20 September 2001 (Business Times) - TENAGA Nasional Bhd will enter intofour separate deals by year-end to buy power from plants that are fuelledby renewable resources like biomass and gas produced from landfills.

Two of the power purchasing agreements (PPAs) will be signed this month.

They are with Bumi Power Sdn Bhd and subsidiary Tenaga SPL Sdn Bhd.

Bumi Power's plant, which uses biomass, will have a capacity to produce7MW of power, and Tenaga SPL's, 2MW from landfill gas, said Deputy Energy,Communications and Multimedia Minister Datuk Tan Chai Ho yesterday.

PPAs will be signed with two other plants by year-end, one which usesbiomass to produce 9MW of electricity and the other palm waste to generate5MW, he told reporters after launching the Power-Gen Asia Conference 2001in Seri Kembangan, Kuala Lumpur, yesterday.

Although the capacities are small, the plants still involve an investmentof between RM40 million and RM50 million each, he added.

The Government has yet to agree on the price for each unit of electricityproduced from the renewable resources, "but it should be between 13 and 17sen per kilowatt hour (kwh),” Tan said.This compares with 11-13 sen per kwh Tenaga currently pays independentpower producers which uses conventional fuel.Under Budget 2001, biomass energy-producers are granted a 70 per cent taxexemption on their statutory income for five years or a tax allowance of60 per cent of capital expenditure incurred during the period.In addition, the companies enjoy import duty and sales tax exemption onmachinery and equipment that are not available locally.The renewable energy programme is part of the national fueldiversification policy.Energy Commission chairman Datuk Mohd Annas Mohd Nor said renewable energy’s contribution to total electricity supply has been targeted at 5 per centby 2005.“Electricity supply is projected at 15,000MW by then, and 5 per cent ofthat amounts to 750MW. The renewable energy sector's growth will begradual, but we are confident of achieving the target,” he said whenapproached by reporters at the conference.Between 500MW and 600MW of electricity are being produced by about 200 oilpalm-based biomass plants, he said. However, the supply is not fed intothe national grid.The Government wants to see more palm oil mills, especially thoseoperating near the national grid, to expand their power generationcapacity and connect their plants to the grid, he added.