Renewable Energy

Malaysia is blessed with vast renewable sources of energy, viz. biomass, biogas, solar, wind and
mini-hydro. The potential for Renewable Energy (RE) is enormous, especially for biomass
energy; whereby these resources are not traded and mostly homegrown. The potential of mini-
hydro projects especially the run-of-the-river types is also huge, as the energy available from the
streams of rivers in the country has been proven to provide considerable contribution to the
supply of electricity in the rural areas. Solar energy is another type of RE resource that is
abundant and readily available, as Malaysia is geographically located at the equator. In view of
these potentials, the Malaysian Government encourages greater use of these non-depleting and
environmentally friendly energy sources. The Government policies on RE have been
documented in the Eighth and Ninth Malaysia Plans (8MP and 9MP), and the ten-year Third
Outline Perspective Plan (OPP3). The integration of RE as the "Fifth Fuel" in the national energy
scenario supports these policies, and encourages rapid up-take for physical implementation of
RE projects. The core focus of the policies was to supplement our national energy mix to include
contribution from RE and reducing the national dependence on depletable fossil fuel.
The Malaysian Government also introduced fiscal incentives in the form of Pioneer Status (PS)
or Income Tax Allowance (ITA) and tax exemption on RE equipment to act as the “push factor”
to stimulate the emergence of RE activities and in particular to encourage the generation of RE
using biomass, hydro and solar. The first set of incentives appeared in the national Budget for
2001 and it has been enhanced over the years. Applications for the fiscal incentives are to be
submitted to MIDA.

Small Renewable Energy Power Programme (SREP)

What is SREP?
In line with its commitment to intensify the development of RE as the Fifth Fuel, the
Government has launched the Small Renewable Energy Power (SREP) Programme on 11th May
2001. The SREP Programme was initiated by the then Ministry of Energy, Communications and
Multimedia (now known as Ministry of Energy, Green Technology and Water), with the aim of
promoting a wider use of the huge amount of RE resources available in Malaysia, particularly its
utilisation in power generation.
Under this SREP Programme, small power generation plants utilising renewable energy can
apply to sell their electricity to the utility through the distribution grid system. The utilisation of
all types of RE sources including biomass, biogas, municipal wastes, solar, mini-hydro and wind
are allowed in the SREP Programme. In order to co-ordinate the implementation of the SREP
projects, a Special Committee on Renewable Energy (SCORE) was set up under the Ministry of
Energy, Water and Communications (now known as the Ministry of Energy, Green Technology
and Water); with the Energy Commission acting as the Secretariat to the SREP Programme.

SREP Guidelines
SCORE will adopt the following Guidelines in promoting the development of grid-connected
small RE power plants:
1. SREP shall apply to all types of renewable sources of energy, including biomass, biogas,
municipal waste, solar, mini-hydro and wind.
 2. Project developers will have to negotiate the Renewable Electricity Purchase Agreement
with the relevant Utility, including the selling price on a willing-seller, willing buyer
basis, based on take and pay.
3. The RE electricity producer shall be given a licence for a period of 21 years, to be
effective from the date of commissioning of the plant.
4. RE electricity producers will be responsible for all the costs of the grid-connection, the
relevant Utility system reinforcement (electric cables, transformer, switchgears and other
protection equipment) and the necessary metering installation. The distribution grid
interconnection shall be made at a voltage between 11 – 33 kV.
5. The small RE power plant shall be located within a distance of 10km from the nearest
interconnection point. Exception is given for hidro power generation project.
6. No stand-by charges shall be levied. However, if back energy is requested by project
developers, it will be charged accordingly with the prevailing tariff.
7. Power generation through co-generation technology shall be given special preference.
8. Maximum capacity of a small RE power plant designed for sale of power to the grid shall
be 10 MW. A power plant can be more than 10 MW in size, but the maximum capacity
that will be allowed for power export to the distribution grid will be no more than 10
MW.
9. The small RE power plant must be ready for grid-connection within 12 months from the
date of approval for such grid connection. This is applicable for existing plant that wish
to connect to the grid. However, in the case of proposals for setting up new RE power
plants (or where “re-powering” is proposed) that require the installation of new boilers or
turbo-generator systems, the plant shall be commissioned within 24 months. The
stipulated period of construction until commissioning shall be counted from the date of
signing of the Renewable Electricity Purchase Agreement (REPA) between the developer
and the utility.
10. The RE power plant must meet all environmental regulations set by the Department of
Environment (DoE), and the developer of the project is responsible for obtaining the
necessary approval of DoE, and any other statutory approvals required.
11. The minimum of 30% equity in an RE power plant project must be by Bumiputera
shareholder(s). Foreign agency/company is allowed to participate in SREP project with
maximum participation equity of 30%.

Process Flowcharts for Applications of SREP Projects

* For more information on the license application procedures, please refer to the Licensing Unit,
Electricity Supply Regulation Department, Suruhanjaya Tenaga

SREP Approval Application Process Flowchart

* Applicant should observe and comply with all required approvals for project implementation
SREP License Application Process Flowchart
Status of SREP Projects