TEEAM paid a courtesy visit to the Minister of Energy, Green Technology and Water, YB Dato’ Sri Peter Chin Fah Kui on 6th June 2011.  Senior officials from the Ministry of Energy, Green Technology and Water (KeTTHA), Mr K Ramnick Lal Verma and Mr Somasundram Ramasamy joined the discussion.  Ir Ahmad Fauzi Hasan (ST CEO) was also present.

The delegation from TEEAM were Engr Fu Wing Hoong (President), Ir Chew Shee Fuee (Vice President), Mr Yap Ching Kiat (Vice President), Mr Ho Khai Hong (Honorary Secretary), Mr Leonard Choong Kin Loong (Vice Chairman of Trading Group) and Ms Winnie Khong (Executive Secretary).

The visit aimed to present a formal proposal on power factor (PF) improvement to the Minister.  Besides, green and renewable energy issues were also touched on.

Improvement of Power Factor

The depletion of fossil fuel is of major concern to the energy needed for all activities of the human race. The concern on excessive CO2 emission creating a climate change phenomenon is however becoming more and more alarming. Therefore the need to accelerate the progress of energy efficiency (EE) is now urgent and has been greatly noted by many governments of the world. Great amount of funds towards the promotion and encouragement on EE are given by many governments in order to reduce the demand on electrical energy and therefore reduce the need for more fuel. At the same time the reduction in electrical demand can be achieved by increased EE.

PF remains an important element in the electrical power distribution. The minimum requirement on PF in the tariff has been established for a long period of time. It is now the time to consider increasing the minimum requirement on PF so that more efficient distribution of power can be made. On the other hand the increase in PF will allow for power distribution to be increased without having to plant-up new generators.

Basing on the current 15,000MW of Maximum Demand (MD) in the Peninsular TNB network we can easily work on improvement of PF on at least half of the MD which is 7,500MW. If we can achieve 10% PF improvement we will reduce 750MW of MD. The amount of power can be used for new installations and other demands before the need for new generators is made.

TEEAM believes the improvement in PF is the way forward to improve EE.  TEEAM’s proposal is also based on the encouragement for PF improvement by giving incentive in discounts of bill if PF can be made better than the current 0.85. This is to reward the user in making capital investment to improve PF.  If the overall PF can be kept at 0.95, it means that there is an extra 10% electrical power in the system available for distribution.  TNB can sell an extra 10% without incurring any extra cost and the amount of carbon reduction would be substantial.

TEEAM’s Proposal on PF Requirement

The current TNB tariff requires PF to have a minimum of 0.85 for voltages below 132kV. In view of the advantage of increasing power distribution if the PF requirement is improved, therefore it is necessary to propose a new PF requirement.  The proposal is additional to the current PF requirement in the tariff structure.

TNB requirement:

• Below 0.85 and up to 0.75 lagging, a supplementary charge of one and one-half per cent (1½%) of the bill for that month for each one-hundredth part (0.01) below 0.85 and up to 0.75 lagging PF will be added to the bill for that month, and
• Below 0.75 lagging, in addition to the charge payable under subparagraph (a) above, a supplementary charge of three per cent (3%) of the bill for that month for each onehundredth (0.01) part below 0.75 lagging PF will be added to the bill for that month.

Proposed additional requirement:

• If PF is above 0.85 an incentive discount of one per cent (1%) of the bill for that month for each one hundredth part (0.01) above 0.85 lagging PF shall be applied to the bill for that month.

The above proposal is well supported by many stakeholders namely MACRA (Malaysian AirConditioning & Refrigeration Association), MALEA (Malaysian Lift & Escalator Association), ACEM (Association of Consulting Engineers Malaysia), SMI (SMI Association of Malaysia), CIOB (The Chartered Institute of Building Malaysia), REHDA (The Real Estate and Housing Developers’ Association of Malaysia), ICEM (Institute of Certified Engineers Malaysia), KLSCCCI (The Chinese Chamber of Commerce & Industry of Kuala Lumpur and Selangor) and PPKM (Malaysian Association for Shopping and Highrise Complex Management).

With incentives given, building and equipment owner will certainly beef up their PF correction and invest in PF equipment.  ST is all for it to give incentives to consumers. The Commission has met TNB on the matter and the utility is studying the proposal.

It is learnt that India and Philippines have incentives for PF improvement in term of rebates on electricity bill.  With tariff increment, rebate to business will be a positive move by the government.  TEEAM’s  proposal was well received by the Minister and we look forward to quick implementation of the proposal.

Green & Renewable Energy

The green initiative is a great effort that will help save our mother earth and will be the future driving force that shape the way we do businesses.  However, there is a high cost of initial investment in green technology. Although there are already incentives in place, TEEAM felt more should be done to spur the private sector to enter this segment in a bigger way so that Malaysia will stand out in the world.

We thanked the government for the number of initiatives to help boost this sector but some of these initiatives need to be re-visited. Although the government had put in place RM 1.5 billion Green Tech Financing Scheme (GTFS), a check at the GreenTech website only shows that RM 200 million was taken up as of  27th May 2011. TEEAM believed that the scheme should be re-studied to make it more attractive and to better encourage the private sector to venture into it.   Some considerations TEEAM proposed the government to look into include the followings:

• The GTFS – Government’s bearing of only 2% interest is not attractive and it is easily offset by the high cost of Green Tech Business.   To be sufficient attractive, the government should look at the overall interest rate, set it with a maximum cap such as interest rate maximum at 4%. Current scheme allows different bank to charge at different spread above BLR and this make the scheme not very attractive to smaller players. The spread can vary between 0-3% depending on the financial strength of the applicant.
• To allow Parent Company for investment tax allowances when they invest in a big way into newly incorporated special purpose green business vehicles.
• To attract local investment in a big way, TEEAM hoped that the government could continue to lead and play an active role by becoming the biggest consumer of green systems.
• Consider tax deductable from income tax even at consumer level for specific green equipment such as solar heaters, solar energy and solar lighting.  All these efforts will help slow down demand on energy for TNB and slow down the need to build power plant.

EE Rebate for Appliances

TEEAM was informed by KeTTHA that the government will be giving consumers rebates when they purchase selected energy-efficient refrigerators and air-conditioners with a 5-star energy rating.  This initiative is to encourage consumers to be energy-efficient.

Feed-in Tariff

KeTTHA informed that the introduction of feed-in-tariff (FIT) of 1% is to be incorporated into the electricity tariffs of consumers effective 1st September 2011. FIT aimed to increase the generation of electricity from renewable sources of energy such as solar photovoltaic, biogas, biomass, mini hydro and solid waste.   The system allows electricity produced to be sold to power utility at a fixed price for a specific duration. The meeting concluded with a note of thanks to the Minister.  The meeting capped off with a group photo.

TEEAM meeting KeTTHA – Issues of concern were raised to the Minister.