Government Targets 500MW from Biofuel by 2010


8 August 2007


by Tamimi Omar


KUALA LUMPUR: The government is pushing ahead with its strategy to use biomass for renewable power generation and aims to generate 500MW by 2010 from the earlier target of 300MW.


Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik said yesterday the strategy included revamping the renewable energy power purchase agreement, and raising the power purchase price by Tenaga Nasional Bhd.


Lim said Tenaga's decision to buy power generated from palm oil biomass waste at 21 sen per kWh from 19 sen per kwh would promote renewable energy, adding that the new tariff would take effect immediately.  He said Tenaga was generating about 20,000MW now and its earnings would not be affected as the target was only 500MW by 2010.


Malaysia has over 400 palm oil mills and the government's plan is for these mills to either generate electricity to sell to Tenaga or for their own use. Lim was speaking to reporters after launching the renewable energy roadshow. Also present was Tenaga chief executive officer Datuk Che Khalib Mohamad Noh.


He also said the electricity reserve margin was 42% and Tenaga had to pay for that reserve capacity.  "We will reduce this to 25% by 2013... no more new coal or gas plants," Lim said, adding that the government wanted more companies to switch to biofuel. Che Khalib said there were only nine companies eligible for tariff hike under the renewable energy power purchase agreement.


Tenaga was keen to encourage more companies to use biofuels to reduce fossil fuel usage. Under the biomass energy strategy - which is part of the Kyoto Protocol - the government is also encouraging more companies to adopt Clean Development Mechanism.


Under the protocol, participating governments of developed countries would pay two sen for every kilowatt per hour energy generated to companies in developing nations that switch to biofuel. Che Khalib said 15 companies were registered under the programme, but it was Lafarge Malayan Cement Bhd and another company that were actively involved in the Clean Development Mechanism.