Green Energy And Technology - Issues And Challenges

2010/EMM9/005Green Energy and Technology - Issues andChallengesPurpose: InformationSubmitted by: Malaysia9th Energy Ministers MeetingFukui, Japan18-20 June 2010

Green EnergyGEanddTTechnologyh lIssues and ChallengesTenaga Nasional BerhadJune 2010CONTENTBackgroundNational Policy on Green TechnologyTNB Initiatives/Contribution in Supporting Green EnergyIssues & ChallengesConclusion-1-Page 1

BACKGROUND1 The world needs to reduce its dependency on fossil fuel (non-renewable energy) as it isfast depleting and due to the harmful impact to the environment – most notably ‘ClimateChange’2 To this end, sustainable utilisation of energy is being given increasing attention in Malaysia:9 Under the Eighth Malaysia Plan, Renewable Energy (RE) was introduced as the FifthFuel in the nation’s energy supply mix.9 The formation of the Ministry of Energy, Green Technology and Water in April 2009presents another milestone in the commitment of the Government towards GreenEnergy9 In July 2009, National Green Technology Policy was introduced to ensuresustainable development and conserve the environment for future generation Hence, Green Technology now assumes an even greater significance. TNB is fullysupportive of the need to strengthen the commitment and focus required to implement3 Green Technology particularly in the energy sector in Malaysia-2-BACKGROUNDDEFINITION OF GREEN TECHNOLOGY1 Green Technology is the development and application of products, equipment andsystems used to conserve the natural environment and resources, which minimisesand reduces the negative impact of human activities.2 Green Technology refers to products, equipment or systems which satisfy thefollowing criteria: It minimises the degradation of the environment; It has zero or low green house gas (GHG) emission, is safe for use andpromotes healthy and improved environment for all forms of life; It conserves the use of energy and natural resources; and promotes the use of renewable resources.It p-3-Page 2

EXAMPLES OF GREEN ENERGY TECHNOLOGYRenewable Technology solar, wind, biomass,geothermal, mini hydroEnergy Efficiency and DemandSide Management DSMNiederaussem Unit K, Germany. The world's largestsupercritical brown-coal fired power plant, 1000 MWAdvanced Energy Cycle Technology(e.g. More Advanced Combined Cycle (MACC),Advanced Super Critical Pressure Boiler)IGCC plant at Negishi, YokohamaClean Coal Technology(e.g. Integrated GasificationCombined Cycle (IGCC))Nuclear Power Plant in FranceOther Alternative Energy(e.g. Nuclear, Mini Hydros)-4-CONTENTBackgroundNational Policy on Green TechnologyTNB Initiatives/Contribution in Supporting Green EnergyIssues & ChallengesConclusion-5-Page 3

CURRENT POLICIES SUPPORTINGGREEN ENERGY & TECHNOLOGY (1)1MALAYSIA NATIONAL ENERGY POLICYSupply es To ensure the provision of adequate, secure and cost-effective energysupplies To encourage development of indigenous energy resources both nonrenewable and renewable energy resources using the least cost options To diversify supply sources both from within and outside the country To promote efficient utilisation of energy To discourage wasteful and non-productive patterns of energyconsumption To minimise the negative impacts of energy production, transportation,conversion, utilisation and consumption to the environment-6-CURRENT POLICIES SUPPORTINGGREEN ENERGY & TECHNOLOGY (2)2FIFTH FUEL POLICY Launched during the Eight Malaysia Plan period (2001 – 2005) Renewable Energy (RE) introduced to contribute towards the country’s totalenergy mix Promotes the utilisation of renewable energy resources such as biomass, biogas,solar and mini hydro-7-Page 4

CURRENT POLICIES SUPPORTINGGREEN ENERGY & TECHNOLOGY (3)3NATIONAL GREEN TECHNOLOGY POLICYFive Strategic Thrusts established ate Green Technology applicationsii.Promotion andPublicAwarenessFive StrategicThrusts of theNational GreenTechnologyPolicyIntensifyHuman CapitalDevelopmentin GreenTechnologyStrengthen institutional arrangements toProvideConduciveEnvironmentfor GreenTechnologyDevelopmentProvide conducive environment for thegrowth of the Green Technology industryiii.Develop skilled, qualified, competent andproductive human resources for thedevelopment of Green TechnologyindustryIntensifyGreenTechnologyResearch andInnovationsiv.Enhance Green Technology R&Dv.Change the mindset of the public onGreen Technology through effectivepromotion and awareness program-8-CONTENTBackgroundNational Policy on Green TechnologyTNB Initiatives/Contribution in Supporting Green EnergyIssues & ChallengesConclusion-9-Page 5

TWO DISTINCT CATEGORIES OF GREEN TECHNOLOGY1. Commercially Viable Green Technology2. Non-Commercially Viable GT (underfurther development and research) Hydro, Solar, Biomass, Geothermal,Thermal Energy Storage, Cogeneration,Clean Coal Technology, EnergyEfficiency and DSM initiatives etc. Widely implemented by various energyindustry players including utilities inother countries Normally implemented with explicitassistance/subsidy from eitherGovernment funding, revolving/seedingfund and/or from consumers (pass throughvia tariff FiT or pool prices).Various examples are as follows:- Hong Kong (DSM fund from end-usetariff)- ThailandTh il d (Energy(EConservationCtiPromotion Fund 0.05 - 0.25 baht perliter of sales of petroleum products,revenue 2 - 2.5 billion Baht perannum), Europe, Australia (Passthrough via end use tariff/grid price)etc- 10 -TNB INITIATIVES / CONTRIBUTION IN SUPPORTING GREENENERGY (1)1. Committed for Renewable Energy Power PurchaseAgreement (REPPA) with RE developer as willingbuyer with agreement terms up to 21 years (as ofApril 2010, a total 88.15 MW has been signed)2. Development of 10 MW Biomass Plant Jengka(joint venture with Felda and JPower), Operation ofMini Hydro Plant 23.5 MW (TNB Energy Servicesand Cameron Highland/Batang Padang HydroElectric Scheme), Jana Landfill Puchong 2 MW(TNB ES).Solar hybrid at ‘Kepulauan Mersing, Johor’3. Solar Hybrid (Pulau Tinggi Mersing, PulauPerhentian, Terengganu, Gunung MachincangLangkawi, etc).Solar hybrid at ‘Pulau Kapas, Terengganu’’- 11 -Page 6

TNB INITIATIVES / CONTRIBUTION IN SUPPORTING GREENENERGY (2)4. Some of TNB’s hydro plant schemes (1,011MW) can be considered as RE (GT) (powerdensity ratio 4 W/m2 – based on UNFCCd fi iti )definition)5. Continuous effort to increase plantefficiency by utilising advanced technology(e.g. SJ Tuanku Jaafar Combined Cyclerunning at about 50% efficiency)6 Constant effort to improve technical system6.losses and equipment efficiency (embodiedin its performance (KPI) requirements)TNB’s SJ Tuanku Jaafar, Port Dickson- 12 -Notes: UNFCC United Nation Framework on Climate ChangeTNB INITIATIVES / CONTRIBUTION IN SUPPORTING GREENENERGY (3)8. TNB plays an active role to support Government National Green Technology (GT)Plan/Roadmap including the following aspects: Public Awareness and information/knowledge dissemination – National EnergyAwareness Campaign (e(e.g.g SWITCH campaign with FOMCA) Training and Capacity Building:- Centre of Excellence on RE established at UNITEN- Recently launched Institute of Energy Policy and Research (IEPRe),UNITEN9. In the long term, to incorporate alternative large scale energy technology with minimalcarbon emission ((e.g.g nuclear)) as GT to sustain future energygy requirementqhenceensuring energy security- 13 -Page 7

CONTENTBackgroundNational Policy on Green TechnologyTNB Initiatives/Contribution in Supporting Green EnergyIssues & ChallengesConclusion- 14 -ISSUES & CHALLENGES1. Intermittency of Supply & Unreliability of Fuel Resources2.9Unable to secure long term fuel contract because most of Small Renewable EnergyProgram (SREP) developers are not owners of palm oil mill or plantation9g of emptyp y fruit bunch ((EFB).)There is alternative usage9Oil palm millers or plantation owners should be encouraged to participate in SREP programFinancing Renewable Energy (RE) Project9SREP developers must have strong financial standing and able to finance RE projectsthrough equity injection rather than relying solely or mostly from commercial loans.9Soft loan to be given by the Government as RE Projects should be considered as nationalprojects3. RE Power Purchase Agreement (REPPA) Price9TNB cannot afford to buy electricity from SREP developers at significantly higher thanTNB’s avoided cost of delivery. Feed in Tariff (FiT) to cater for cost differential between REand TNB purchase price9Price Support Mechanism should be introduced using “Polluters Pay” concept. For example,Petrol tax or “Pollution tax” which can be used to support RE development- 15 -Page 8

ISSUES & CHALLENGES4. Interconnection9To provide access of energy supply from SREP projects to designated loads.9TNB (and other electricity industry players) are obligated under licenses issued by EnergyCommission to maintain a standard of supplypp y to the customers.9Interconnection facility requirements are to ensure compliance with all prevailing statutoryrequirements and best practices on safety, reliability and power quality of electricalinstallations and service to customers.- 16 -CONTENTBackgroundNational Policy on Green TechnologyTNB Initiatives/Contribution in Supporting Green EnergyIssues & ChallengesConclusion- 17 -Page 9

CONCLUSIONTNB is fully committed towards the implementation of Green Technology inMalaysia:9 Embarked on a numerous Green Technology projects – e.g. solar hybrids/ PV,biomass RE9 Embarked on public awareness and information/knowledge dissemination – NationalEnergy Awareness Campaign (e.g. SWITCH campaign with FOMCA)9 Training and Capacity Building:¾ Centre of Excellence on RE established at UNITEN¾ Established the International Energy Research and Policy Institute (IEPRe),UNITEN9 Continue to support RE Power Purchase Agreement (REPPA) at higher than ouravoided cost of generation (up to 21 sen/kWh)9 Continuous support for energy efficiency initiatives e.g. Thermal Energy Storage,Energy Efficiency in Buildings etc.9 RE to be integrated in future generation capacity planning9 Incorporate large scale alternative energy technology that emits minimal carbonemission – e.g. nuclear9 Prudent to treat/signal RE and EE as alternative energy resource and not a financialproduct with very high returnTHANK YOUPage 10- 18 -

BACK - UPSTHAILAND ESCO FUNDSource: Ministry of Energy Thailand, ADB Workshop on Climate Change and Energy 2009Page 11- 21 -

LIST OF TNB HYDRO SCHEMES RECOGNIZED AS RE BY UNFCCDEFINITION Hydroelectric schemes with reservoir and power density more than 4W/m2 could be classified as RE Run off river hydro is automatically classified as REHydroySchemes ((TNB))Total Capacityy ((MW))Major Schemes (meet UNFCCC criteria power density 4W/m2) Pergau, Woh, Jor, Bersia, Piah988Batang Padang/Cameron Highlands Scheme Odak, Habu, Kg. Raja, Kg. Terla, Robinson Falls11.9Distribution Mini Hydros (connected at 11 kV) Pahang - Sg. Pendak, Sg. Sempam , Sg. Sia, Sg. Pertang , Sg. Benus11.6 Kelantan - Sg. Sok, Sg. Renyok, Sg. Rek, Sg. Lata Tunggil Terangganu -Sg. Brang, Sg. Cheralak, Sg. Kemia PerakPk - Sg.S Bil,Bil Sg.S Kinjang,Ki jSg.S Kenas,KSg.S Asa,ASg.S Chempias,ChiSg.S Temelong,TlSg.S TebingT bi Tinggi,TiiSg. Lawin Kedah - Sg. Mahang, Sg. Mempelam, Sg. Tawar BesarTotal1011.5- 22 -Notes: UNFCC United Nation Framework on Climate ChangeREPPA STATUS AS OF APRIL 2010No.ItemNosCapacitypy ((MW))1April 2010 - REPPA signed1788.15a. Project Commissioned (COD)624.7b. REPPA Signed841.45c.REPPA Has BeenTerminated322.014108.92Project Not Signed3.Project not yet Approved by SCORE4304.Project Rejected by EC737Total Application39264.05- 23 -Source: System Planning & DevelopmentPage 12

Clean Coal Technology, Energy Efficiency and DSM initiatives etc. Widely implemented by various energy industry players including utilities in other countries Normally implemented with explicit assistance/subsidy from either Government funding, revolving/seeding fund and/or from consumers (pass through via tariff FiT or pool prices).