KeTTHA eyes almost RM400m energy savings for buildings

By MARK RAO / Pic By AFIF ABD HALIM

The Ministry of Energy, Green Technology and Water (KeTTHA) has launched a RM200 million energy performance contracting (EPC) fund as authorities work to reduce electricity usage and slash the government’s subsidy for the power sector.

The RM200 million fund, provided by Malaysia Debt Ventures Bhd (MDV), a company wholly owned by the Ministry of Finance Inc (MoF Inc), could see commercial buildings saving energy as much as RM399 million.

The fund will be provided by MoF Inc’s unit MDV to eligible energy service companies (ESCOs) to encourage the growth of energy-efficient projects in the country.

Through the programme, KeTTHA will provide RM15.8 million in credit guarantee financing, while another RM2 million will be contributed from the JKR-Building Sector Energy Efficiency Project.

KeTTHA Minister Datuk Seri Dr Maximus Johnity Ongkili said commercial buildings in Malaysia used 71,293 gigawatts (GW) of electricity in 2015, or almost 54% of the country’s overall electricity demand.

“With the funds, a total of 50 energy efficiency projects through EPC are expected to be carried out,” Ongkili said at the official EPC fund launch in Putrajaya yesterday.

Malaysia’s electricity supply is subsidised by the government. The higher usage means the government has to fork out higher subsidy for electricity. Recently, the authorities rejected the tariff increase for electricity.

He said the ministry expects electricity savings could reach 1,050GW per hour in the fifth year of implementation, or equivalent to RM399 million worth of energy.

“It will also reduce 729 kilotonnes of carbon dioxide in greenhouse gas emissions,” he said.

Commercial buildings, which account for about 179 million sq m in space at the end of last year, comprise purpose-built offices, shop lots, shopping complexes and hotels.

Under the EPC project, endorsed by the Green Technology and Climate Change forum in March this year, building owners can engage with ESCOs to formulate strategies and seek financial resources to reduce energy consumption in their respective structures.

The fund will be used by ESCOs to undertake energy efficiency initiatives.

“Because the ESCO market is still in its infancy, the financial strength of ESCOs is inadequate to bear the cost of investments, resulting in slow execution of EPC projects. The fund is aimed to enhance the credibility and financial rating of ESCOs through the implementation of rigorous EPC for energy efficiency projects and increase the confidence of financial institutions to provide the funding,” he said.

There are presently 125 registered ESCOs in Malaysia. They are eligible for the fund after abiding by the procedures and processes set out by MDV.

The companies will also have to be creditworthy and provide 15% of their own funds under the EPC initiative.

“Energy that we do not use is the new fuel. I deem this as the sixth fuel for Malaysia,” he said.