FIT for quota — The Green Ninja
JULY 25 — Since the Rio Summit in 1992, everyone has been talking about Green. From green technology to green financing, from carbon footprints to green energy, everyone is suddenly talking about sustainable development and the impact we are having on the environment. Sometimes, policymakers and lawmakers have to go back to the drawing board to revisit their original plan.
The Green Ninja says it is time to reflect and take a sip from The Green Ninja’s cup of Green Tea. This Green Ninja does not promise pep talk, but is prepared to raise a number of green controversies — both stimulating and thought-provoking — to help people start thinking about what could have gone wrong. Why are we getting nowhere as a country aspiring to be green? If you are offended by the views expressed in this article, too bad!
The country became excited on the eve of December 1 last year when the e-Feed-in Tariff system for Renewable Energy was launched at midnight. Within an hour or so, every quota for the solar segment for 2011 and 2012, was snatched up.
The process of approval was administered by the Sustainable Energy Development Authority (SEDA), the agency tasked with managing the sustainable energy.
Because it was an online application, it was automatically considered to be an “open” tender. In other words, the process was supposed to be transparent and above board, and anyone from small local entrepreneurs to big tycoons could submit an application.
But how transparent was it? How transparent can an online application be?
This Green Ninja is of the opinion that, unless all parties are fully involved in the open tender process, there can be no transparency in the way an application is processed even with the online application system.
What goes on behind the shrouded veil of e-FiT online system is as good as anyone’s guess. Although SEDA’s Chief Operating Officer, Ir. Ali Askar Bin Sher Mohamad has explained that the quota is automatically reduced based on calculations of payout over the entire period, there is no basis to show how the approval process could be transparent, except that it was “approved” on a first-come-first-served basis.
In other words, the early bird catches the worm. However, with such a system, where human discretion is involved in the approval process without public disclosure of how or why the approval was done, there can be no transparency. There are in fact flaws with such a system, because some companies or individuals may be hogging the system at the expense of companies, which have the better package, who are unable to submit proposals ahead of others.
SEDA has not been particularly upfront until lately as to how it approved the projects. According to Deputy Secretary General (Energy Sector) of Ministry of Energy, Green Technology and Water, Badaruddin Mahyudin in July last year, the responsibility lies with SEDA to implement and manage the renewable energy FIT. As a statutory body with legal powers, its job is to constantly review the implementation of the FIT.
The FIT is supposed to be open to the general public instead of being advertently or inadvertently monopolised by one party, especially someone linked to a former chief secretary to the Federal Government, or else SEDA will just lose its credibility altogether.
It can no longer claim that it is transparent, when it continues to defend something that has been brought out into the broad daylight. It is quite alarming that 12 out of the 32 companies had collectively won the “lion’s share”, or 32.4 per cent of the country’s solar energy quota.
Therefore, it is this Green Ninja’s opinion that, should some discrepancies be exposed, SEDA has the moral obligation to immediately call back the offer letters given to the parties concerned. It brings some relief when SEDA announced recently that six solar power contracts are in danger of being revoked for failing to meet certain milestones. The quota that is recouped should then be opened up for tender again to be fair.
Why the hype?
The FIT is based on the amount of money paid by both commercial and household consumers, based on one per cent of the existing tariffs. The renewable energy fund is used to pay for the renewable energy generated by independent producers and fed to the grid.
A quota is set for each sector of the renewable energy. Currently, the four sectors include biogas, biomass, solar PV and small hydro. The reason often quoted by SEDA officials for the quota is to avoid a similar situation experienced by Spain and other European countries which have experienced difficulties in paying the tariffs.
For a solar farm like Cypark in Pajam, Negri Sembilan, with a total capacity of 36 GWh of electricity, for example, the returns could be as high as RM34 million annually for the next 21 years, based on a Renewable Energy Power Purchase Agreement (REPPA) at a tariff of 95 sen per kWh over the entire period.
If properly set up, the solar panels will continue to generate electricity with minimal maintenance costs involved except for the cleaning of the panels on a periodic basis. Based on industry sources that each MW requires an investment of RM8 million, the payback period is only eight to 10 years, while the rest of the REPPA period, there is a huge return of RM950,000 for every MW.
There is a lot of money in the renewables. Therefore, there is every reason for companies and individuals to do all it can to secure a piece of the pie before it is taken up.
* The Green Ninja reads The Malaysian Insider.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.