Renewable energy expected to generate RM70 billion in revenue by 2020

The renewable energy (RE) industry has the potential to generate RM70 billion in revenue for the country and provide RM1.75 billion in tax receipts for the government by 2020.

Minister of Energy, Green Technology and Water, Datuk Seri Peter Chin Fah Kui said the RE sector is also expected to create a host of spin-off benefits, including at least RM19 billion in loan values for RE projects and the creation of 52,000 jobs for the economy.

“Following the passing of the Acts related to RE development in parliament, the government has set aside an allocation of RM189 million as the initial start for the RE fund,” Chin said in his keynote address at the Sustainable Energy Forum 2011 here today.

The fund is aimed at unlocking the full potential of the RE industry in the country, he said.

Consumers, according to Chin will also be required to contribute to the RE fund through the one per cent levy for more than 300 KW of electricity consumed in a month.

The levy will be imposed from December.

While there have been lingering questions and doubts on the viability and growth potential for RE, especially in the minds of investors, financiers and those who are not privy to workings of the industry, the industry has been immensely successful in Germany, whose FiT (Feed in Tariff) became the blueprint for Malaysia, Chin said.

“Renewable energy made up 17 per cent of the country’s energy mix in 2010 and provided abut 357,400 jobs,” he pointed out.

He, however, stressed that the ministry would be mindful to avoid the mistakes and difficulties faced by less successful Feed-In-Tariff (FIT) scheme faced by other countries.

It would introduce control mechanisms, such as quotas and realistic targets to ensure a moderate but healthy and sustainable growth for the RE industry according to the size of funds, he said.

“Or else you will have to keep on replenishing funds and the government has to make conscious decision whether to keep on subsidising and consumers will not be happy to keep on paying a higher levy,” he explained.

FiT refers to the policy mechanism to boost the investment in RE with the government providing financial incentives to players who install RE generation capacity.

Malaysia is expected to implement the FiT system for the renewable energy sector on Dec 1.

According to a company official from the Ministry of Energy, Green Technology and Water, about 100 MW of RE will be open to players in the industry to participate in the RE generation of the country by December comprising RE sources such as solar, biomass, hydro and biogas.

“Countries like Germany, Spain, Italy, France and the US have made strong head start in RE growth, mainly through the implementation of FiT scheme for different types of RE sources,” he said..

The key to this success which Malaysia is adopting, will be a solid regulatory framework, attractive tariffs and incentives and also a digression rate to encourage early adopters and reduction of technology costs, Chin said.

He also noted that as a result of growing energy consumption, Malaysia’s Green House Gas (GHG) emissions and ensuing climate change was a growing concern, with the country reported to be one of the world’s fastest growing nation in terms of carbon emission.

“Malaysia’s energy intensity in which is the ratio of GHG emissions to the country’s Gross Domestic Product is about 1.8 times above the global average,” he said.

“However, Malaysia is committed to reducing her CO2 emission as part of its contribution to a larger global initiative,” he said.

In this respect, the government has decided that green technology will be the new economic frontier and in its pursuit that of a low carbon economy.

“We have made our pledge to reduce our carbon intensity by 40 per cent by the year 2020 compared to 2005 levels,” he said.


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