Open electricity grid to reduce renewable energy cost

The Feed-In-Tariff (FiT) was introduced in 2012 to offer long-term contracts and guaranteed pricing to producers of renewable energy (RE), in the hope of bringing prices down. After 8 years, the cost of RE is between 32.05 ~ 54.13 sen per kWh which is nearly twice the non-RE electricity generation cost.

FiT merely subsidises profit margins, and this is killing incentives to bring down RE costs. FiT has become the RE version of the Independent Power Producers fiasco, promising risk-free profits for RE.

Solar prices in Malaysia experienced the biggest ever drop under Net Energy Metering (Solar-NEM). The demand for rooftop solar from the commercial and industrial sectors has increased exponentially.

However, under NEM the amount of electricity generated and consumed at each location must be the same. This limits the investment and expansion potential of other RE.

Malaysia needs to open the electricity grid to allow an entity to produce its electricity needs elsewhere and transport it to the required consumption site. In exchange TNB could collect a transmission fee for the use of the electricity grid.

For example:

1) Sime Darby could produce electricity from palm oil waste from its plantations in rural areas to power its automotive showrooms and corporate offices in Selangor.

2) Franchise operators like QSR Bhd could purchase agricultural waste from farmers in Kelantan to generate electricity from biomass for its 1000+ KFC & Pizza Hut restaurants.

3) BMW could invest in mini hydro generators in streams in rural Kedah to power its factory in Kulim.

Under Incentive Based Regulation (IBR-RP2), the pro-rated TNB transmission fee is RM0.124 per kWh. This will represent electricity savings between 43% to 75%.

Opening the electricity grid will mobilise capital and competition from outside the energy sector to bringing down costs and increase RE penetration. Malaysia will benefit greatly by reducing fossil fuel imports and creating new green jobs

SHARAN RAJ
Central Committee
(Bureau for Environment & Climate Crisis)
Parti Sosialis Malaysia (PSM)

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