Driving RE increase in Malaysia through Solar Energy Purchase (S - PowerPoint PPT Presentation

Driving RE increase in Malaysia through Solar Energy Purchase (S (SEP) and Supply Agreement – Renewable Energy (SARE) Aznan Ezraie Ariffin TNBX, Retail Division, Tenaga Nasional Berhad Asian Utility Week 4 Sept 2019

Content • Introduction and Background • Rooftop Solar: A High-Benefit Power Source • Overview of PV Business Model Evolution • Available PV Business Models • The Solar PPA Business Model • Regulations and Solar size limitations • PPA Example • Conclusions 2

TNBX Services Your Trusted Energy y Partner Advisory Energy Contracting Customer Experience Billing & Invoicing Management From A to Z Marketing Metering Contact Center Revenue Assurance (Collection & Disconnection) Business Plan 3

YB MESTECC Minister’s Announcement Announced nounced in IGEM M 2018 1. 1. LSS 2. 2. NEM 1:1 3. 3. SARE

Introduction • Current PV business models principally revolve around the ownership of PV systems by individuals and utilities • Who owns and controls the PV facilities and the related flows of cash and other benefits determines the potential viability • FiT and NEM policies instituted were expected to grow the rooftop solar market in Malaysia • Rooftop solar power market is expected to gain momentum due to increasing public awareness and government support • Commercial and industrial uptake of solar to take off once a more economically viable business model is introduced 5

Benefits of Rooftop Solar Power Construction Site access Photovoltaic (PV) systems are at the point of consumption, thus do not require additional investment for access during construction or for operation and maintenance. Modularity They can be designed for easy expansion if power demand increases. Operation and Maintenance Primary energy Solar energy is freely available, and the PV system does not entail environmental costs supply for conversion to electricity. Peak generation These systems offset the need for grid electricity generation to meet expensive peak demand during the day. Mature Technology PV systems nowadays are based on proven technology that has operated for over 25 years Impact Investments Rooftop PV system costs help offset part of the investment needed for new power generation, transmission, and distribution in the power grid. Cost Fuel savings from PV systems typically offset their relatively high initial cost. Environment PV systems create no pollution or waste products while operating, and production impacts are far outweighed by environmental benefits. 6

Overview of PV Business Model Evolution 1 st Generation 2 nd Generation 0 Generation 3 rd party ownership and operation PV System supply ‘Full integration’ Business models focus on Business models driven by third parties Business models allow PV to become an manufacturing, supply and installation which develop projects and own PV integral part of the electricity supply and of PV systems systems, resulting in: distribution infrastructure - Reduction of hassle and complexity for end-user - Better access to financing - Leveraging of current incentives structure (especially for commercial building applications) End-user is the owner - Utility gradually takes on a Business models energy with variation facilitation role as PV market share of system: grows - Ownership - Operation control Utility is largely passive, providing net Utility gradually takes on a facilitation Utility becomes more deeply involved as metering and standard/simplified role as PV market share grows PV becomes major consideration interconnection, but otherwise, unaffected PV product is specialized PV product is less specialized PV product supply chain becomes ‘commoditized’ 7

International Solar Business Models 8

Solar as Digitalised Business

The Solar PPA Business Model • Solar purchaser or “off - taker” buys power from a project developer at a negotiated rate for a specified term without taking ownership of the system • Project developer procures, builds, operates, and maintains the system • PV system may be physically located on the off- taker’s premises (onsite PPA) or located remotely from the off-taker (offsite PPA) • It is a financial mechanism that allows the off-taker to accrue many of the benefits of solar power without owning a system. 10

Supply Agreement – Renewable Energy (SARE) All parties’ interests are protected by SARE Utili lity Servic ice provi ovider der, Servic ice Customer omer contr tracti acting ng & coven enant ants billing ing coven enant ants Inv nves estor/ or/Asse Asset t Ow Owne ner Pros osum umer er Engineering ineering Procure cureme ment nt Constru tructi ction on (EPC), ), O&M Perform Pe ormance ance Coven enant ants Companies registered as RPVI with SEDA Businesses and government entities (non-residential customers) in Peninsula Malaysia *RPVI = Registered PV Investor Business Plan 11 11

What the ST rules say SELCO NEM 12

Customer SELCO NEM Fuse (A) CT ratio Size (kWp) Rooftop (m2) Domestic LV 1-Phase A Up to 12 72-120 12 kWp NA 3-Phase Up to 72 432-720 72 kWp Commercial OPC 1-Phase B 60% fuse-rating 13.3 or 26.2 79.8 - 262 32 or 63 OPC 3-Phase LPC 60% CT rating NA 0.6 x 1.732 x 400 x CT size MV General C1 75% avg Limited by 75% of avg MD or Max 1-year MD Rooftop Size (whichever lower) Peak/Off-peak C2 Industrial LV OPC 3-phase D 60% fuse-rating 32 or 63 13.3 or 26.2 79.8 - 262 75% of MD LPC 60% CT rating NA 0.6 x 1.732 x 400 x CT size MV General E1 Limited by 75% of avg MD or Max Rooftop Size (whichever lower) Peak/Off-peak E2 HV Peak/Off-peak E3 75% avg 1-year MD Agriculture LV H MV General H1 Peak/Off-peak H2 13

Regulation and Registration Self Consumption NEM LSS (>30MW) TNB Registration √ √ √ SEDA Registration NA √ Provision of information PSS Study √ (> 425kW) √ (> 72kW) √ EC Licensing √ (>24kW for single phase √ (>24kW for single phase √ (award by bidding and >72kW for 3-phase) and >72kW for 3-phase) process) Maximum capacity 75% of MD 1kWp to 75% of MD (for LSS1 – 50MWp last 1 year data or LSS2 – 30MWp declared value) or 60% LSS3 – 1-100MWp fuse rating/CT RPVI Registration √ √ NA 14

Solar PPA Example Savings 15

Completed project under Solar Energy Purchase scheme Sekolah Menengah Agama Darul Ehsan 65 kWp Business Plan 16 16

Solar Monitoring for SAMDE Business Plan 17 17

Bills Summary for SAMDE Line Graph from July 2018 – June 2019 NEM Bills started 10,000.00 from 26 th March 2019 9,000.00 8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 MONTH 0.00 (RM) Business Plan 18 18

Bills Before Solar Business Plan 19 19

Bills After Solar Business Plan 20 20

Summary Bills After Solar Business Plan 21 21

Conclusions • Solar PPAs can provide a fixed price for energy generated removing exposure to price volatility and allowing for accurate and cost planning • Solar power is low-maintenance, reliable and passive, with no significant fuel supply risks, making it ideal for a PPA agreement • Significant cost savings to be made as grid power prices rise over time and the PPA rate remains stable • Customers can expect to see savings from the outset at least a certain % reduction on its energy bills within the first year of the agreement • The customer can exist the contract via novation or buy-out of the solar asset at any time • The challenge so far in Malaysia is understanding of the PPA contract, management approval (investment or pure savings), concerns on responsibilities (eg insurance and safety) and few actual installation showing examples of savings 22

THE END TAMAT

Current TNB Tariff 24