Develop renewable energy to generate long-term energy needs

KUALA LUMPUR Oct 28 - Energy, Water and Communications Minister, Datuk Seri Dr Lim Keng Yaik, said that Renewable Energy (RE) could be developed further in Malaysia to generate long-term energy needs, including electricity supply.
However, he said that problem might crop up in terms of pricing, like at what price could RE developers sell their energy to Tenaga Nasional Bhd (TNB).
Dr Lim said that anything new, such as RE, must be expensive, and that TNB might refuse to take anything above what they could afford.
"We have to work out the incentives, to give a higher selling price to the RE sources," he told reporters after opening the Renewable Energy Symposium organised by the Malaysian-German Chamber of Commerce and Industry here Thursday.
"We must have Renewable Energy Power Purchase Agreement (REPPA), and a standard one for that matter," he said.
Earlier in his speech, Dr Lim said that perhaps it was timely for TNB in particular, to take a more supportive role, by ensuring that the REPPA be quickly concluded with all RE developers approved by the ministry under the Small Renewable Energy Project (SREP) programme.
He said that presently, only about 12 percent of the total RE projects approved, have already concluded their REPPA with TNB.
Dr Lim believed that the electricity generated from renewable sources should be given special tariff consideration by TNB to ensure that RE projects are viable and also attractive to potential financiers.
He said that the normal average buying of electricity for independent power purchasers (IPPs) is roughly 13.5 sen to 14 sen per kilowatt/hour.
"Small Renewable Energy Project (SREP), as far as I understand, cannot pull down their cost to below 17 sen," he said.
"It is a matter of trying to work out the prices. But we may have to find slightly higher sales price in order to attract investment in this," he said.
Dr Lim said that as more people use and produce RE, the price of RE and the machineries to develop it would also come down.
He also said that financial institutions play an important role in renewable energy development, as prospective developers must seek out substantial loans besides equity to fund their projects.
"If they have to borrow funds on a year-to-year basis, and there is no availability of long-term low-cost funds, it will deter them from developing RE," he said.
He said that the lack of awareness among commercial financial institutions on benefits of RE and also the absence of viable demonstration projects in the country are some of the reasons why RE developers are facing funding problems.
Dr Lim said that the central bank could also play an important role in reforming the capital market to be oriented towards environmental projects.
He said that developing RE now is timely, as it is not only to protect the environment, but also to counter the negative effect of rising oil prices.
Under the Five Fuel Policy, Dr Lim said that RE as well as energy efficiency has been identified as important resources for the country's fuel mix together with oil, natural gas, coal and hydro.
"There is a lot of potential at all the palm oil mills, where all the empty fruit bunches are, which could be turned into RE," he said.
"Instead of sending the empty fruit bunches back to the estates, they should turn it into energy for electricity, but it is all a matter of costing," he added.
Dr Lim also said that Malaysia has to find more hydro sources as hydro sources in the Peninsular are limited to Terengganu and perhaps Pahang.
There is big potential for hydro resources in Sarawak, citing the Sungai Rejang capability to generate 20,000 megawatts of electricity, he said.
"We have to generate the popularity of these resouces, not only as an alternative resources of energy, but to also develop energy saving," he said.(by Rosehanizar Mohd Radzi)