RECs can aid in helping companies with their respective climate-related targets, which can further stimulate the growth of RE. Kamarul Baharin
PETALING JAYA: The time is ripe for corporate Malaysia to revisit its current policies and regulatory framework on renewable energy (RE).
Experts are urging the relevant authorities to relook at the existing policies and framework, and address challenges to ensure an efficient sustainable energy mix in the long term.
They added the move would, at the same time, also boost economic growth and spur investments and job creation in the rapid growing RE space.
Deloitte Malaysia sustainability and climate leader Kamarul Baharin told StarBiz that stronger government support and a comprehensive and long-term policy could be created to incentivise investments in RE development in Malaysia.
To this end, he said careful, balanced considerations of funding, offtake, storage and human capital need to be taken care of.
He said technological limitations and land-use complications, as well as a general lack of human capital, have contributed to the relatively higher cost for deployment and maintenance of RE in the country.
A potential approach to tackling the problem is to attract more advanced players into Malaysia so that technology and knowledge transfer can occur. This needs to be further supported by a robust policy to attract such players, Kamarul noted.
Nirinder Singh Johl, who is an energy expert, recently said in this daily that despite the country’s potential to generate RE, progress has been painfully slow in transitioning to a more efficient and sustainable energy mix.
This is where strong political will and actions are needed to wean off populist policies, namely, subsidies, which are counter-productive in the long term.
The founder and chief executive officer of Asia Carbon XChange PLT said it was imperative that the Environment and Climate Change Ministry and the Economy Ministry revisit current policies and the regulatory framework, and engage the various stakeholders instead of working vertically in silos.
The Renewable Energy Act 2011 and grid connecting policies can be further revisited with utilities focusing on making the grid resilient to distributed generation (DG) or DG connectivity, he said.
In terms of RE resources, the RE policy had always shown greater inclination towards solar instead of biogas and biomass. This lopsidedness needs to be addressed, among others, he said.
Biogas and biomass are RE sources that produce significantly lower carbon emissions compared to fossil fuels.
By implementing a carbon tax regime, Nirinder said the government could incentivise companies to invest in RE projects, particularly in the solar, biogas and biomass sector, which are readily abundant in the country.
“This would not only help to reduce the country’s carbon emissions, but also spur further economic investment, growth and create job opportunities in the fast-growing RE sector,” he said.
Kamarul agreed there was potential for the use of biomass and biogas as renewable energy, but it was not fully utilised.
“This could be due to a lack of a comprehensive regulatory framework to incentivise the deployment of such resources.
“Malaysia enjoys a relatively low levelised cost of energy due to large-scale usage of traditional energy sources such as coal and natural gas and poses a challenge for RE projects to compete in terms of price points.
“Having said that, there have been multiple successful biomass and biogas projects in Malaysia, such as those related to the plantation industry, whereby palm oil mills use biomass as a source of energy to power their operations,” Kamarul said.
Ernst & Young Consulting Sdn Bhd Malaysia Climate Change and Sustainability Services leader Arina Kok
While the utilisation of RE remains low, Ernst & Young Consulting Sdn Bhd Malaysia Climate Change and Sustainability Services leader Arina Kok said Malaysia has been witnessing an increased utilisation of RE through solar energy adoption over the past decade with the rapid expansion of solar photovoltaic installations in the country.
In addition to solar, she said other REs are also seeing increased utilisation due to factors such as government initiatives, funding and grid enhancements.
To a question whether the country could achieve the reduction in carbon emissions by 45% in 2030 under the Paris agreement judging by the current slow developments in RE, Kok said it was possible.
She said this was due, among others, to the vast changes in the RE landscape from complex, inefficient systems in the past to modern set-ups, complemented and supported with rapidly improving technologies which could further accelerate the utilisation of RE.
“Besides that, government initiatives are also ramping up through policies such as the Net Energy Metering 3.0, Smart Automation Grants and Green Investment Tax, which would allow the local clean energy industry to advance.
“With Bank Negara allocating funds to assist SMEs in adopting sustainable and low-carbon practices, we expect more entities to implement RE in the medium term,” she said.
Energy experts agree the implementation of RE Certificates (RECs) could also boost RE growth. Kok said RECs are key to spurring RE growth. The reason being, she said RECs had a clear value proposition for both project developers and corporate buyers, resulting in a win-win situation for both.
They provide project developers with additional revenue for each megawatt-hour (MWh) of renewable power produced, while enabling corporate buyers an opportunity to meet their sustainability targets, she said.
RECs are tradable certificates that represent the environmental attributes of one MWh of RE generated. These certificates serve as proof of RE generation and can be bought and sold by companies looking to meet their RE targets.
In Malaysia, the Sustainable Energy Development Authority Malaysia has partnered with APX Inc (an innovative technology and service solutions provider for the energy and environmental markets) to enable access to RECs for corporate buyers on a trusted global platform – the Tradable Instrument for Global Renewables Registry.
Kamarul said RECs could aid in helping companies with their respective climate-related targets, which could further stimulate the growth of RE. RECs can be generated via certification procedures that involve independent verification of RE produced against specific standards, he added.
