Levy on heavy power users from January

The levy money will be used to reward green energy producers through the feed-in tariffs.


Kuala Lumpur: The government will impose a levy on heavy electricity users starting January 2012 and use the money to remunerate green energy producers under the Renewable Energy Act's feed-in tariffs (FiT).

"Green energy producers will be rewarded via the feed-in tariffs. The funding is derived from polluters-to-pay concept," said Energy, Green Technology and Water Ministry's deputy secretary general for energy sector Badaruddin Mahyudin.

He said the Sustainable Energy Development Authority will set up the Renewable Energy Fund in September 2011 to collect the levy and oversee the implementation of the FiT.

"Those who consume more than 300KW (kilowatts) per hour will be considered heavy energy users and they will be taxed. We estimate Tenaga Nasional Bhd (TNB) to collect RM300 million per year on behalf of the government to fund the green power producers.

"Please note, household customers consuming 200 units of electricity or less will not be affected by the renewable energy levy," he said.

"Our ministry has, so far, received a RM189 million loan from the Finance Ministry to kick-start the Renewable Energy Fund," he added.

Badaruddin was speaking to reporters after launching the pre-show guide of POWER-GEN Asia 2011 here yesterday. The regional conference and exhibition on power generation, transmission and distribution will be held at the Kuala Lumpur Convention Centre from September 27 to 29.

It was highlighted that manufacturers, which make up 40 per cent of TNB's clientele, are the likely target group to be slapped with the renewable energy levy.

Badaruddin said the government is aware that the largest contributor to the levy will be from the industrial sector. He gave an assurance that the 1per cent levy on the bills of heavy energy users will only minimally impact the industry's manufacturing cost.

Moreover, the industrial sector may want to offset the incremental electricity cost by being more energy-efficient at their factories or even generating green power, thus benefit from the FiT.

To date, TNB's small renewable energy programme is only applicable to those generating up to 10MW. Come September 2011, the FiT will raise the bar to 30MW.

Power is generated from sustainable sources that include hydro, solar, biomass and biogas.

The FiT essentially guarantees green power producers a premium selling price over that generated from depleting and finite sources like oil, gas and coal.

The FiT could, on a cumulative basis until 2020, facilitate avoidance of about 46 million tonnes of carbon dioxide emitted from conventional power generation. This is achieved if and when Malaysia generates at least 3,000MW of green power.