Saturday August 28, 2010
Renewable energy a growth sector for Malaysia
By ELAINE ANG
THE renewable energy sector is fast gaining ground as a new growth area for many countries worldwide with the vast potential it presents environmentally and economically.
Renewable energy plays a major role in meeting a country’s energy needs, enabling businesses to reap energy cost savings and revenue while combating global warming.
On the homefront, renewable energy is seen as a growth sector that will help propel the country into a high-income economy.
The sector, however, is still relatively undeveloped in the country as reflected in the low achievement of renewable energy targets under the Ninth Malaysia Plan (9MP).
According to PricewaterhouseCoopers Advisory Services associate director (sustainability and climate change) Mark Wong, the 9MP targeted the production of 350MW of grid-connected electricity from renewable sources, translating into 1.8% of electricity mix.
However, only 53MW was achieved by the end of 2009, or 15% of the targeted capacity,” he said.
The 10th Malaysia Plan (10MP) re-emphasised the use of renewable energy to meet Malaysia’s growing energy demands, in particular hydro power for electricity generation and blending of biofuels for transport sector.
Two of the steps taken by the Government to help boost development in renewable energy sector is the plan to implement a feed-in tariff programme later this year and the mandatory blending of biofuels for transport sector in 2011.
Wong said renewable energy was expected to contribute about 6% of the country’s electricity production mix in the next five years and about 11% by 2020.
“Renewable energy is often perceived to be a green initiative that is something nice to do. What needs to be understood is that there is a strong business case for renewable energy sector in the long term,” he said.
Renewable energy advisor to the Energy, Green Technology and Water Ministry, Ahmad Hadri Haris, had said in a report that based on projections by experts, the sector could provide at least RM70bil worth of revenue for the private sector and potentially generate tax revenue of at least RM1.76bil for the Government by 2020.
Another economic and social benefit arising from the sector is job creation. Experts have estimated that at least 52,000 jobs could be created from the construction, operation and maintenance of renewable energy plants in the country by 2020.
ACCA Global head of sustainability and corporate social responsibility Henning Drager said there was a strong recognition that the dependence on fossil fuels needed to be curtailed. This is based on the Government’s support of renewables as reflected in the National Renewable Energy Policy and Action Plan.
“Communities, industries, businesses and households need a reliable energy supply to prosper.
“Ramping up the renewable energy generation percentage is crucial if Malaysia is serious about reducing fossil fuels’ contribution to climate change, addressing energy security issues around importing oil and coal from unstable global regions, and the creation of skilled and unskilled jobs in the domestic renewables sector.”
Latest projections by the Organisation for Economic Cooperation and Development is that renewable energy, especially solar power, could play a large role in Malaysia’s future energy generation. This is because the country is blessed with over 250 days of sunshine a year, thus providing great potential to meet the energy needs of businesses and communities.
Amsterdam-based international expert on corporate responsibility and sustainable development, Paul Hohnen, concurred.
He said the country’s challenges in the long term included the transition from its reliance on finite supplies of oil and gas to renewable sources such as solar power and also to ensure maximum diversity and sustainability of its ecosystems.
“At the end of the day, the sun is Malaysia’s greatest renewable asset. It sustainably powers forests and farms, as well as tourism. But there is still much untapped potential and this is where much of the growth potential is.
"If Malaysia can achieve this transition, it will create firm foundations not only for domestic solar power industries but also industries based on plant genetic diversity (such as medicines), and sustainable crops for fuel, food, fibre and fertilisation,” he said.
Drager said significant upfront investment would be required to increase the contribution of renewables based on a thorough assessment of their respective generation potential.
Addressing any structural, political and cultural barriers to redirecting government subsidies towards this sector will be a key element for future success,” he added.
Drager said a detailed renewables job creation programme would need to be worked out by the Government to match the skills based on the renewables ambition.
“The programme should also address Malaysia’s high-income model because the highly-skilled labour required, including engineers, electricians and project managers, will be able to demand salary premiums and create aspirations around joining Malaysia’s renewables drive.”
Concrete measures and frameworks needed to be worked out across stakeholder groups and these include low and no interest loans, longer return-on-investment timelines, tax incentives and ambitious renewables targets, he said.