KUALA LUMPUR, Oct 28 (Bernama) -- Energy, Water and CommunicationsMinister, Datuk Seri Dr Lim Keng Yaik, said that Renewable Energy (RE)could be developed further in Malaysia to generate long-term energy needs,including electricity supply.

However, he said that problem might crop up in terms of pricing, like atwhat price could RE developers sell their energy to Tenaga Nasional Bhd(TNB).

Dr Lim said that anything new, such as RE, must be expensive, and that TNBmight refuse to take anything above what they could afford.

"We have to work out the incentives, to give a higher selling price to theRE sources," he told reporters after opening the Renewable EnergySymposium organised by the Malaysian-German Chamber of Commerce andIndustry here Thursday.

"We must have Renewable Energy Power Purchase Agreement (REPPA), and astandard one for that matter," he said.

Earlier in his speech, Dr Lim said that perhaps it was timely for TNB inparticular, to take a more supportive role, by ensuring that the REPPA bequickly concluded with all RE developers approved by the ministry underthe Small Renewable Energy Project (SREP) programme.

He said that presently, only about 12 percent of the total RE projectsapproved, have already concluded their REPPA with TNB.

Dr Lim believed that the electricity generated from renewable sourcesshould be given special tariff consideration by TNB to ensure that REprojects are viable and also attractive to potential financiers.

He said that the normal average buying of electricity for independentpower purchasers (IPPs) is roughly 13.5 sen to 14 sen per kilowatt/hour.

"Small Renewable Energy Project (SREP), as far as I understand, cannotpull down their cost to below 17 sen," he said.

"It is a matter of trying to work out the prices. But we may have to findslightly higher sales price in order to attract investment in this," hesaid.

Dr Lim said that as more people use and produce RE, the price of RE andthe machineries to develop it would also come down.

He also said that financial institutions play an important role inrenewable energy development, as prospective developers must seek outsubstantial loans besides equity to fund their projects.

"If they have to borrow funds on a year-to-year basis, and there is noavailability of long-term low-cost funds, it will deter them fromdeveloping RE," he said.

He said that the lack of awareness among commercial financial institutionson benefits of RE and also the absence of viable demonstration projects inthe country are some of the reasons why RE developers are facing fundingproblems.

Dr Lim said that the central bank could also play an important role inreforming the capital market to be oriented towards environmentalprojects.

He said that developing RE now is timely, as it is not only to protect theenvironment, but also to counter the negative effect of rising oil prices.

Under the Five-Fuel Policy, Dr Lim said that RE as well as energyefficiency has been identified as important resources for the country'sfuel mix together with oil, natural gas, coal and hydro.

"There is a lot of potential at all the palm oil mills, where all theempty fruit bunches are, which could be turned into RE," he said.

"Instead of sending the empty fruit bunches back to the estates, theyshould turn it into energy for electricity, but it is all a matter ofcosting," he added.

Dr Lim also said that Malaysia has to find more hydro sources as hydrosources in the Peninsular are limited to Terengganu and perhaps Pahang.

There is big potential for hydro resources in Sarawak, citing the SungaiRejang capability to generate 20,000 megawatts of electricity, he said.

"We have to generate the popularity of these resources, not only as analternative resources of energy, but to also develop energy saving," hesaid.

-- BERNAMA