The Renewable Energy Fund According to SEDA Malaysia

Sustainable Energy Development Authority (SEDA) Malaysia held an Open Day for some Malaysian bloggers on 20 Oct 2013 at Berjaya Times Square Hotel, to explain its work on renewable energy. Zara and I went representing MESYM. Zara, efficient as she is, has already published a candid account of the event while I’m writing this. In this article, I will give an introduction about the Blogger Workshop and move on to focus on the topic of the Renewable Energy Fund – a.k.a. the 1% surcharge on electricity bills for heavy users.

SEDA Malaysia was established since September 2011 under the SEDA Act (2011), to implement the Feed-in Tariff mechanism and a host of other policy matters. Feed-in-Tariff (FiT) is a system enabling people to invest in renewable energy that they can sell back to the energy provider (in Malaysia’s case, Tenaga Nasional Berhad). The types of renewable energies available for investment include Solar PV (for individual households and non-individuals), biomass, biogas and small hydro.

The Event

The Event (Picture courtesy of SEDA Malaysia)

The Event (Picture courtesy of SEDA Malaysia)

The objective of the event was to reach out to the general public through bloggers, which I thought was a rather interesting approach. SEDA invited a room full of bloggers in 3 different languages (Malay, English and Chinese), and briefed us on renewable energies, how FiT works, and why the 1% surcharge on the electricity bill was required for the Renewable Energy Fund. For every article written, the bloggers would be paid. Of course, blog advertising has been around in Malaysia for many years now, but this is the first governmental attempt that I know of.

As far as I could tell, the top management seemed to be quite down-to-earth, passionate about the topic, and respectful towards the bloggers (although I was not that impressed with the initial interactions with the Corporate Communication people – they had failed to inform us about the postponement of the original date of the event, causing a lot of confusion). The presentation by Chief Corporate Officer Dr. Wei-Nee Chen was very comprehensive and honest – she did not hide the fact that Malaysia is behind in its implementation of renewable energy, especially when compared to Thailand, which started about the same time as we did. The CEO Datin Badriyah was also present to deliver a speech, and for the Q&A session afterwards.

The Renewable Energy Fund

Most of the questions during the Q&A session had to do with the 1% surcharge on the TNB bills which go to the Renewable Energy Fund. Basically, for all the consumers who buy more than 300kWh/month (i.e. electricity bill exceeding RM77), a 1% surcharge will be imposed, and the money goes to the Renewable Energy (RE) Fund. For example, if you pay RM100 for your bill, you will have to pay an extra RM1. If you pay RM75, there will be no extra charge.

As 75% of households in Malaysia do not use more than 300kWh/month, the surcharge will only affect 25% who are heavy users. To me this seems fair, as polluters will pay more, and people will have the incentive to save energy if they really cared about paying an extra 1% on top of their bill.

Here’s a quick explanation on how the RE Fund works, as was explained by SEDA Malaysia.

How the RE Fund Works

How the FiT is implemented (Source: SEDA Malaysia)

The RE Fund is channeled to the implementation of Feed-in-Tariffs. As illustrated in the above figure, if you install a solar panel on your rooftop, you can sell the electricity to TNB. What you sell is priced at RM1.75/kWh. What you buy is priced at RM0.31/kWh. The sellers of electricity to TNB still pay their electricity bill every month on what they consume, and TNB then reimburses the total amount of money for electricity sold back. When TNB claims money from SEDA, it deducts the prevailing displaced cost and can only claim the positive difference of the two.

This is also why there is a quota for FiTs. In order to expand the quota, we need to increase the amount in the RE Fund. The fund was described by the CEO as the “lifeline of FiT”. As of now, Malaysia is behind its target to generate 986MW of electricity by 2015 – that’s why they are planning to increase the surcharge from 1% to 2%. The negative feedback from the public seems to be a major concern, hence the efforts on public relations.

SEDA themselves were quite candid about the public uproar on the surcharge, and even devoted a slide to the matter.

Complaints about the 1% surcharge

Complaints about the 1% surcharge (Source: SEDA Malaysia)

Indeed, SEDA went through quite a lot of flak in its implementation of FiT. Some opposition leaders had released a media statement on cronyism in the process of awarding FiT contracts. Recently SEDA was again attacked for poor implementation, and failure to achieve its annual targets. SEDA had even released a press statement to address some of the accusations released by the President of Association of Water and Energy Research Malaysia (AWER), alleging that the FiT mechanism is flawed and should be shut down.

My Thoughts 

Personally, I am glad that Malaysia has a Renewable Energy Fund to channel money into RE. At least it’s one step towards the right direction. We need to move towards renewables, that much is clear.

However, as with everything in Malaysia, it boils down to governance. Good policies are often foiled by patchy implementation. SEDA’s stance during the workshop was that Malaysians are too used to subsidies and have a handout mentality, therefore people are reluctant to pay an additional 1%. I do agree with the sentiment on the handout mentality – but it is fair if people demand to know where their money goes to.

It is sad that good causes are hurt by low public trust. I have a feeling that SEDA and its detractors are missing the bigger picture here. All the petty arguments over an additional 1% surcharge on the electricity bills can be avoided if we can reach the common understanding that we are doing this in anticipation of a much bigger problem, i.e. climate change, that would in time cause more losses than the 1% surcharge could ever cover. The framing of the problem seems to have focused mostly on the nitty gritty of dollars and cents.

But until the Malaysian public sees climate change as an issue of social justice (the poor will suffer much more than the rich when hit by the effects of climate change), or even considers climate change as a legitimately serious issue – we will continue to miss the forest for the trees.


This post is sponsored by SEDA Malaysia.

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