MAY 2021 Buying Renewable Energy in Malaysia Corporate Renewable Energy and Low Carbon Supply Chain Series Malaysia’s electricity market provides corporate buyers of Population Average Electricity Price (Est.) renewable energy with multiple procurement pathways, Malaysia 32,644,524 $.09 - .10/kWh including corporate power purchase agreements (PPAs) and a variety of other bundled and unbundled options. at a Glance Current Renewable Energy Mix Projected PPA Cost (Est.) The volume of corporate transactions has thus far been (Incl. Large Hydro) $0.07 - .09/kWh limited, but attractive osite PPA opportunities are 23% emerging and will be a private sector demand driver in the coming years. With prices that are increasingly cost Renewable Energy Goal Estimated Unbundled EAC Price (Incl. Large Hydro) $1 - 2/MWh competitive and an ability to create significant carbon 31% by 2025 benefits due to the country’s heavy reliance on coal and natural gas, Malaysia is well positioned to facilitate the Grid Emissions Factor Bundled EAC Price growing appetite for renewable energy by multinational 0.64 kgCO2/kWh $19/MWh and local companies alike. Renewable Energy Procurement Options RE100/CDP Procurement Option Availability Key Considerations Eligibility Process Supportive Policies, Contact Local Solar Onsite Renewables Limited Generation Providers TNB Is Single Retail Subscribe To myGreen+ Retail Renewable Energy Provider Oering From TNB Both I-RECs and TIGRs Procure Using mGATS Platform Unbundled EACs Available. I-RECs Associated or Directly From Projects Using With TNB’s mGATS Platform I-RECs or TIGRs Limited Availability; MOU Contract With Generator; Corporate Power Purchase With Ministry Can Potentially Approval Needed From Agreement (CPPA) Expedite Project Development TNB And Gov’t Agencies No Public Examples, But Virtual Power Purchase Understood To Be Allowed Contract With Generator Agreement (VPPA) Under NEDA+ Some Investments In PV Contract Using Tripartite Direct Investment Projects May Generate RECs (Investor, EPC, TNB) Agreement For Corporate Investors As Registered PV Investor (RPVI) Market Overview The Malaysian government has initiated key policies in recent years, including a 31% target for renewable energy by 2025 and key reforms such as the Large Scale Solar With Large Scale Solar (LSS) Auction Prices Dropping in (LSS) program and the Net Energy Metering (NEM) scheme. LSS is a competitive bidding Peninsular Malaysia, Corporate PPAs Will Become program that has helped to drive down the Levelized Cost of Energy (LCOE) for large Increasingly Attractive scale solar photovoltaic (PV) plants. Beginning with the third LSS program (LSS3) in 2019, solar generators in the program automatically transfer their EACs to the peninsular LSS4 Avg. Auction Malaysia utility, Tenaga Nasional Berhad (TNB). NEM allows for PPAs between the 0.05 Price (est.) corporate buyer and project developers for on-site solar generation, without involving TNB. A virtual NEM, or Net Oset Virtual Agreement (NOVA), allows solar PV energy Corporate PPA 0.08 produced on-site that is not self-consumed to be exported to up to three designated Price (est.) premises, providing bill credits to the accounts of these designated premises. Avg. Electricity 0.09 Price (est.) In peninsular Malaysia, TNB has historically played the role of a traditional vertically integrated utility, but has recently integrated corporate renewable energy infrastructure 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.1 by creating mGATS. This platform, along with I-RECs and TIGRs, allow corporations to USD $ KWH purchase RE100 and CDP recognized EACs to match their local electricity consumption. In addition, TNB launched their myGreen+ product, a retail renewable energy oering that pairs EACs with electricity sales. The New Enhance Dispatch Arrangement (NEDA) was established in 2017 allowing merchant generators to sell power to a single buyer. Sarawak and Sabah Corporations now have the potential to procure both osite physical PPAs and virtual PPAs, although there have been limited transactions to date. Sarawak and Sabah are two independent Malaysian states located on the island of Borneo. In December 2019, Sarawak Energy Berhad (SEB), the Sarawak vertically integrated utility, launched a renewable energy certificate (REC) platform and issued its first REC under the Tradable Instrument for Global Renewable (TIGR) registry. In 2016, SEB began exporting electricity to West Kalimantan, Indonesia, which, pending RE100 market boundary guidance, could potentially allow Indonesia RE100 members to source RECs from SEB. Sabah Electricity Sdn. Bhd (SESB) serves the state of Sabah and currently does not oer any known corporate renewable energy procurement options. Market Size and Activity Malaysia is home to major industries, including: electronics, rubber and palm oil Key Policies processing, pharmaceuticals, medical technology, petroleum production, and solar PV Large Scale Solar (LSS) module manufacturing. Over 50 RE100 member companies representing over 1.2 Competitive bidding program to drive down the Levelized Cost of Energy (LCOE) for the development of large million MWh of annual electricity demand have a presence in the market. scale solar photovoltaic plants. Net Energy Metering (NEM) As of 2020, 409 MW of total installed renewable energy capacity has been registered Allows for on-site solar PPAs and third-party solar leases. Latest NEM scheme oers tax incentives and reduced electricity bills to owners who install on-site solar generation. with mGATS, with an estimated 258,708 RECs produced by energy generated from New Enhanced Dispatch Arrangements (NEDA+) renewable sources in 2020. IPPs (merchant generators) allowed access to the single buyer electricity market, not reserved to imports. With NEDA+, Malaysia wholesale electricity facilitation now includes solar power producers as a new category of In addition, Malaysia is viewed as a potentially accessible market to address electricity participant. consumption from neighboring Singapore, where 64 RE100 members have footprints Nationally Determined Contribution (NDC) to the Paris Agreement Under the NDC, Malaysia is committed to reduce its emissions intensity by 45% by 2030 (relative to its emissions and renewable energy supply is very limited due to land constraints. Due to the intensity per unit of GDP in 2005). growing market pressure from Singapore-based corporates, the sovereign island’s government issued an RFP in March 2021 for 100MW of electricity imports from Key Malaysian Market Stakeholders Malaysia. Sustainable Energy Development Authority (SEDA) Administers and manages the implementation of Malaysia’s Feed-in Tari (FIT) mechanism. Authorized verifier or Qualified Reporting Entity (QRE) for the TIGRs Registry. Tenaga Nasional Berhad (TNB) TNB is peninsular Malaysia’s designated buyer and transmission-distribution provider of electricity generated JULY MARCH by independent power producers (IPPs). It also owns and develops generation capacity. Sarawak Energy Berhad (SEB) 2020 2020 2021 Electric utility that generates, transmits, and distributes electricity in the Malaysian state of Sarawak. Ministry of Energy & Natural Resources Unbundled EACs On-Site PPA Virtual PPA Government agency responsible for formulating energy-related policy and laws. American multinational Tesco Malaysia and NESS (export to Singapore) Energy Commission (EC) semiconductor manufacturer, entered into the largest Sunseap and TNB Provides consent and approval to develop renewable energy projects, as well as approves export power Intel, procured unbundled long-term power purchase established a joint venture under NEDA+. EACs from TNB, validated by agreement (PPA) for solar (JV) to participate in a tender Sabah Electricity Sdn. Bhd (SESB) I-REC, to help cover 100% of energy in Malaysia, by Singapore to import 100 Electric utility that generates, transmits, and distributes electricity mainly in the state of Sabah and the Federal its annual usage. facilitating the installation of MW of renewable energy Territory of Labuan. solar photovoltaic (PV) panels from Malaysia. on the rooftop spaces of 15 Tesco stores nationwide. For more information on renewable energy procurement opportunities, contact Apala Group at [email protected].