximum use of domesc resources; (2)

ulise energy eciency and conservaon and eliminate

wasteful consumpon; (3) protect the environment,

or achieve the other two objecves without degrading

Malaysias rich ecological and social heritage. The Four

Fuel Diversicaon Strategy of 1981 explicitly promoted

hydroelectricity, natural gas, and coal as an alternave

to oil, and dropped naonal oil dependence from 90

percent in 1980 to less than ten percent in 2003.4 The

Electricity Supply Act, which one respondent called the

bible and another the biggest umbrella, everything

else comes underneath it, started the privasaon of

the electricity sector and enabled independent power

producers to enter the wholesale electricity generaon

market. Aer a major blackout in 1993 followed by roll-

ing brownouts in 1995, the government began planning

its Fih Fuel Diversicaon Policy of 2001 intended to

promote other forms of renewable energy. These mea-

suresespecially privasaon and the fuel diversica-

on policieshave seen oils share of naonal energy

supply drop precipitously since the 1980s and the rise of

Figure 10: The 109.5kW solar-diesel hybrid at the upper terrace of the Langkawi Cable Car

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11Date Event Descripon

1949 Central Electricity

Board formed

Central Electricity Board (CEB) created by the government for electricity

generaon, transmission, and distribuon in Malaysia.

1965 Naonal Electricity

Board formed

CEB is renamed to the Naonal Electricity Board (NEB).

1974 Petroleum

Development Act

The state-owned Petronas is given exclusive rights to own, explore, and produce

petroleum and related products.

1975 Naonal Petroleum

Policy

Sets regulaons for the oil and natural gas industries to ensure economic

development needs are met.

1979 Naonal Energy Policy Sets the three objecves of supply, ulisaon, and the environment.

1980 Naonal Depleon

Policy

Naonal Petroleum Policy is augmented to extend the life of domesc energy

reserves and lower reserve to producon raos.

1981 Four-Fuel

Diversicaon Strategy

Strategy intends to develop non-oil based sources of energy such as natural gas,

hydropower, and coal.

1990 Electricity Supply Act Established the state-owned ulity Tenaga Nasional Berhad to be peninsular

Malaysias naonal electricity provider, created by privasing and corporasingthe NEB.

1999 Pusat Tenaga Malaysia

formed

Pusat Tenaga Malaysia (PTM) created to promote energy eciency and

renewable energy.

1999 Five-Fuel

Diversicaon Strategy

Renewable sources of energy recognised as the h primary fuel in naonal

energy supply.

2001 Small Renewable

Energy Programme

launched

Small Renewable Energy Power (SREP) Programme created to achieve ve

percent renewable electricity supply by 2005.

2002 Malaysian Energy

Commission formed

Department of Electricity and Gas Supply at the Ministry of Energy transformed

into a regulatory agency responsible for energy maers

Table 2: Timeline of major energy policy events in Malaysia, 1949 to 2010

Figure 11: Fuel mix for Malaysian electricity generaon, 1995 to 2010 (%)

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coal and hydroelectricity in the naons electricity mix,

depicted in Figure 11.

Notwithstanding reliance on fossil fuels to meet most

naonal energy and electricity demand, Malaysia is

blessed with abundant renewable resources. One study

esmates no less than 30,700MW of renewable energy

potenal shown in Table 3, when in 2009 exisng in-

stalled capacity was less than 23,000MW.5 Similarly, the

Internaonal Energy Agency projected that realisablepotenal for renewables in Malaysia was about 130 Ter-

rawa-hours (TWh) per year by 2030, but that in 2006

the country generated only 101.3TWh. Both esmates

imply that Malaysia could possibly be completely pow-

ered by renewable resources.6

Malaysian planners seem cognisant of this potenal, and

embarked in 2001 to capture some of it through the

Small Renewable Energy Power (SREP) Programme. One

expert we interviewed explained the decision to pro-

ceed with the SREP as follows:

We had the four fuel policy operang for many

years, and it was basically successful at promot-

ing large hydro and a collecon of natural gas and

coal-red power plants. But we saw the need to

promote other types of renewable energy. Though

we had some diesel power plants, these were inef-cient, costly, and pollung. Most of the large hy-

dro potenal had either already been tapped, or

were in places like Sabah and Sarawak, hundreds

of kilometres away from major urban centres. In-

creased reliance on coal was thought to be too

environmentally damaging, and was somemes

opposed by local communies. Natural gas was al-

ready an uncomfortably large share of the naonal

electricity porolio. Renewables were seen as the

only viable alternave.

The Malaysian government also recognised that a collec-

on of pernicious barriers prevented the wider adopon

of renewable energy in the late 1990s and early 2000s.

These included lack of a naonal policy in support of

renewable energy, the percepon that waste-to-energy

and palm oil technologies were pollung, inability to

cover project costs and lack of nancing, and poor coor-

dinaon among dierent naonal players and ministries.

One study went so far as to argue that renewable energy

was looked upon as a primive and dirty fuel.7

To address these issues, the Ministry of Energy, Green

Technology, and Water announced the SREP on May 11,

2001. It was intended to be the main vehicle to meet

the renewable energy targets espoused by the Eighth

and Ninth Malaysia Plans as well as the Third Outline

Perspecve Plan. Eligible technologies for the SREP were

limited to biomass, biogas, municipal solid waste, so-

lar photovoltaics, and mini-hydroelectric facilies. The

Ministry established a Special Commiee on Renewable

Energy (SCORE) to oversee the programme and permit-

ted projects up to 10MW of installed capacity. These

projects could sell to two of the three major ulies in

Malaysia: Tenaga Nasional Berhad (TNB) in peninsular

Malaysia or Sabah Electricity Sendirian Berhad (SESB)

in Borneo. Project developers had to negoate a REPPA

with the relevant ulity according to a willing buyer,

willing seller model and were granted a license for 21

years aer the commissioning of a plant. Renewable en-

ergy project developers were responsible for the costs

of grid connecon and ulity system reinforcement in-

cluding cables, transformers, switchgears, protecon

equipment, and metres, and were required to distribute

electricity into the network between 11 to 33 kV. Facili-

es had to be within ten kilometres of the nearest in-

terconnecon point to the grid, and all facilies had to

meet regulaons set by the Department of Environment.

Lastly, a minimum 30 percent equity had to be held in all

projects by Bumiputera (indigenous Malaysian) stake-

holders, and foreign companies were allowed to parci-

pate only with a maximum equity of 30 percent. Project

developers also had to go through a somewhat cumber-some and complicated process involving an applicaon

for approval followed by an applicaon for license

depicted in Figures 12 and 13. Ancillary support mecha-

Sources MW

Hydropower 22,000

Solar photovoltaics 6,500

Biomass and Biogas 1,300

Mini-Hydro 500

Municipal Solid Waste 400

Total 30,700

Table 3: Achievable renewable energypotenal for Malaysia (MW)

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13

Figure 12: SREP Approval applicaon process owchart

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14

Figure 13: SREP License applicaon process owchart

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nisms, such as Pioneer Status or Income Tax Allowance

and tax exempon on equipment, were implemented in

tandem with the SREP. Appendix B provides the full list

of project criteria.

At the me the SREP was launched, it was believed

that accomplishing a ve percent share of renewable

electricity supply by 2005, or a total of 500 megawas

(MW)the stated goal of the Eighth Malaysian Plan

would save the country about US$2 billion over those

ve years.8 Respondents told us that the SREP was de-

signed to accomplish mulple goals.

First, it was seen as a way to tap the waste energy po-

tenal from the palm oil industry, one of the largest ag-

ricultural sectors in the country. One parcipant told us

that we thought we could get at least 600MW alone,

100MW above the target, from the 400 plus palm oil

mills producing millions of tons of empty fruit bunches,

palm fronds, and palm oil mill euent each year. In-

deed, at the price of only US$30 per barrel of oil, one

study esmated the value of palm oil waste at more than

US$200 billion.9 Given that the price of oil is three mes

that amount in early 2011, ostensibly US$600 billion of

value exists. A separate assessment calculated at least

665MW of renewable energy capacity from biomass as

well, gures presented in Table 4.10 Another study as-

sessed a whopping 2,400MW of potenal,11 and yet an-

other study calculated 2,059MW from the 71.3 million

tons of empty fruit bunch produced each year along with

the 19 million tons of crop residue.12

Second, the SREP was heralded as a way to promote

innovaon and technological learning in alternaves

Malaysia had lile experience with, such as waste incin-

eraon, small-scale hydro, and solar photovoltaic panels.

Malaysians produce roughly 20,000 tons of waste every

day, enough to bury the Petronas Towers under a pile of

trash every four days, but also enough to create US$10

billion of revenue if converted to electricity. Solar ener-

gy potenal was cited as extremely favorable with 6.0

to 6.5kWh of potenal energy per square metre, given

Malaysias locaon on the equator.13

Third, the SREP was seen as a mechanism to also help

achieve the countrys remaining electricaon goals.

While more than 99 percent of the countrys populaon

has access to the exisng grid, about 150,000 to 200,000

homes, mostly in the poorest and most rural parts of Ma-

laysia, sll rely on diesel generators or receive no modern

energy services at all. The SREP programme was partly

hoped to develop smaller scale systems, especially mini-

hydro and solar, which would reach hard-to-access popu-

laons. Another respondent commented that hydro

and solar provide a convenient and cost-eecve way to

produce power in rural areas as it is near impossible to

build transmission lines to cater for the small number of

homes currently o-grid, and SREP was believed to help

develop suitable o-grid and micro-grid technologies.

Fourth and nally, SREP was conceived as a way to reduce

Malaysias greenhouse gas emissions and environmental

polluon, especially from the palm oil industry. Every

single ton of palm oil creates six tons of palm fronds,

ve tons of empty fruit bunches (EFB), one ton of palm

trunks, one ton of mesocarp ber, 750 kilograms of palm

kernel cake and endocarp, and a staggering 100 tons of

palm oil mill euent (POME). Before it is discharged,

POME is usually collected in open ponds or storage

takes to degrade, a pracce that produces voluminous

amounts of greenhouse gas emissions, as every ton cre-

ates 28 cubic metres of methane.14 Taken together, such

emissions from the palm oil industry account for roughly

12 percent of naonal greenhouse gas emissions, and

converts what is in essence a fugive emission into a

source of electricity that was seen as aracve.

Despite these reasons in favor of renewable energy,

however, implementaon did not proceed as planned.

In 2003 a study noted that major obstacles remained in

Malaysia two years aer SREP had started, including lack

of economies of scale, poor percepon of commercial vi-

ability for projects, and higher risk premiums for nanc-

ing.15 At the end of 2005, SREP had achieved a meager

2.4 percent of its original goal. As the Minister of Energy,

Tun Dr. Lim Keng Yaik, noted at the me:

The SREP has not been able to connect the envis-

aged 500MW of electricity generated from renew-

SourcesQuanty

(kton/yr)

Potenal

Generaon

(GWh)

Potenal

Capacity

(MW)

Rice Mills 424 263 30

Wood Industry 2,177 598 68

Palm Oil Mills 17,980 3,197 365

Bagasse 300 218 25

Palm Oil

Mill Euent

(POME)

31,500 1,587 177

Total 72,962 5,863 665

Table 4: Biomass electricity potenal in Malaysia

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able sources to the naonal grid. What it has been

able to deliver in the last four years is 12MW from

two projects. The wide gap between policy and im-

plementaon clearly indicates that there are barri-

ers to the eecve transion from a convenonal

to a sustainable model of energy development.16

The Ministers comments were conrmed by an inde-

pendent study which noted that the development of

renewable energy technology was not suciently de-

veloped in Malaysia.17 Costs of producon were sll

higher than many other countries at 725 U.S. cents/

kWh, compared to convenonal electricity costs of 46

U.S. cents/kWh. Lack of informaon on renewable en-

ergy was referenced as a major barrier, palm oil facilies

were sll not converng their waste to electricity, and

weak public awareness about the benets of renewable

energy was widespread.

Because of these problems, Malaysian planners extend-

ed the SREP for another ve years but scaled down its

targets to 350MW: 300MW in peninsular Malaysia, and

50MW for Sabah in Borneo. When, yet again, implemen-

taon lagged far behind targets, the SREP was revised

at the end of 2006 to increase taris from 17 Malaysian

sens/kWh to 19 sens/kWh and later 21 sens/kWh, though

this was only for biomass and biogas technologies, not

mini-hydro and solar system, as shown in Table 5.

Even the revised taris, nonetheless, did not signicantly

accelerate parcipaon in the programme. At the end

of 2010, Table 6 shows that only 61.7MW of renewableenergy capacity had been connected to the grid from 11

projects. Of these projects, roughly 80 percent were re-

lated to waste and palm oil. As Table 7 illustrates, an addi-

onal 33 projects with 210.85MW of capacity were in the

pipeline but not yet approved or licensed. Total renewable

energy supply, including projects supported by SREP as

well as those from other programmes an incenves, was

217MW,18 less than a one percent share for the country.

Renewable

electricity priceBiomass Biogas

Mini

hydro

Solar

Photovoltaics (PV)

17 sen / kWh

(2001)X X X X

19 sen / kWh

(2006)X X

21 sen / kWh

(2007)X X

Table 5: Revised taris under the SREP, 2001 to 2009

Project Developer Project Locaon Capacity (MW) Fuel Source

TSH Bioenergy Sdn. Bhd. Tawau, Sabah 10Empty fruit

bunches (EFB)

Seguntor Bioenergy Sdn. Bhd. Jalan Seguntor, Sandakan Sabah 10 EFB

Kina Biopower Sdn. Bhd. Lot 2, Jalan Seguntor, Labuk Road Sandakan Sabah 10 EFB

Esajadi Power Sdn. Bhd. Sungai Kadamaian, Kundasang, Sabah 2 Mini hydro

Esajadi Power Sdn. Bhd. Sungai Pangapuyan, Kota Marudu, Sabah 4.5 Mini hydro

Recycle Energy Sdn. Bhd.Lot 3041 & 3042 Mukim Semenyih Daerah Hulu

Langat Selangor5.5 Municipal waste

MHES Asia Sdn. Bhd.HS(D) 12572, Lot PT No. 3226, Mukim Serng,

Negeri Sembilan10 EFB

AMDB Perng Hydro Sdn Bhd Sg. Perng, Bentong Pahang 4 Mini hydro

Renewable Power Sdn. Bhd. Sg. Kerling , Selangor 2 Mini hydro

Bell Eco Power Sdn. Bhd. Parit Ju, Batu Pahat, Johor 1.7 Biogas

Jana Landll Sdn. Bhd. Puchong, Selangor 2 Biogas

Table 6: Licensed and operaonal SREP projects (as of February, 2011)

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For all intents and purposes, the SREP was subopmal.

As one respondent told us:

The SREP is not a success. From 2001 to 2008,

most of the duraon of the programme, 50 proj-

ects were approved for a capacity of 288MW,

but 40 percent were cancelled, and one-quarter

were issued with licenses but never started op-

erang. One-third were not issued with licenses,

and only 13MW was built for the rst eight years

of the programme.

Another parcipant calculated that about two-thirds

of the projects proposed under SREP never progressedand that even today, the major players are not geng

into the renewable energy business they just dont

want to get involved. Sll others commented that our

conclusion is that the SREP is a failure. The government

needs to relook at it if they wish to see some success

in the near future and the SREP experience has been

dismal. A slew of recent studies have also implied the

same, with one interviewing key stakeholders in Malay-

sia and nding that regulators and investors commonly

see renewable energy as immature, exoc, unproven,

and risky.19 Another argued that ulisaon of renew-

able energy [in Malaysia] is sll very low.20 The Inter-

naonal Energy Agency documented that a lack of stan-

dard codes and cercaon, inadequate training, and

mistrust among nanciers and investors sll remained in

Malaysia.21 Another study analogously argued that lim-

ited local experience, improperly designed regulaons,

and lack of awareness were impeding the diusion of re-

newable energy.22 Yet another study concluded in their

assessment that renewable energy in Malaysia is sll

being generated on a small-scale basis [even though]

Malaysia is blessed with abundant resources The

progress in bringing renewable energy generaon into

the mainstream has been slow.23

Why, then, did the SREP fail to meet its targets, catalyze

the growth of the renewable energy industry, and over-come the barriers it was intended to prevail against? This

secon explains the challenges facing SREP implementa-

on. It argues that obstacles were partly technical, dealing

with actual renewable electricity power plant design and

training issues; in part economic due to low electricity tar-

is, unaracve nancing rates, and connued subsidies

to fossil fuel producers; and partly instuonal, involving

aws in programme design, resistance, and regulatory

failures. Table 8 provides an overview of these barriers.

Technical Obstacles

One major technical obstacle involved developing re-

newable electricity systems that would work in a Ma-

laysian context. One respondent noted that the palm

oil industry, for instance, had no experience with ad-

vanced boiler technology and no understanding of bio-

CategoryNumber of

projectsCapacity

Mini-Hydro 9 50.8MW

Biomass 14 140MW

Biogas 10 20.05MW

Total 33 210.85MW

Table 7: SREP projects under construcon and

approved (but not yet licensed or operaonal)

Dimension Explanaon

Technical

Lack of technology such as boilers that

could combust empty fruit bunches and

experience with digesters.

Insucient educaon, training, and

sharing of experience among all

stakeholders (e.g. planners, developers,

electric ulies, research instutes,

nancial instuons)

Expensive feasibility studies and high grid

interconnecon costs.

Economic

Low electricity taris for renewable power

producers.

Unfamiliarity and resistance of nanciers

and bankers.

Subsidies to fossil fuels and the failure

to include the cost of externalies in

electricity prices.

Instuonal

Flaws in programme design including

capacity caps, long lead mes for project

approval, and no authority given to

programme managers over enforcement.

Disinterest and occasional hoslity

from naonal ulies and convoluted

Renewable Energy Power Purchase

Agreements (REPPAs).

Lack of adequate and strongly

implemented naonal policy frameworks.

Table 8: Summary of challenges facing theSREP in Malaysia

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gas technology, meaning engineers encountered numer-ous problems related to how to combust empty fruit

bunches or gasify palm oil euent. Thus, biomass proj-

ects had to proceed with a lot of costly trial and error.

Small hydroelectric projects had trouble because of the

great uctuaon in water supply between the wet and

dry seasons, and were also locaon dependent, given

the ten kilometre restricon set by TNB. Most of the

Malaysian landlls were not designed or well suited to

capture methane gas, and the country had praccally

no experience with designing and using solar panels to

generate commercial electricity, which is why no solar

projects were ever sponsored by SREP.

The Bukit Tagar sanitary landll gas capture power plant

we visited, took years to design and involved geo-syn-

thec clay liners, high design polyethylene blankets, wa-

ter treatment facilies, anaerobic closing ponds, gas ex-

tracon wells, pumps, blowers, ame arresters, and are

stacks. The Kajang waste incineraon plant we visited

had to specially design a refuse derived fuel cycle that in-

volved magnecally sorng waste, drying and shredding,

spling and recycling non-combusble items, digesng

organic waste, combusng the remaining material, and

treang euent. One ocial at the Bell Palm Oil biogas

facility we visited shown in Figure 14 called designing thedigester system as a nightmare, and also menoned

how devastang palm oil plantaons could be to the lo-

cal environment if managed improperly. As one respon-

dent summed it up, when the SREP kicked o, not many

people knew about renewable electricity, so we had to

develop it all on our own.

Another closely related obstacle was lack of skills and

insucient educaon, training, and quality assurance.

While it is clear that all stakeholders are making their own

eorts to build their capacity in renewable energy, one

respondent noted that there was no centralised training

instuon, no place to learn about how to innovate tech-

nology, instead we had to do our research on an ad hoc

basis. Another respondent menoned that although his

instute undertakes research in solar, biogas, waste and

other renewable energy technologies, their ndings have

contributed lile toward the SREP. It is therefore not sur-

prising that there is a seeming imbalance when it comes

to stakeholder capacity, with some real innovaons hap-

pening in some places but not others.

Such lack of capacity became apparent during two of

the site visits we conducted to TNB renewable energy

demonstraon plants. We showed up at the rst, a hy-

Figure 14: The digester tanks of the 1.7MW Bell Palm Oil Facility

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19

brid system at the Langkawi Cable consisng of 16kWpof solar panels and two 50kW diesel generators shown

in Figure 15, only to nd that it was no longer working,

despite being built in 2002. As one of the operators told

us, all the solar panels are broken, lightning short cir-

cuited the system, we cant get spare parts and wouldnt

even know what to do with them if we did. The second,

a TNB solar-wind hybrid project on Pulau Perhenan in

Terengganu, was no longer operaonal due to lack of

maintenance skills and interest from its operators.

As one local community member told us, that system

hasnt been working for years even though its sll fea-

tured on the TNB website, its just decoraon now, its

been long abandoned. Even at one of the operaonal

SREP sites we visited, one of the facility managers told

us that spare parts and maintenance is a big problem,

we had to hire a full-me technician from China to live at

the plant, because there was no one available to train us

in what to do. One dimension to this issue of capacity is

poor project feasibility assessments, with many sub-

standard projects passing the approval stage that never

should have. The reason is that planners didnt really

have the experse to approve a project, but they did

anyways because they wanted to be seen as cooperang

with the new SREP. Clearly, the lack of a strong capac-

ity building component within the SREP is a missed op-portunity for stakeholders to build experse, share their

experiences, and propagate best pracces.

A nal technical obstacle relates to onerous interconnec-

on and feasibility requirements spulated by TNB. One

project developer exclaimed that we were forever at the

mercy of TNB to say which substaon to interconnect to,

what type of circuit breakers and equipment we had to

use, how much we had to spend on feasibility studies.

That same project developer esmated that such com-

plicaons accounted to a staggering 20 percent of the

total project cost (though other project managers told us

interconnecon costs amounted to only 25 percent of

total costs). Another remarked that its hard connecng

to TNBs grid, there is the legimate concern that our dis-

tribuon system could damage their network, but they

also set very stringent protecon requirements that re-

ally complicated the technical eciency of our project.

Economic and Financial Obstacles

In the economic realm, insucient taris for renew-

able electricity providers hobbled project develop-

ers. One respondent noted that the taris paid to

SREP developers were not based on sound economic

principles, they were set with no consideraon of ac-

Figure 15: The inoperable solar-diesel hybrid system at the Langkawi Cable Car in Kedah, Malaysia

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20

tual cost recovery. The original tari of 17/sen perkWh was shockingly low, far below even the actual

cost of operang SREP facilies. In the case of the

Bukit Tagar sanitary landll, operators told us that it

would have made more sense to just use the electricity

onsite for the facility, since they were paying 30 sen/

kWh for electricity but could only sell at 21 sen/kWh.

This, however, was not allowed, forcing the landll

in essence to sell electricity to TNB for 21 sen per unit

that we then buy right back at 30 sen. Another project

developer told us that SREP taris pay only enough to

cover operaon costs and to run the plant, we make

no money at all unless we get carbon credits under the

CDM. A third project developer we spoke with con-

curred, and noted that without CDM, projects would

never make itSREP is insucient. At another facility,

respondents argued that the tari is too low, we dont

even get enough to cover operaons, we need extra

income from pping fees, recycling, and making plas-

c resin onsite. For solar projects, respondents men-

oned that at least RM 1.70 per kWh would be needed

to make projects viable, more than seven mes the

rate currently oered by TNB. As another respondent

noted, the SREP rate is way too low for such projects

to be commercially viable.

Because the tari was so low, respondents noted thatmany project developers could make more money do-

ing other things with renewable fuels. Palm oil mill-

ers, for example, can use wastes and residues to gen-

erate grid electricity, or as a component of maresses

and chipboards, for use in the paper and pulp industry,

to make animal feed, or to manufacture compost fer-

liser. SREP is just another opon for mills, one re-

spondent told us, but its not a key factor, something

extra, somemes a nuisance, somemes worth do-

ing. Managers also spend much of their me focusing

on acquiring land for the expansion of palm oil mills

shown in Figure 16, rather than generang electricity.

Landll gas, similarly, can be used to generate electric-

ity, or when upgraded and sweetened used for a va-

riety of other applicaons including heang, cooking,

and a transport fuel.

A separate economic obstacle dealt with lack of nanc-

ing and the unfamiliarity of Malaysian banks with re-

newable electricity projects. One respondent noted

that when SREP started, local banks were unwilling

and unready to give nancing. Project developers usu-

ally had to go abroad to Chinese and Japanese nan-

ciers. Another commented that bank managers had

Figure 16: Land in Perak is cleared to make way for the expansion of palm oil mills

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21

no idea about renewable energy, its hard for them to

visualise what a landll gas capture or municipal solid

waste plant looks like.

Lastly, subsidies to natural gas and oil, along with energy

prices that do not reect full costs result in an oversup-

ply of electricity generated from fossil fuel sources andimpede the diusion of technologies under SREP, espe-

cially as the country is already 99 percent electried. As

one respondent put it, the marketplace in Malaysia is

not fair, fossil fuels have been cross-subsidised for de-

cades, eroding the move to go into renewables the

playing eld isnt only uneven, its an enrely dierent

game. Another argued that the explanaon behind

SREPs poor performance is that other items and dam-

ages associated with fossil fuels, such as carbon dioxide

or acid rain, are not factored into taris, Malaysians are

not paying the full cost of electricity. Such senments

have been conrmed by other studies, with one study

nong that in Malaysia there is sll massive support for

convenonal energy sources in the forms of subsidies

and export credits.24 The result is a lack of economies

of scale for renewable energy, and arcially low pric-

es for fossil fuel supply presented in Table 9.

Polical and Instuonal Obstacles

Just as signicant as technical and economic barriers,

a collecon of instuonal obstacles wreaked havoc

on the SREP. Our respondents idened no less than

seven. First is that the capacity cap of 10MW was set

too low, according to some respondents, for it ruled

out economies of scale for hydroelectric, waste, and

biomass projects. Another remarked that the 10MW

cap created a no mans land where smaller projects

had too many transacon costs such as interconnec-

on fees and negoang with TNB, but larger proj-

ects were funconally excluded. Yet another jokingly

called the SREP the small-small renewable energy

programme. The 10MW cap, one respondent told us,

meant all we could do was generate peanuts, noth-

ing more.

Second, the inial ve percent and 500MW by 2005

naonal target was set without any feasibility studies

and chosen almost randomly, without consultaon with

key stakeholders in the industry. One parcipant told

us that they didnt know where either of the numbers

came from, it surely wasnt by consulng the experts.

Third, altering the taris in 2005 was seen as pickingwinners since it only applied to biomass and palm oil

technologies, and not solar and hydro technologies. One

respondent called the low tari for solar PV odd since

that technology had the highest costs compared to all

qualied systems.

Fourth, REPPAs took too long to negoate and TNB

had the ability to stall or delay whenever they wanted

to, and the 21 year operang license was hard to meet

given that many of the fuel contracts and nancing

agreements for things like fruit bunches or waste weredone on ten and een year bases.

Fih, all SREP projects had to be approved by SCORE,

but the commiee met only twice a year, meaning if a

project missed the rst session they would have to wait

another six months to apply.

Sixth, neither SCORE nor the Malaysian Energy Commis-

sion had the authority to enforce SREP, or to reconcile

complaints about TNB, or to expedite projects. Such or-

ganisaon were also compromised and prone to con-

icts of interest since their members included TNB and

the Malaysian Palm Oil Board, but not solar and hydro

developers or consumer advocate groups. One respon-

dent went so far as to suggest that the Energy Commis-

sion really does nothing, its just a surrogate for TNB and

has their interests in mind.

Seventh, the SREP had limited oversight and poor

evaluaon, meaning problems like those above were

not caught or remedied.

Add all of these design aws up, and some projects took

ve years or longer to get completed, some develop-

ers never bothered to complete the process, and many

more never bothered to start in the rst place. Another

SourceElectricity

generaon cost

Gas and Coal Electricity 46

Hydro 112

Mini-Hydro 510

Geothermal 710

Biomass 715

Solar 2025

Table 9: Exisng levelised costs of electricity

generaon in Malaysia (including subsidies),2009 (U.S. Cents/kWh)

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22

project developer told us that it took a terribly longme to go through the SREP processit was supposed

to be done in three months, and took us ten mes lon-

ger. Furthermore, the ten kilometre restricon to the

grid meant that many rural areas and Orang Aslicom-

munies were sll too far from the grid to qualify for a

project, and had to instead rely on inecient, expensive,

and pollung diesel generators like the one in Figure 17.

Another key instuonal problem was resistance from

TNB, the only buyer in peninsular Malaysia that renew-

able power producers could sell to. TNB had all the

bargaining power, didnt need renewable energy, and

saw the SREP as a threat to its revenue and prots. It

was a recipe for disaster, another respondent told us,

with TNB seng extremely low taris, seng perfor-

mance provisions that facilies had to deliver electricity

at precise capacity factors, levying penales for short-

falls in expected generaon, demanding half of the sav-

ings developers accrued from tax reducons, intenon-

ally delaying the approval of projects to put pressure

on developers to accept unfair provisions, and seng

unfair standby taris for backup power. All three of thesite visits we undertook revealed that project develop-

ers had asked for greater amounts of capacity but had

been denied from TNB: Kajang could generate 10MW

but was limited to exporng less than 7MW; Bukit Tagarcould do 6MW but was limited to 1MW; Bell could have

done 4MW but was limited to 1.7MW. One respondent

explained that:

TNB sees independent renewable power produc-

on as a lose-lose situaon because it displaces

their capacity, and lowers their electricity sales.

Pung them in charge of SREP was akin to let-

ng a fox manage a chicken coop, or an atheist in

charge of a church. TNB put up hurdles every way

they could.

A nal instuonal challenge related to the lack of a na-

onal, cohesive, strongly implemented policy framework

on renewable energy. As one respondent put it, SREP

was designed and implemented with no thought or rela-

onship to the various other ongoing renewable energy

programmes, there was no harmonisaon, no coordina-

on. The Ministry of Energy, for example, had to com-

pete with the Malaysian Energy Commission and TNB

over the direcon of naonal electricity policy in addi-

on to actors like the Ministry of Housing taking chargeof waste, the Ministry of Science technological develop-

ment, the Department of Environment regulaons, its

a convoluted policy landscape. Another respondent

Figure 17: A diesel generator provides electricity to the Long Wat Penan Selement in the interior of Sarawak

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spoke about a mishmash between the SREP and local

policies and regulaons that would sll impede projects

even aer TNB would give approval, with hydroelectric

projects, because they deal with water, and waste proj-

ects, because they interfere with pping fees, especially

polemic. Apparently communicaon between local and

naonal governments was not good and requirements

and standards diered state by state, with Johor having

dierent requirements than Pahang which is sll dier-

ent than Selangor.

Even though SREP did not meet its targets, it oers

many lessons for energy planners and policymakers. Atthe top of the list is beer design: SREP was hobbled

from the start by capacity caps, a lengthy approval pro-

cess, lack of monitoring, exclusion of stakeholders, and

few (if any) pre-feasibility studies. Project developers

had to pay the cost of interconnecon and had to build

systems within ten kilometres of the exisng electricity

grid. Operang licenses were spulated to be 21 years

but nancing agreements and fuel contracts rarely ex-

tended beyond ten years. Electricity taris were

changed under the programme in 2001, 2006, and

2007, and targets were revised downward in the middle

of the programme. Projects supposed to take three

months to design, approve, install, and connect ended

up taking 35 years, and scores of project developers

abandoned their eorts midstream. Each of these de-

sign aws, especially the 10MW cap, arcially, and

perhaps unnecessarily, prevented an organic renewable

electricity market from taking hold.

In addion, the ecacy of SREP was eroded by fragmen-

taon and lack of cohesion with other Malaysian energy

policies, notably connued subsidies for natural gas and

oil as well as conicts with state guidelines and policies

concerning hydroelectricity, waste-to-energy, and palm

oil euent and waste. A sort of policy gap existed be-

tween the loy targets enshrined in SREP and the local

developers and ocials on the ground charged with re-

alising those targets.

Relying on the dominant state-owned electric ulity TNB

also proved to be a mistake, as was the willing seller,

willing buyer model of REPPAs. Rather than embrace re-

newable energy, evidence from our pool of respondentsstrongly suggests that TNB opposed it and used a variety

of taccs, such as interconnecon fees, costly feasibility

studies, and delays, to discourage projects. Part of this is

understandable, given that the structure of SREP meant

that small-scale renewable electricity projects traded o

with TNB revenues and prots.

Equally important, electricity taris under SREP did not

match true producon costs, were not based on sound

economics, and did not provide cost recovery for projectdevelopers. Every single project we visited highlighted

the need for extra streams of income, from CDM credits

to pping fees and recycling, in order to be nancially

viable. When taris under SREP were changed in 2006,

this was made without cosng studies and created the

percepon of picking winners of biomass and biogas.

Finally, and perhaps the most important lesson of all:

Malaysian planners could have given up aer SREP and

abandoned the idea of renewable electricity overall,

but they instead learned from its dicules are imple-

menng a progressive set of new policies, including an

ambious feed-in tari. Unlike the SREP, this new policy

framework will guarantee access to the grid by requir-

ing TNB and other ulies to accept all electricity from

private renewable electricity producers. It will stream-

line approval and sing procedures, and also set taris

based on reasonable rates of return to project vendors.

The new policy framework is seng up a single agency,

the Sustainable Energy Development Authority (SEDA),

to consult with stakeholders and then monitor and eval-uate progress. Planners in Malaysia expect total grid con-

nected renewable energy capacity to grow from 219MW

in 2011 to 4,000MW by 2030 and 21,370MW by 2050.25

Such targets have also been incorporated into the 10th

Malaysian Plan (20112015) and a Naonal Renewable

Energy Policy and Acon Plan. Though it is uncertain if

such ambious targets will be accomplished, the move is

a sign that if you dont succeed at promong renewable

energy at rst, try, try again. Ulmately, the experience

with SREP implies that planners can learn just as much

from project failures as successes.

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24

Date Instuon LocaonNumber of

interviews

Mar 2010 Board of Naonal Economic Advisory Council Kuala Lumpur, Selangor 1

Apr 2010 Ministry of Energy, Green Technology & Water Putrajaya, Selangor 1

May 2010 United Naons Development Programme Malaysia Kuala Lumpur, Selangor 1

May 2010 Instute of Strategic & Internaonal Studies Malaysia Kuala Lumpur, Selangor 1

May 2010 Sarawak State Government Kuching, Sarawak 1

May 2010 Ministry of Natural Resources and Environment Putrajaya, Selangor 1

May 2010 Friends of the Earth Kuching, Sarawak 1

May 2010 Global Environment Facility Kuala Lumpur, Selangor 1

Jul 2010 Sarawak Hidro Sdn Bhd Kuala Lumpur, Selangor 3

Jul 2010 United Naons Development Programme Malaysia Kuala Lumpur, Selangor 5

Jul 2010 Economic Planning Unit, Prime Ministers Department Putrajaya, Selangor 2

Jul 2010 Public Private Partnership Unit, Prime Ministers Department Putrajaya, Selangor 8

Jul 2010 Corridor Development Unit, Prime Ministers Department Putrajaya, Selangor 1

Jul 2010 Regional Corridor Development Authority Putrajaya, Selangor 2

Jul 2010 Ministry of Tourism Kuala Lumpur, Selangor 1

Jul 2010 Centre for Environment, Technology, and Development Malaysia Petaling Jaya, Selangor 1

Jul 2010 OSK Research Kuala Lumpur , Selangor 1

Jul 2010 Ministry of Energy, Green Technology & Water Putrajaya, Selangor 2

Jul 2010 Sime Darby Kuala Lumpur, Selangor 2

Jul 2010 Petronas Kuala Lumpur, Selangor 3

Jul 2010 State Planning Unit, Sarawak State Government Kuching, Sarawak 1

Jul 2010 Sarawak Energy Berhad Kuching, Sarawak 4

Jul 2010 Universi Malaysia Sarawak Kuching, Sarawak 1

Jul 2010 Sarawak Rivers Board Kuching, Sarawak 2

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Date Instuon LocaonNumber of

interviews

Jul 2010 Natural Resources and Environment Board Sarawak Kuching, Sarawak 2

Jul 2010 Sarawak Electricity Supply Company Kuching, Sarawak 2

Jul 2010 Alstom Hydro Bakun, Sarawak 1

Jul 2010 Sarawak Hidro Berhad Bakun, Sarawak 3

Jul 2010 Borneo Resources Instute Malaysia Kg. Mudung Abun, Sarawak 1

Jul 2010 PACOS Kg. Mudung Abun, Sarawak 1

Jul 2010 Sarawak Energy Berhad Batang Ai, Sarawak 2

Jul 2010 Sarawak Electricity Supply Company Batang Ai, Sarawak 3

Jan 2011 Eco-Ideal Consulng Sdn. Bhd. Kuala Lumpur, Selangor 1

Jan 2011 Malaysian Energy Commission Putrajaya, Selangor 2

Jan 2011 Renewable Power Sdn. Bhd. Kerling, Selangor 2

Jan 2011 Forest Research Instute Malaysia Kepong, Selangor 1

Jan 2011 Ministry of Energy Putrajaya, Selangor 3

Jan 2011 Tenaga Nasional Berhad Putrajaya, Selangor 1

Jan 2011 Malaysian Palm Oil Board Kuala Lumpur, Selangor 5

Jan 2011 Renewable Energy Research Centre (SIRIM) Kuala Lumpur, Selangor 1

Jan 2011 JD Energy Systems Shah Alam, Selangor 1

Jan 2011 Langkawi Development Authority Langkawi, Kedah 3

Jan 2011 Bell Palm Industries Sdn. Bhd. Batu Pahat, Johor 1

Feb 2011 United Naons Development Programme Bangkok, Thailand 1

Feb 2011 Kub-Berjaya Enviro Sdn. Bhd.Bukit Tagar Sanitary Landll,

Selangor1

Feb 2011 Recycle Energy Sdn. Bhd. Semenyih, Selangor 4

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SCORE will adopt the following Guidelines in promong

the development of grid-connected small with regards

to power plants:

1. SREP shall apply to all types of renewable sources

of energy, including biomass, biogas, municipal

waste, solar, mini-hydro and wind.

2. Project developers will have to negoate the Re-

newable Electricity Purchase Agreement with

the relevant Ulity, including the selling price on

a willing-seller, willing buyer basis, based on take

and pay.

3. The RE electricity producer shall be given a licencefor a period of 21 years, to be eecve from the

date of commissioning of the plant.

4. RE electricity producers will be responsible for all

the costs of the grid-connecon, the relevant Ul-

ity system reinforcement (electric cables, trans-

former, switchgears and other protecon equip-

ment) and the necessary metreing installaon. The

distribuon grid interconnecon shall be made at

a voltage between 11 33 kV.

5. The small RE power plant shall be located within adistance of 10km from the nearest interconnecon

point. Excepon is given for hydro power genera-

on project.

6. No stand-by charges shall be levied. However, if

back energy is requested by project developers,

it will be charged accordingly with the prevailing

tari.

7. Power generaon through co-generaon technol-

ogy shall be given special preference.

8. Maximum capacity of a small RE power plant de-signed for sale of power to the grid shall be 10MW.

A power plant can be more than 10MW in size,

but the maximum capacity that will be allowed

for power export to the distribuon grid will be no

more than 10MW.

9. The small RE power plant must be ready for grid-

connecon within 12 months from the date of ap-

proval for such grid connecon. This is applicable

for exisng plant that wishes to connect to the

grid. However, in the case of proposals for seng

up new RE power plants (or where re-powering

is proposed) that require the installaon of new

boilers or turbo-generator systems, the plant shall

be commissioned within 24 months. The spu-

lated period of construcon unl commissioning

shall be counted from the date of signing of the

Renewable Electricity Purchase Agreement (REPA)

between the developer and the ulity.

10. The RE power plant must meet all environmental

regulaons set by the Department of Environment

(DoE), and the developer of the project is respon-

sible for obtaining the necessary approval of DoE,

and any other statutory approvals required.

11. The minimum of 30% equity in an RE power plant

project must be by Bumiputera shareholder(s). For-

eign agency / company is allowed to parcipate in

SREP project with maximum parcipaon equity of

30%.

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Malaysia: Issues and Challenges for Sustainable

Growth, Renewable and Sustainable Energy Reviews

14, pp. 12411252.

6. Olz, Samantha and Milou Beerepoot. 2010. Deploy-

ing Renewables in Southeast Asia: Trends and Poten-

als (Paris: Internaonal Energy Agency/OECD).

7. Koh, Mok Poh and Hoi Why Kong. 2002. Renewable

Energy in Malaysia: A Policy Analysis, Energy for Sus-tainable Development6(3) (September), pp. 3139.

8. Mohamed, Abdul Rahman and Keat Teong Lee. 2006.

Energy for Sustainable Development in Malaysia:

Energy Policy and Alternave Energy, Energy Policy

34, pp. 23882397.

9. Shigeoka, Hitoshi. 2004. Overview of Internaonal

Renewable Energy Policies and Comparison with Ma-

laysias Domesc Policy(Kuala Lumpur: Pusat Tenaga

Malaysia).

10. Ibrahim, Hassan. 2002. Small Renewable EnergyPower Programme for the Promoon of Renewable

Energy Power Generaon, Presentaon to the First

Meeng of ASEM Green IPPs Network, Bangkok, Oc-

tober 2425.

11. Lim et al 2006.

12. Mohamed and Lee 2006.

13. Ibid.

14. Sovacool, BK and IM Drupady. Innovaon in the

Malaysian Waste-to-Energy Sector: Applicaons

with Global Potenal, Electricity Journal 24(5) (June,

2011), pp. 29-41.

15. Jaafar, Mohd. Zamzam, Wong Hwee Kheng, Norhaya-

Kamaruddin. 2003. Greener Energy Soluons for a

Sustainable Future: Issues and Challenges for Malay-

sia. Energy Policy31, pp. 10611072.

16. Lim Keng Yaik. Renewable Energy and Malaysia.

Presentaon to the Regional Forum on Sustainable

Energy, Marriot Hotel Putrajaya, April 11, 2005.

17. Mohamad et al. 2006.

18. Malek, Badriyah Abdul. 2010. Renewable Energy

Development in Malaysia, Presentaon to EU-Ma-

laysia Cooperaon in Green Technology, June 1.

19. Sovacool, BK. A Comparave Analysis of Renewable

Electricity Support Mechanisms for Southeast Asia,Energy35(4) (April, 2010), pp. 17791793.

20. Lee, Chung Lau, Kok Tat Tan, Keat Teong Lee, Abdul

Rahman Mohamad. 2009. A Comparave Study on

the Energy Policies in Japan and Malaysia in Fullling

Their Naons Obligaons Towards the Kyoto Proto-

col, Energy Policy37, pp. 47714778.

21. Olz and Beerepoot 2010.

22. Mustapa, Si Inda, Leong Yow Peng, and Amir

Hisham Hashim. 2010. Issues and Challenges of

Renewable Energy Development: A Malaysian Ex-perience, Presentaon to the PEA-AIT Internaonal

Conference on Energy and Sustainable Development,

Empress Hotel, Chang Mai, Thailand, June 24.

23. Oh et al. 2010: 1245, 1251.

24. Oh et al. 2010: 1251.

25. Malek 2010.

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28

The authors are appreciave to the Centre on Asia and Globalisaon and

the Lee Kuan Yew School of Public Policy for some of the nancial assistance

needed to conduct the research interviews, eld research, and travel for this

project. The authors are also extremely grateful to the Naonal University

of Singapore for Faculty Start-up Grant 09-273 as well as the MacArthur

Foundaon for Asia Security Iniave Grant 08-92777-000-GSS, which have

supported elements of the work reported here. Any opinions, ndings, and

conclusions or recommendaons expressed in this material are those of the

authors and do not necessarily reect the views of the Centre on Asia and

Globalisaon, Lee Kuan Yew School of Public Policy, Naonal University of

Singapore, or MacArthur Foundaon. Also, the views of the author(s) ex-

pressed in this study do not necessarily reect the views of the United States

Agency for Internaonal Development or the United States Government.

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29

Benjamin K. Sovacool is an Assistant Professor at the Lee

Kuan Yew School of Public Policy. Dr Sovacool has worked

as a researcher, professor and consultant on issues per-

taining to energy policy, the environment and science and

technology policy. He has served in advisory and research

capacies at the U.S. Naonal Science Foundaons Elec-

tric Power Networks Eciency and Security Programme, Virginia Tech Consor-

um on Energy Restructuring, Virginia Centre for Coal and Energy Research,

New York State Energy Research and Development Authority, Oak Ridge Na-

onal Laboratory, Semiconductor Materials and Equipment Internaonal,

U.S. Department of Energys Climate Change Technology Programme and the

Internaonal Instute for Applied Systems and Analysis near Vienna, Austria.

Dr Sovacool has published or edited six books, more than 100 academic ar-

cles and presented at more than 60 internaonal conferences and symposia

in the past few years. His email is bsovacool@nus.edu.sg

Ira Marna Drupady is currently a research associate at the

Lee Kuan Yew School of Public Policy, where she also gradu-

ated with a Masters in Public Policy in 2010. She currently

researches energy security, rural electricaon, and energy

development and poverty. Before joining the LKY School,

she worked as a Project Assistant with the Asia-Europe

Foundaon. She can be reached at iramarna@nus.edu.sg

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30

A worker with a fresh batch

of fruit bunches at a palm oil

plantaon in Terengganu

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31Energy Governance Case

Studies Series

1. Lighng Laos: The governance implicaons

of the Laos rural electrificaon programme

2. Gers just want to have fun: Evaluang the

renewable energy and rural electricity

access project (REAP) in Mongolia

3. Living up to energy governance

benchmarks: The Xeketam hydropower

project in Laos

4. Seling the score: The implicaons of the

Sarawak Corridor of Renewable Energy

(SCORE) in Malaysia

5. What went wrong? Examining the Teachers

Solar Lighng Project in Papua New Guinea

6. Summoning the sun: Evaluang Chinas

Renewable Energy Development Project

(REDP)

7. Rural energy development on the Roofof the World: Lessons from microhydro

village electrificaon in Nepal

8. The radiance ofSoura Shakt: Installing two

million solar home systems in Bangladesh

9. Untapped potenal: The diffi cules of the

Small Renewable Energy Power (SREP)

Programme in Malaysia

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32

The view from the top of the Langkawi Cable

Car in Kedah, home to a hybrid dieselsolar

power system no longer in operaon

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33

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The Lee Kuan Yew School of Public Policy is an autonomous,

professional graduate school of the Naonal University of

Singapore. Its mission is to help educate and train the next

generaon of Asian policymakers and leaders, with the ob-

jecve of raising the standards of governance throughout the

region, improving the lives of its people and, in so doing, con-

Strategic partners