An Outlook of Renewable Energy Development in Malaysia

An Outlook of Renewable Energy Development in Malaysia Biomass Asia Conference, 21 st May 2013 Amer Aqel Amer Nordin Consultant, Energy & Environment

Amer Aqel Amer Nordin Functional Expertise Consulting experience in market research analysis, market entry strategy, product development, competitive intelligence, technology due diligence, industry benchmarking and demographic analysis Amer Aqel Amer Nordin Consultant Energy & Power System Frost & Sullivan Asia Pacific Malaysia Industry Expertise Experience in covering energy and power sectors with focus in corporate strategy and marketing. Consulting and research expertise in several areas including: Renewable energy Transmission and Distribution Power plant Services Energy management What I bring to the Team In depth market research analysis Strategy consulting Industry knowledge of renewable energy sector Career Highlights Business Development Analyst for Vestas Wind Systems A/S based in Singapore; part of the technology M&A team and corporate strategy. Research Assistant for Solar technology projects in Monash University Malaysia. Education Bsc. Mechanical Engineering, Monash University

Agenda The Need for Renewable Energy (RE) in Malaysia RE Developments in Malaysia (2000 2012) 2012 RE Mix: Estimate vs Actual Renewable Energy Revenue Forecast Solar Energy: Reaching Grid Parity in 2018 2020 Feed-in Tariff System Renewable Energy Financing Overview Wind Energy Potential in Malaysia Malaysia: Poised for positive RE growth

The Need for Renewable Energy (RE) in Malaysia 5-8% increase in electricity demand annually Additional 10GW needed by 2020 Decline in domestic gas supply Demand increase from competing sectors Strong drive in GHG Emission reduction 40% reduction of emissions in 2005 by 2020 High Electric Demand Viability of gas based power Low domestic supply Economic growth in coal export countries may lead to coal supply shortage GHG Emissions Target Coal reliability issue Lack of large hydro potential in peninsular Malaysia Ecological resistance from Borneo region Large hydro ecological issue Nuclear option Fukushima incident

Renewable Energy (RE) Development in Malaysia (2000 2012) Renewable Energy Key Events in Malaysia The Five-Fuel policy introduced in RMK-8 aims at 5% of electricity generated from RE by 2005 however only 12MW of capacity was achieved. RMK-9 has revised the target to 300MW in Peninsular and 50MW in East Malaysia by 2010 however only 56MW was achieved by September 2010. Malaysia Five- Fuel Policy (RMK-8) BioGen Project launched Malaysia RE Target revision (RMK-9) Suria 1000 project launched RE Policy & Action Plan launched FiT program implemented SREP Program launched MBPIV Project launched SEDA was formed

2012 Renewable Energy Mix: Estimate vs Actual Solar has been a key driving force in the renewable energy mix mainly due to several reasons including: Feed-in Tariff Direct consumer level participation Reduced risk (i.e. no fuel procurement risk) Source: SEDA

2012 Renewable Energy Mix: Estimate vs Actual Source: SEDA Total installed capacity was only 32% of the target envisioned. Ample business opportunity as the target capacity has yet to be fully optimised in several sectors including: Technology supply Plant construction O&M services Spare parts

Renewable Energy Revenue Forecast As per the FiT policy, the RE market is expected to grow 2GW by 2020 and 21GW by 2050 lead by solar power installation. Technology CAPEX is expected to reduce following economics of scale by 2015 in particular solar energy. Biofuels are expected to be fully exhausted by 2030 or later depending on the fuel supply availability and total allocated quota used. Source: Frost & Sullivan

Solar in Malaysia: Reaching Grid Parity in 2018-2020 Electricity Tariff Source: Frost & Sullivan Technology advancement in solar would reduce the effective cost of power production at 5 10% annually across the globe. Assuming a constant reduction in solar power due to promotional programs like FiT which would provide an initial impetus to solar PV and lead to economies of scale and an increase in other sources of power following the rate if inflation in Malaysia, grid parity is likely to occur in Malaysia between 2018-2020.

Power Sector Value Chain Regulation & Planning Sustainable Energy Development Authority (SEDA) Energy Commission Power Generation Primary technology Spare parts O&M services Balance of Plant O&M service Fuel procurement Construction Project Management Regulation & Policies Feasibility Studies Tenaga Nasional Berhad Sarawak Electric Supply Corporation Sabah Electricity Sdn. Bhd Transmission & Distribution

Feed-in Tariff (FiT) System Power Generation Primary technology Spare parts O&M services Balance of Plant O&M service USD $/kwh Malaysia Thailand Philippines Vietnam Indonesia FiT Energy Subsidy Fuel procurement Construction Project Management FiT Regulation & Policies Feasibility Studies Avoided cost tariff Biomass 0.08 0.13 0.01 0.05 0.16 0.087 0.07 0.16 Biogas 0.09 0.13 0.01 0.05 - - - Solar 0.27 0.47 0.26 0.30 0.23 0.087 0.07 0.16 Small hydro 0.07 0.08 0.03 0.08 0.14 0.087 0.07 0.16 Wind - 0.11 0.19 0.20 0.094 0.07 0.16 FiT Source: Frost & Sullivan

Renewable Energy Financing Overview Market overview: Financing Type The various financing types covered are mentioned below. Also indicated in the figure below are the various processes and the predominant financing type for the same. Private R&D Departments, Universities Manufacturers, Plant developers End user technology adopter Technology Research Technology Development Manufacturing Scale-Up Roll-Out [Asset Finance] Residential Usage Public Financing Source: Frost & Sullivan

Wind Energy Potential in Malaysia 1 2 3 Several wind hot spots in Malaysia particularly at the East coastline of Peninsular Malaysia and East Malaysia Wind availability rate in most areas of Peninsular Malaysia are directly related to the monsoon season SEDA has called for a more comprehensive study to explore the viability of wind in 2012. 4 5 The feasibility of using kw scale wind turbines is greater than MW scale Offshore MW scale wind project in the South China Sea has a higher potential. 6 Public acceptance study and awareness program has to be conducted. Graphics shows potential onshore and offshore wind hotspots in Malaysia taken from several research papers (Source: Frost & Sullivan)

Malaysia: Poised for positive RE growth 1 With an increasing demand for power and the fluctuating price offossil fuels, the government will need to rely on renewable energy sources which are more sustainable in the long run. 2 3 The Feed-in Tariff program has spurred positive developments in the renewable energy sector in 2012 and the lack of FiT take up offers strong business potential. With an increasing number of installed power plants, financial institutions are gradually easing the risk associated with green technology as the industry matures in the country. 4 Technology advances will assist RE in reaching grid parity in particular solar power further reducing the total CAPEX needed with reduced associated cost.

Thank you Contact: aqel.amernordin@frost.com H/P: 012 9066190