2011 IEEE First Conference on Clean Energy and Technology CET Solar Energy Policy: Malaysia VS Developed Countries H. Fayaza, N.A. Rahimb, R. Saidura, K. H. Solangi\ H. Niazc, M.S. Hossaina aDepartment of Mechanical Engineering b Centre of Research UMPEDAC, Level 4, Engineering Tower Faculty of Engineering, University of Malaya, 50603 Kuala Lumpur, Malaysia cInstitute of Business and Technology (BIZTEK), City Campus Shahra-e-Faisal, Karachi, Pakistan Abstract--Countries all over the world is enquiring and taking "No optimal model has emerged, and probably none will do efforts so in the contexts that is shaped by different histories and to implement the environment friendly renewable energy to mitigate the negative impacts of fossil fuels on the cultures". environment and their fast depletion. To reduce the reliance on fossil fuels and environmental degradation, many countries inustries, and Malaysia, are discussed as well as the discussion of policies in energy policy, there are many it will be very useful for policy makers, energy proucing solar energy policies, implemented in the developed countries energy the policies for 4 countries around the world. It is expected that increase its share into energy mix. In this paper a review of the solar set However, in this paper authors discuss and compare energy have focused and formulated solar energy related policies to successful existing To literatures, which target the particular policy for a country. research organizations and Govenment in Malaysia. the developed countries. According to the 2010 BP Statistical Energy Survey, II. the world cumulative installed solar energy capacity was 22928.9 W in 2009, a change of 46.9 % compared to 2008. UNITED STATES OF AMERICA According to industry reports, solar energy use increased at Ater the review of literature, FiT, RPS and Incentives are massive scale in 2008 in the USA and rest of the world. The found to be the most beneicial energy policies implemented by Solar the developed countries. These policies create the paths to Energy Industries Association, "2008 U.S solar Industry Year in Review", found that U.S. 17% of solar promote the development and implementation of renewable energy technologies. Also, the current policies related to solar energy capacity increased in 2007, reaching the 8,775 energy megawatts (MW) total equivalent. Research and publishing in Malaysia are investigated and compared with irm, Clean Edge and the nonproit Co-op America, gave developed countries. ywords: Malaysia solar energy, developed countries, the report that projects about 2% of the nation's electricity policy, comes rom concentrating solar power systems, while solar photovoltaic systems will contribute 8% of the nation's I. electricity. Those igures correspond to about 50,000 MW INTRODUCTION of solar photovoltaic systems and more than 6,600 MW of Energy policy is a way strategy or manner; in which govenment decides to address the issues of concentrating solar power [5]. United States of America has energy put several energy policies related to solar and other forms development along with the development of the energy of renewable energy in action described as follows; industry to sustain its growth; including energy production, J) distribution and consumption [1]. The attributes of energy policy may include legislation, intenational treaties and incentives to investment, guidelines for 28 states of USA have adopted RPS mechanism, by which energy maximum production energy is required rom renewable conservation, taxation and other public policy techniques. It energy such as solar, wind, geothermal and biomass. To plays a vital role to mitigate the impacts of global warming help utilities comply with their RE obligations, majority of and crisis of energy availability [2]. Diverse policies have the states which have RPS policy, allow the utilities to been developed and implemented to promote the use of renewable energy. These policies include exchange renewable energy credits (RECs) or renewable feed-in-terrif energy certiicates. There are three assumptions made, for (FiT), pricing laws, renewable portfolio standard (RPS), the implementation of RPS policy program. First, an RPS production incentives, tax credits, trading systems and quota policy is only considered operational according to the requirements etc. [3]. Reduction of the reliance on fossil effective date of policy implementation, not the adoption uels, mitigation of environmental impacts of the energy date. Second, any RPS policy that became effective in either sector and encouragement of new industrial development, November or December is not coded as effective until the are the main objectives of these strategies. Hence, among all following iscal year. For instance, if a state effectively those policies, the most popular are the feed-in-terrif (FiT) begins a RPS program in November 2003, the value of their and renewable portfolio standard (RPS). Though, To make a RPS variable equals zero rom 1998 to 2003, and one choice for suitable policy, there exist a lot of debates thereater. Third, they do not code any voluntary or "goal" regarding their effectiveness. For this, it depends on the based RPS policies as a mandated standard. circumstances and objectives of the countries that which E policy can be suitable to implement. According to Ekins [4] 978-1-4577-1354-5/11/$26.002011 O IEEE Renewable Porfolio Standard (RPS) 374 2011 IEEE First Conference on Clean Energy and Technology CET 2) III. The formation Incentives France It was irst adopted as the Public Utility Regulatory Policies Globally, the position of France is ith for production of PV Act or PURPA in 1978. It was the requirement of the energy. In 2009, the French electricity giant EDF announced PURPA for utilities to purchase renewable electricity rom that it will build the country's largest solar manufacturing qualiied independent generators over long-term contracts. plant with an initial annual capacity of more than Unlike today's feed-in tariffs, which guarantee a premium Megawatt Peak (MWp). At the end of last year, France for the renewable electricity delivered to the grid, PURP A committed to multiply solar power use by 400 in the coming 100 payments were based upon the avoided cost of generating 12 years. To double the share of renewable energy up to electricity rom conventional sources. Under the PURPA 23% by 2020 is the part of a larger pln for meeting the EU rom 198 1 to 1990, approximately 12,000 Mw of renewable obligations and to compete with Germany, regarded as EU energy were installed around the USA. giant. [8]. For renewable energy technologies, in 1978 irst Investment I) Tax Credits (ITe) was established. Residential tax credit France uses FiT as a main measure to adopt PV in the was created for 30% of the irst $2000 invested in a solar or country, issued in July 2006. In this, an obligation is put on wind systems and 20% of the next S8000 invested by the the part of a utility to purchase electricity rom renewable Energy Tax Act of 1978; business tax credits for 15% of energy producers paying a tarrif set by public authorities investment in a solar, geothermal and wind systems; and an nd guaranteed for a speciic time period. A FiT's value is excise tax exemption for gasohol, tned into a tax credit for the ethanol. Regan Administration encouraged the Congress to allow the residential solar and wind investment tax credits an independent power producer renewable energy resources, including a premium above or additional to the market price but excluding tax rebates or 3) Production tx credit other production subsidies, which govenment pays. In Europe and the USA, FiTs mechanism is primarily used to For small large-scale wind projects a Production Tax Credit RES development and presently, they are being applied in (PTe) of 1.5 centlkilowatt-hour (kWh) of electricity was 20 EU member countries. 1992. For small large-scale wind projects a Production Tax Credit (PTe) of ull price, which receives for any kWh of electric energy produced rom to run out for the irst time in 1995. created in Feed-in tarfs (FI) Ministry of Industry is the legal ramework for this measure 1.5 centlkilowatt-hour (kWh) of electricity was created in 1992, based on up-ront in France. FITs are composed rom a basic tariff, for non­ capital costs [6]. From 1986 to 1988, the business ITC for integrated PV systems (NIPV) and a bonus in the case of solar was reduced about 10%. Installed PV capacity doubled building integrated PV systems (BIPV). Table 1 s mmarizes in the U.S rom the result of 30% increase and extension of the FITs' values for PV installations in 2009. residential and business ITCs for 3 years in 2005. The TBLE I. FITS N 2009 FOR ELECTRICITY GENERATED FROM PV SYSTEMS IN FRANCE [8] 2007-2008 political seasons capped off the tumultuous 30year ride for these tax credits. For struggling Wall Street banks ater a 2-year political stand-off over extending the 2009 credits before their expiration at the end of 2008, Congress Overseas regions and Corsica Continental France inally passed a tax-extenders bill in October as part of a inancial bail-out package. Today, the solar industry has an FIT extension of 8-years of the ITC. It seems the only thing consistent about the tax credits has been in consistency, Granting period when looking at the brief history of renewable energy top Roof and ground mounted incentives in the U.S. 4) 20 years 0.32823 €/kWh BlPV Target Industrial/commer buildings cial application (new tari) Other information Solar hot water systems or solar-electric systems are being enjoyed by millions of Americans. About 83,000 solar thermal and solar electric systems were installed in U.S in 2007 [7]. 30% of federal ITC has been the most important component, although state solar programs have played a key role in driving this growth. In the recent report of the ITC economic impact, over 6000 MW of annual solar PV and solar thermal installations by 20 16 could be resulted by and 8 year extension of the residential and business credits. 0.43764 €IkWh 0.60176€1k Wh 0.45 €/kWh Tariff annually on revised inlation for new and existing FIT contracts Navigant projected that annual installations would have Before the revision in the normal review process, these fallen to about 1500 MW by 20 16; If Congress had failed to tarifs will remain valid until 20 12. It is expected that PV extend the ITC in 2008. 978-1-4577-1354-5/11/$26.002011 O IEEE cumulative installed capacity will increase rom 1 100 MW 375 2011 IEEE First Conference on Clean Energy and Technology CET in 2012 to 5400 MW in 2020. Because of the long scale solar thermal remains an expensive proposItIOn as administrative procedures, in 2008 only 46 MW were being a stand-alone tecnology therefore it limits the connected to the grid out of 105 MW installed capacity [8]. commercial diffusion to subsidized programs such as the 2) Solar Flagships program, earmarking AU$I.6 billion over Incentive 6-years for the support of construction and demonstration of Tax incentives and green loans are beneicial in credit large-scale solar power stations, with an ultimate target of terms, and are the example of other additional supports to 1000 MW [l3]. promote RE. The govenment grnts a 50% tax credit on 3) material cost at the main residence (maximum €8000 for Target Australia is at the cross-roads in terms of how to meet its singles and €16,000 for couples, valid until the end of 2012) for the PV systems <3 kWp. Tax credit is not cumulative uture energy requirements in an increasingly 'carbon­ with FIT For PV systems >3 kWp. Accelerated investment constrained' [14]. depreciation for companies and a reduced VAT of 5.5% (if shortfall in available electricity is expected with few years multilateral policy environment A the equipped host building is more than two years old) are at the current levels of generation. Due to the Carbon the other inancial incentives. Pollution Reduction Scheme White Paper, the publication of IV. the Ganaut report and announcement of an Emissions AUSTRALIA Mandatory Renewable Energy Target Trading Scheme to commence in 2010 and announcement [9] of a national mandatory renewable energy target of 20% program of share of electricity supply in Australia by 2020, Federal 2001, aimed at encouraging 9500 GWh of electricity policy is beginning to change. generation rom RE sources by 2010, is built on by the Renewable Energy Trget, announced in August 2009. In V. july 2009, estimated installed PV was 115 MW, which contributes an estimated 0.1 to 0.2% of total production despite the dry, sunny and hot climate, ideal of formulated numerous energy-related policies to combat the its climate change and ensure the energy security. Pragmatic utilization. The cost of solar panels is the reason for energy policies since last three decades have facilitated a unreached grid parity because of higher cost per kW than clean energy development path. The ive-fuel policy was h Malaysian Plan which was extension of other power sources. FiTs and other mandatory renewable energy targets are designed to enhance introduced in 8t the four fuel diversiication policy in which renewables as a commercialization of renewable energy in Australia. [10]. 1) ith uel was included. Contribution of 5% of the country energy mix with RE by year 2005 was targeted with Feed- in tarfs mitigation of 70 million tones of CO2 over a time period of FiTs have been investigated in many territories and states 20 years. Parallel to this, Small Renewable Energy Program Australia but this time only South Australia and Queensland have implemented schemes. (SREP) which was launched in May 2001 under the Queensland's Solar Bonus initiative of the Special Committee on Renewable Energy Scheme pays small electricity customers (deined as l customers that consume less thanIOOMWh yr· ) AU$ 0.44 l kWh· rom photovoltaic systems less than10 kVA for (SCORE) to support the govenment's strategy to intensiy the development and utilization of RE as the ith uel resource in power generation, which is also stipulated in the single phase and 30 kVA for 3 phase systems until 2028 objectives of the Third Outline Perspective Plan (OPP) for [11]. Albeit, small electricity customer must consume less 2001�2010 and the 8thMalaysia Plan (2001�2005) (8MP). than 160 MWhyr-l Since South Australia has an identical Facilitation of the expeditious implementation of grid­ scheme. In 2008, the Australian Capital Territory passed connected RE resources-based small power plants is the FITs legislation. 3.88 times the domestic electricity price is primary focus of SREP [15]. Further, in the 9th Malaysia paid by the ACT scheme, which are equal to or less than plan the utilization of RE resources and eicient use of 10kVA, 3.104 times for systems greater than 10 kVA up to energy were emphasized. 30kVA, and 2.91 times for systems larger than 30kVA. There is no FiT implemented in Westen Australia to date The but newly elected govenment has shown support for a WA establishment of the Ministry of Energy, Green Technology and Water, shows Malaysia's seriousness that FiTs sheme. 2) SOLAR ENERGY POLICY OF MALAYSIA Troughout the years, the govenment of Malaysia has 'clean and green' is the way forward towards creating an economy Subsidies that is based on sustainable solutions. The National Green Technology Policy is comprised of four Solar PV technology is still 34 times the cost of gas-ired pillars � (1) seek to attain energy independence and promote electricity. Consequently, despite signiicant govenment eficient utilization (2) Conserve and minimize the impact support programs, solar PV is estimated by recent on the environment; (3) Enhance the national economic projections to grow at an annual rate of 15MW (medium development case) up to 2020 [12]. Utility scale thermal technology is improve the quality of life for all. It will also be the basis for through the use of technology; and (4) under development, although lOMW demonstration plant is all Malaysians to enjoy an improved quality of life, in line about to be commercialized, planned in Queenslnd. Large- with the national policies, including the National Outline 978-1-4577-1354-5/11/$26.002011 © IEEE 376 2011 IEEE First Conference on Clean Energy and Technology CET Perspective Plan, where the growlh objectives for the nation 1 1,000 jobs. The E policy provides the rules and unds to will make E an important component of the country's energy continue to be balanced with environmental consideration. For the decades to come, fossil uels are mix, expected to be the main source of energy, where renewable market failures, create a level playing ield for these energy sources such as solar, biouels, biomass, geothermal technologies and drive down costs. But the role of public heat and wind are expected to double until 2030. Recently, th in 10 Malaysian Plan RE share is set to 5.5%, and is efforts must be taken by the govenment to generate public projected to 5.9% by 2030 [ 16]. will in support of the renewable energy agenda. So far, the arguments barriers, address existing in favor of supporting RE have Hydropower and solar PV are with highest The right support mechanisms must be in place to create the market, for any green technology industry to succeed. One large rivers suitable for dam projects and its tropical climate of the key obstacles is the prohibitive pricing of E that with plenty of sunlight. gives households and businesses little incentive to adopt the TABLE 2. RENEWABLE ENERGY POTENTIAL IN MALAYSIA technology. [15] 2) Incentives for Renewable Enery Investment Renewable Energy Potential (MW) Malaysia is blessed with multiple E resources, such as Hydropower 22,000 biomass, biogas, mini-hydro and solar, that will be Solar PV 6,500 leveraged to ensure a more sustainable energy supply. However, despite rigorous initiatives, the renewable target set out under the Ninth Plan period was not achieved. Under 1,300 Biomass/biogas (oil palm mill the Tenth Plan, several new initiatives anchored upon the waste) Renewable Energy Policy and Action Plan will be Mini-hydro 500 Municipal solid waste 400 Wind Low wind undertaken to achieve a renewable energy target of 985 MW by 20 15, contributing 5.5% to Malaysia'S total electricity generation mix. Amongst the measures taken will be: speed • support the development of E. This mechanism allows electricity produced rom E to be sold to utilities at a ixed neighboring countries as Solar is the second renewable premium price and for a speciic duration; and source ater biomass, which gets a big boost. In this case, • the policy for developing countries for instance is always which include solar, apart rom the local National Energ ; Energy Development Authority, under the Ministry of Energy, Green Technology and Water (KeTTHA) to support Policy drated since the Fith's Malaysia Plan [ 17]. development of RE [ 18]. Enery Research and Development (R&D) Enhancement domestic hot water system, drying VI. of solar energy. Malaysia has switching to solar energy can be a viable move. It is evident rom the literature that all the countries have speciic solar abundant energy policies to utilize solar energy for power generation. sunshine with the average daily solar insolation of 5.5 kW/ m2, which is equivalent to electricity, whether The solar energy policies in developed countries are well 15 MJ/ m2. PV-generated standalone or grid connected, CONCLUSIONS Solar energy is one of the most promising renewable, of agricultural produce and water pumping are the main applications Establishment of a Renewable Energy Fund rom the FiT to be administered by a special agency, the Sustainable available as a mechanism to enhance the utilization of RE present, Introduction of a Feed-in Tariff (FiT) of 1% that will be incoporated into the electricity tariffs of consumers to However, Malaysia is rich in solar power as compared to J) been overwhelmingly environmental [3 and 17]. potential due to Malaysia's geographical terrain with many At technological policy is so important, where it is not deined enough. The Table 2 shows the rough estimation of the RE potential in Malaysia. overcome designed to enhance electricity generation rom solar power is signiicantly. Feed-in Tariff, Tax exemption, renewable electricity generated at point of use. If generation and portfolio standards subsidies, formation incentives are the transmission losses of the conventional system are factored main policies adopted by developed countries. in then I MW of PV generated electricity is equivalent in uel saving to about 4 MW of conventional electricity. To Malaysian govenment has fomulated a series of policies set a target of about 10MW of grid connected photovoltaic for the promotion and insurance of the rapid, effective and system for Malaysia may be quite feasible. smooth development of renewable energy, such as FiTs, For instance, Monier Malaysia, a local company launched laws, last years when oil prices peaked, which specializes in and economic development, encouragement, industrialized technical support and renewable energy model projects, etc. energy eicient rooing solutions, has got systematic growth The PV market in Malaysia is still extremely small as of demand for its solar product. Malaysia managed to invest compared to other developed countries. Under the Tenth US $4 over the past three years resulting in creation of 978-1-4577-1354-5/111$26.00 2011 © IEEE regulations, research 377 2011 IEEE First Conference on Clean Energy and Technology CET [17] M.P. Koh,W.K. Hoi, Renewable energy in Malaysia: A Policy Plan, several new initiatives anchored upon the Renewable Analysis. Energy for Sustainable Development Volume VI NO. 3: 31- Energy Policy and Action Plan will be undertaken to 39. 2002. achieve a renewable energy target of 985 MW by 20 15, [18] 10th MP, Tenth Malaysia Plan 2011-1015, contributing 5.5% to Malaysia's total electricity generation mix. It is found that there are few limitations in Malaysia's 2010. renewable energy policies, such as less encouragement in lower level; lack of coordination and consistency in policy ramework; lack of regional policies innovation; inadequate investment in technical research and development; incomplete and unhealthy inancing and investment system etc. It is forecasted that in near uture sustainable energies in Malaysia will play signiicant role because country is struggling to replace fossil uels with altenative energy sources which are truly clean, renewable and safer. REFERENCES [ I] DPS. Department of Political Science, Retrieved on March 2010, available athttp://www.politics.ubc.ca/index. php?id=12547,March20 I O. 20 I O. [2] EPD. Energy policy deination. Retrieved on June 2010, Available at.http://www.tutorvista.comiks/energy-policydeinition.March2010. 20 I O. [3] K.H. Solangi, M.R. Islam, R. Saidur, N.A. Rhim, H. Fayaz. 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Renewable and Sustainable Energy Reviews 2010; 14(4): 1241-1252. [16] F. Sulaiman, Renewable Energy and its Future in Malaysia: A Country Paper. Proc. of Asia-Paciic Solar Experts Meeting, Islamabad, Pakistan. 1995. 978-1-4577-1354-5/11/$26.00 2011 O IEEE Published by 'The Economic Plnning Unit Prime Minister's Department Putrajaya 378