Analysts say the Government’s aim for 2,080 MW or 11% of all electricity generated nationwide in 2020 to be sourced from environment-friendly renewable energy will be a challenging and long-term task.
“I think the target is challenging but attainable with the proper support mechanism from the Government. This is mainly because generation cost for renewable energy is not cheap,” a local bank-backed analyst said.
Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui unveiled the target last month. He said it was in line with a framework of 10th Malaysia Plan (2011-2015) which gave emphasis to the use of such energy.
Analysts expect Budget 2011 to be announced by the Government today would boast a slew of renewable energy solutions and sustainable practices.
This was to promote greater use of renewable energy to supplement the nation’s depleting oil and gas reserves, they said.
“Any provisions to be announced in the budget will help the nation to achieve the target,” an analyst said.
The country now relies heavily on fossil fuels and is starting to promote renewable energy aggressively.
In the first nine months of this year, 54.3% of electricity generated in Peninsular Malaysia are sourced from gas, 39.8% from coal, 5.5% from hydroelectric and the balance from oil, diesel and biomass.
“We believe the budget may again mention Renewable Energy Act, which is scheduled to be tabled in November for passing by the first quarter of 2011.
“This will set up the feed in tariff as well as the tariff rates for renewable energy power which will be more attractive compared with what is in place now,” said OSK Research head Chris Eng.
He believes there should be more green initiatives under the budget.
“The recommendation from Chin on phasing out incandescent light bulbs may start next year and the Energy Commission has already worked with various parties to set up energy efficiency rankings for numerous white goods sold in the country,” Eng added.
Eng said the passing of Renewable Energy Act would be crucial to achieve the Government’s target.
A local bank-backed analyst agrees with Eng. “I think key to driving the adoption of renewable energy at the end of the day would be the act.”
The analyst said much had been talked about the Renewable Energy Act and the introduction of the feed-in tariff mechanism.
“In a nutshell, a feed-in tariff is an incentive structure to encourage the adoption of renewable energy through Government legislation.
“The national utility would be obliged to buy renewable electricity at above-market rates set by the Government over a specific period of time from the day the system is connected to the grid,” the analyst explained.
“The utility would be authorised to pass on this cost to all electricity consumers through their regular electricity bills.”
He said while it may not guarantee a success, experiences abroad suggested that a feed-in tariff was one of the most suitable forms to support renewable energy.
“However, we think much would still depend on the Government’s will power, especially given that it is electricity consumers who will have to bear the high cost of renewable energy,” he added.
Tenaga Nasional Bhd (TNB) has asked the Government to consider tax incentives or tax breaks for the installation of green technology like solar panels and other equipment at homes and workplaces.
TNB president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said this would encourage more people to use renewable energy sources, leading to a reduction in overall energy cost.
“I think the Government will put more initiatives for green energy under the budget,” Che Khalib said.
