The Sustainable Energy Development Authority (SEDA) is looking at adjusting the feed-in-tariff (FiT) for renewable energy (RE) before it calls for the next round of quote in July/ August 2012 as there is an imbalance in the RE resource mix.
At a recent talk on renewable energy updates, SEDA chief executive officer Badriyah Abdul Malek highlighted that almost half of the installed capacity for RE being generated, since the beginning of the FiT on Dec 1, 2011, was using solar energy which could be a "wrong signal" for the market.
Other resources include biogas, biomass and small hydro projects. In addressing the imbalance, there may also be a need for the government to address administrative barriers faced by applicants for other energy sources such as small hydro projects if it was to achieve a balanced portfolio in RE generation.
The overwhelming response to solar power generation, which has the highest tariff for renewable resources, could also be because it has the least entry administrative barriers compared to the other renewable resources, she told The Malaysian Reserve in an email response last week.
“It was found that for small hydro, at least 30 signatures are required to get all the necessary approvals (eg state, local, etc) and the construction for some RE plants eg small hydro and biomass could take up to 36 months,” she said.
Solar capacity as at Feb 29 was at 140MW out of a total of 311.6MW generated via RE and the number of applications for solar as a source of power was 348 out of 377 applications under the FiT according to SEDA. In addition, she said solar power quota for non-individual was fully taken up within less than three hours after the opening of quota.
But the FiT rates are not overpriced as applications data reveal that the internal rate of return for solar power averages below 11% compared to other renewable resources, she said.
However, she said SEDA is constantly monitoring the levelised cost of energy for all renewable resources.
On why she called solar power prevalence a wrong signal, she said what Malaysia needs to grow is the solar industry and other supporting industries, not just the capacity of solar energy.
“The concept of the FiT in Malaysia is that we should exhaust renewable resources that demand less per kilowatt hour (kWh) to fund, meaning we should exhaust the technical potential for small hydro, biomass and biogas before moving big time into solar PV where the tariff is highest among other RE sources,” she said.
Solar power dominance is worrying because it would seem SEDA is very much into solar PV growth only whereas the National Renewable Energy Policy and Action Plan has identified other RE sources to be developed as well, she said.
In addressing these matters, she said “it is quite likely” that SEDA will seek corrective measures to adjust the FiT and/ or degression rates possibly before the next opening of RE quota in July/August 2012.