neeap for comments final january 2014

7/25/2019 NEEAP for Comments Final January 2014

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NATIONAL

ENERGY EFFICIENCY

ACTION PLAN


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ACTION PLAN

National Energy Efficiency Action Plan

Table of Contents

1. Executive Summary ............................................................................................. 4

2. Background .......................................................................................................... 8

2.1 The Institutional Setup and Regulatory Framework on Energy Efficiency .... 9

2.2 Past Experiences on Energy Efficiency Promotional Initiatives ................... 10

2.3 Identified Barriers to Energy Efficiency ....................................................... 123. A Plan for Energy Efficiency ............................................................................ 14

3.1 Energy efficiency Potentials .......................................................................... 14

3.2 The Guiding Principles of the Plan ............................................................... 17

3.3 The Thrusts of the Plan ................................................................................. 18

3.4 Policy Direction of the Malaysia Energy Efficiency Action Plan ................ 19

3.5 Targets and Impact of Malaysia Energy Efficiency Action Plan .................. 20

3.6 Costs and Benefits ......................................................................................... 22

3.7 Strategic actions ............................................................................................ 23

3.8 Key Initiatives ............................................................................................... 24

3.9 Malaysia Energy Efficiency Action Plan Programmes ................................ 25

4. Strategic Actions ................................................................................................ 28

4.1 Action 1: Establish A Malaysia Energy Efficiency Action Plan Project Team 28

4.2 Action 2: Funding for Energy Efficiency ...................................................... 30

4.3 Action 3: Government Led Initiatives ........................................................... 31

4 4 Action 4: Capacit B ilding 31


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List of Figures

Figure 1: Economic growth rates versus Energy growth rates. ................................... 14

Figure 2: Final energy intensity vs Industrial energy intensity. ................................... 15

Figure 3: The energy savings and demand reduction by the Malaysia Energy

Efficiency Action Plan ................................................................................................. 21Figure 4: Linkages of target and impact with major stakeholders ............................... 22

Figure 5: The organisational Structure of NEEMP Project Team ............................... 29

Figure.6: The Malaysia Energy Efficiency Action Plan Public Budget Breakdowns . 30

List of Tables

Table 1: The cash-flow of Malaysia Efficiency Action Plan ....................................... 23

Table 2: Programmes for the Industrial Sector ............................................................ 26

Table 3: Programmes for energy-efficient buildings ................................................... 26

Table 4: Programmes for energy-efficient equipment ................................................. 27

Table 5: Key Initiatives ................................................................................................ 34


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1. Executive Summary

Malaysia is a developing country where its growing population and expansion of

economic activities especially in the manufacturing sector have been the major drivers

for the increasing demand for energy supply. Historically, the nations energy demand

growth rates were higher than the growth rates of its Gross Domestic Products (GDP).The energy demand growth, especially the demand growth for electricity, was

accelerated by the industrialisation process in the past two decades. The imbalance

ratio between energy demand and GDP is indicative of the more energy-intensive

economic activities driving the growth. In this regard, the need to promote efficient-

use of energy in the country has become clear. However, the effort requires sound

energy efficiency policies supported with good strategies and implementable

programmes.

Since 2000, Malaysias energy intensity ratios have been always over 1.0. The ratios

were simple indicators to express the level of energy efficiency from the techno-

economics perspectives and values over 1.0 indicate the inefficient use of energy. The

level of energy efficiency provides a compelling reason for Malaysia to improve its

energy use. Energy efficiency offers an effective and efficient energy policy


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institutions and agencies, but was lacking in terms of a coherent framework to ensure

sustainability in the longer term.

The lessons from the past experiences have given the understanding on the main

barriers that impeded the progress and success of past energy efficiency improvement

efforts in Malaysia. The barriers can be categorised as:

Low energy prices;

Lack of finance for energy efficiency;

Lack of overall national plan for Energy Efficiency;

Lack of champion to drive Energy Efficiency; and

Lack of consistency in embarking on energy efficiency.

Therefore, the Malaysia Energy Efficiency Action Plan presents the instruments for a

successful implementation of energy efficiency strategies in the country for a period

of 10 years which will address and mitigate those barriers.

The Malaysia Energy Efficiency Action Plan presents a strategy for a well-

coordinated and cost-effective implementation of energy efficiency measures in the


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Thrust 3: Create adequate and sustainable funding mechanism for energy efficiency;

Thrust 4: Implement Energy Efficiency Programmes; and

Thrust 5: Enable commercial finance institutions to support energy efficiency.

The above five thrusts will help eliminate the existing barriers and ensure that energy

consumers in the targeted sectors will be encouraged to adopt and adapt energy

efficiency as a way of life and reap the benefits that energy efficiency could provide.

The Malaysia Energy Efficiency Action Plan outlines strategic actions that are needed

for an effective and efficient implementation of energy efficiency programmes. The

actions are:

Action 1: Establish a Malaysia Energy Efficiency Action Plan Project Team;

Action 2: Funding for energy efficiency;Action 3: Government led initiatives;

Action 4: Capacity Building; and

Action 5: Research, development and innovation.

The Malaysia Energy Efficiency Action Plan contains 17 specific energy efficiency

programmes covering three sectors to be implemented over a 10 years period. The

b d i t 5 k i iti ti l t d t th d i f th


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Plan implementation will result in a total capacity saving of 2,268 MW. The fuel

savings derived from the Malaysia Energy Efficiency Action Plan will also lead to

less environmental impact and reduction in greenhouse gas emissions. The total

reduction of greenhouse gas emission over the plan is projected to be 40 million

tonnes CO2 equivalent. A total reduction of 96 million tonnes of CO2 equivalent will be

achieved over the lifetime of the energy-efficient technologies adopted and adapted

from the plan implementation.

The effective and efficient implementation of the Malaysia Energy Efficiency Action

Plans programmes requires an average governmental budget allocation of RM 104

million annually. The budget will cover the cost to administer and incentivise the

Malaysia Energy Efficiency Action Plans programmes. The public expenditure on

the Malaysia Energy Efficiency Action Plan, a total of RM 1,040 million, will beleveraged by the private sector investments. A total of RM 9,518 million private

sector investments will be induced over the plan. From this investment amount, the

largest share will be spent on the adaptation of energy-efficient technologies.

The public and private expenditure on Malaysia Energy Efficiency Action Plan

programmes, amounting to a total of RM 10,557 million, will result in a total direct

t i b fit f RM 14 627 illi Th di t t b fit i th


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2. Background

Malaysia is a progressive developing country. Its economic and social development

has been growing fast with energy as one of the main inputs to drive them. Malaysias

final energy consumption had increased from 13 million toe in 1990 to about 41

million toe in 2010, reflecting an annual average growth rate of 6%. The electricityconsumption during the period grew at an annual average growth rate of 9% to reach

104,519 GWh. At the same time, MalaysiasGDP grew at an annual average growth

rate of 6%. Malaysia is determined to maintain its economic growth over the next

decade, but the growth in its energy consumption must be managed to ensure the

productivity and competitiveness of its economy.

In the process to accelerate its economic and social development, supported by its

current position as a net energy exporter, Malaysia provides subsidies on energy-use

for various levels of users. The energy subsidies amount offered to various energy

users in the country has been growing from year to year, corresponding with the

volatility of global energy prices and growing demand for energy. The subsidies

amount has reached a worrisome level that the government expenditure capacity has

b t t h d b d it bilit d h t k th h f th d l t l


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2.1 The Institutional Setup and Regulatory Framework on Energy

Efficiency

The key agencies involved to promote energy efficiency in Malaysia are the Energy

Unit of Economic Planning Unit (EPU) of the Prime Ministers Office, the Ministry

of Energy, Green Technology and Water (MEGTW) and the Energy Commission

(EC). The role of MEGTW is to formulate and implement energy efficiency policy, incoordination with the EPU. The EPUs main role is to allocate sufficient resources for

the implementation of energy efficiency programmes. The EC, established under the

Energy Commission Act 2001, is the regulatory agency for the electricity and the gas

supply industry at the reticulation stage. The Commissions main tasks are to regulate

the electricity and gas supply industry at the reticulation stage from the technical,

safety and economic aspects. EC also advises the Energy, Green Technology and

Water Minister on all matters related to electricity and tariffs including energy

efficiency promotion.

In promoting energy efficiency, MEGTW had enacted a number of legal instruments.

The main legal instrument on energy efficiency promotion is the Electricity Supply

Act (Amendment) 2001 or known as Act A1116. The Act empowers the Energy,

G T h l d W t Mi i t d th S ti 23A 23B d 23C f th


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buildings with air-conditioned space exceeding 4,000 square metres to be designed to

meet the Overall Thermal Transfer Value (OTTV) and the Roof Thermal Transfer

Value (RTTV) of MS 1525. The section also requires those buildings to be provided

with an Energy Management System (EMS).

The latest regulatory instrument to promote energy efficiency improvement is the

Electricity Regulations (Amendment) 2013. The regulation has been amended to

allow the implementation of Minimum Energy Performance Standards (MEPS) on

selected electrical appliances and lighting. Under the new regulation, refrigerators,

air-conditioners, televisions, fans and lamps (Fluorescent, Compact Fluorescent, Light

Emitting Diode and Incandescent) that enter the Malaysian market or are sold to

consumers must meet the minimum energy performance standards as prescribed in the

regulation. Furthermore, information related to MEPS of those products must be madeavailable to consumers by labeling. Labeling of appliances covered by MEPS will

became a mandatory requirement. The regulation will pave the way for the phasing-

out of inefficient electrical appliances and lighting.

2.2 Past Experiences on Energy Efficiency Promotional Initiatives

I th t 10 b f ffi i i iti ti h d b d t k b


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projects, rating of high efficient equipment and increasing the awareness

among industrial consumers on energy efficiency.

b. Integrated Resource Planning was a 4-year DANIDA funded project

aimed at providing capacity building on methodologies for effective

energy planning and forecasting, taking both supply and demand side

initiatives into account.

c. GEO Building the building where the present Greentech Malaysia is

located is a demonstration building that had been designed with low

energy features. The energy consumption of the building was designed to

be 50kWh/m2 significantly lower than the average of 200 kWh/m2 of

typical office buildings. Furthermore, installation of photovoltaic systems

brings the net electricity consumption down to about 35kWh/m2.

2) Centre for Education and Training in Energy Efficiency and Renewable Energy

(CETREE)is a centre located in the campus of University of Science, Penang. At

the initial stage, CETREEs establishment was assisted by DANIDA. CETREEs

focus is to increase awareness on energy efficiency and renewable energy among

school children and students. The Centre has developed curricula for primary and


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5) Sustainability Achieved via Energy Efficiency Program or SAVE was a program

designed under the Economic Transformation Program (ETP) of the Malaysian

Government in July 2011. The program was aimed to provide cash rebates for the

purchase of energy-efficient refrigerators, air-conditioners and chillers. A total of

RM 45 million was allocated under the program for the rebates and its

promotional campaign activities throughout the country. The budget had covered

the purchases of as many as 100,000 units of refrigerators, 65,000 units of air-

conditioners and 72,000RT capacity of energy efficient chillers for eligible

domestic consumers and private companies. SAVE has helped to create a market

for energy-efficient appliances and market penetration of those products

6) Energy Performance Contracting (EPC) is an initiative started in Jan 2013 by the

Malaysian Government to promote energy efficiency in government buildings.

Under the EPC concept, government buildings are allowed to engage energy

services companies (ESCO) to improve energy efficiency. The cost of investment

to implement energy efficiency improvement will be provided by the ESCO,

while the government buildings are allowed to pay the cost of investment by the

ESCO from the savings made from the improvement efforts. The initiative will

help create an ESCO industry in Malaysia as well as ease the governments

t b d b ildi bill


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prices prevent energy efficiency as the consumers are less concerned about the

energy costs. Furthermore, energy efficiency investments are not made as the

returns in terms of energy savings are small due to the low energy prices.

2) Lack of finance for energy efficiencydedicated finance for energy efficiency

from commercial lending institutions has been difficult to obtain, as the banks

have not built sufficient capacity to deal with energy efficiency project

evaluation and project finance schemes. Loans for energy efficiency projects

are normally given based on collaterals from the applying companies and not

based on the project feasibility. Similarly, there are no loan schemes for

energy efficiency for individual consumers and the finance institutions will

normally recommend traditional loan schemes such as e.g. term loans, credit

card loans, if an individual wishes to purchase energy-efficient appliances.

3) Lack of overall national plan for Energy EfficiencyEnergy efficiency has

been a part of the Malaysian Development Plans, but there has not been any

underlying road map or action plan for the implementation of energy

efficiency. The activities are, therefore, driven by individual short-term

projects, without a clear coordination among the activities and a clear medium

t d l t bj ti


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10 0

15.0

20.0

3. A Plan for Energy Efficiency

3.1 Energy efficiency Potentials

Energy plays an important role in Malaysias economic development. In 2010,

Malaysia used 41 million toe of energy for its economic development and the well-being of its people. The usage of electricity as one of the final energy components was

104,519 GWh or 9 million toe. Figure 1 shows the economic growth rates pattern

versus the energy growth rates patterns which are represented by the final energy

demand and electricity demand. The energy demand growth tended to move in

tandem with the economic growth rate. The pattern has proved that Malaysias

economic development was depending heavily on energy as one of the important

factor inputs.


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100

growing private vehicle ownership are driving the increase in demand. Malaysia is

taking concerted efforts to manage its transport energy demand by improving its mass

transit system, promoting the market penetration of efficient hybrid cars by tax

exemption and having continuous awareness dissemination programmes. However,

energy efficiency improvement on the transport sector is not covered in this Plan and

will be addressed separately by the Government.

Malaysias economic development is supported strongly by the industrial sector.

Figure 2 shows the relationship between the final energy intensity and industrial

energy intensity. The values of both intensities show a strong relationship and they

moved in tandem. The reduction in the both intensity values beginning from 2008

was caused by the global financial crisis. The reduction in demand for industrial

outputs resulting from the crisis affected the Malaysias industrial outputs as well. Thereduction of energy intensities, which is often related to improvement of energy

efficiency, in this case was caused by industrial activity reduction and to some extent

by structural changes. The improvement is caused by non-energy components of

energy intensity.


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The 2% savings, however, could bring about high savings as the annual energy

consumption was high. The highest potential energy saved had been found in the

cement industry, which at 32.7% of the annual energy consumption of almost 15

million GJ could yield a savings of 4.9 million GJ. The focus on industrial energy

efficiency improvement should be on the adaption of energy-efficient equipment and

processes, better management of energy at plant and organisational levels and human

capacity development.

The commercial and residential sectors energy use was small when compared to the

other two sectors. But the sector has significant contribution to Malaysias economy.

The sectors energy use is mainly in buildings, which is for space cooling and to

operate equipment in the buildings. Managing building energy use in Malaysia is

relatively easier compared to buildings located in seasonal climates. In this regard, thebuildings energy needs are quite stable and easily predictable. However, the major

challenge in promoting energy efficiency in Malaysia is the enforcement of regulatory

instrument due to the lack of human capital and relatively low tariffs for commercial

buildings to embark on energy efficiency measures.

Malaysias commercial buildings, other than specific function buildings, on average

h B ildi E I d (BEI) f d 200 300 kWh/ 2/ H h


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3.2 The Guiding Principles of the Plan

A plan to promote national-level energy efficiency requires a number of guiding

principles. The principles will ensure that the promotion of energy efficiency with

various levels of energy users will not result in any adverse effects. The guiding

principles are as follows:

Cost Effectiveness: The planned initiatives have been assessed in terms of cost

effectiveness. The indicator used is the Benefit-Cost Ratio (BCR) where the ratio of

monetary energy savings over the cost is evaluated for both government and private

sectors. Only initiatives with a BCR above 1 are considered, and a high BCR is

preferred.

Improved competitiveness and welfare: As the BCR of the private sector is evaluated

and must be above 1, this means the end-users will be saving money on their energy

expenditure as a result of implementing the initiatives. Only initiatives that can

maintain or increase competitiveness and welfare are chosen, mainly by encouraging

more efficient practises and more efficient technologies.


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Create a domestic market for energy efficient technologies: Energy efficient

technologies will be made available in the domestic market, by creating a market push

through incentives and regulation for suppliers, as well as a market pull from the

consumers by energy efficiency initiatives. Furthermore, local manufacturers of

energy consuming technologies will be encouraged to produce and provide energy-

efficient and green technologies for the domestic market as well as the increasing the

size of the international market for such technologies.

Ensure comfort is not compromised: The initiatives shall not have any adverse impact

on the current and future comfort levels expected by the consumers. Therefore energy

efficiency initiatives that provide the same or better service with lower energy

consumption are chosen.

3.3 The Thrusts of the Plan

The ineffective implementation of energy efficiency strategies and programmes in

Malaysia is owed to some indentified barriers. The barriers need to be removed for

effective and efficient implementation of the energy efficiency policy. The plans to

promote effective implementation of the energy efficiency policy by removing the


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initiatives and mitigating the economic barriers to a wide spread uptake of energy

efficiency;

Thrust 4: Implement Energy Efficiency Programmes. The core of this national

action plan is the implementation of specific energy efficiency programmes that

will reduce the energy consumption by the target consumers. Therefore, the Plan

comprises a catalogues of programmes which are to be pursued during the Plan

period; and

Thrust 5: Enable commercial finance institutions to support energy efficiency.

As it is intended to ensure that energy efficiency is a way of life for the society, it

is important that the consumers have access to finance to choose and invest in

energy efficient technologies and projects. Therefore, the finance institutions areenvisaged to play a major role in accepting and providing finance to energy

efficient technologies and energy efficiency improvement projects.

The above 5 thrusts will together ensure that energy efficiency plays an important role

in society during the next Ten-Years. The thrust will reach out to all segments of

society and ensure that all energy consumers are encouraged to implement energy

ffi i d h b fi f h i h ffi i ill id


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The policy direction includes the following key principles:

Promote: The implementation of energy efficiency is to promote the concept that

consumers have to be more energy efficient, by mainly voluntary participation. Only

minor parts of the action plan will be based on mandatory or compulsory initiatives

and only in cases where it is determined to be for the common good.

Productive use: The plan is not to reduce the productivity of the society and reduce

the comfort level. On the contrary the aim is to increase productivity, but in a manner

where the energy usage is controlled and not higher than necessary.

Minimise waste: Waste is defined as both waste of fuel resources, waste products

from energy generation such as pollution and greenhouse gasses as well as waste of

money, from overspending on electricity and fuels.

Sustainable development:This is defined as meeting our current needs in a manner,

that the needs of future generation are not compromised. The central point for the

development of the society is that economic growth does not lead to constraints for

h i h f


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0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

0

1000

2000

3000

4000

5000

6000

7000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

GWh

energy-efficient technologies adopted and adapted during the plan period. The

cumulative lifetime savings of the technologies is estimated at about 121,178 GWh of

electricity. Figure 3 shows the electricity savings and electricity demand reduction by

the Malaysia Energy Efficiency Action Plan.


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Residential-Energy

efficient

Commercial-Energyefficient

Industry-

Energy efficienttechnologiesand process

Government

-Leadershipby example

ReduceEnergy Bill

ImproveEconomic

Productivity

ImproveQuality of Life

ReduceEnvironmental

Effects

and adapted from the plan implementation. The significant linkages of the target and

impact of the Malaysia Energy Efficiency Action Plan with major stakeholders are

shown in Figure 4.


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based on the current electricity tariff. The other indirect benefits, i.e. capacity savings

and greenhouse gas reductions are not included in the direct monetary benefit.

The cost-benefit ratio of the Malaysia Energy Efficiency Action Plan, which is

calculated by dividing the direct monetary benefit with the public and private cost, is

1.4. In other word, every RM 1 spent on the Malaysia Energy Efficiency Action Plan

programmes will result in a benefit of RM 1.40. The cost-benefit ratio based on the

lifetime savings of energy-efficient technologies adopted and adapted during the

Malaysia Energy Efficiency Action Plan is 3.2. The overall cash-flow during the

plan period is summarized in Table 1. The cash-flow shows continuous gain from the

sixth year of the Malaysia Energy Efficiency Action Plan implementation. The reason

for such pattern is because the energy savings from the early years of the plan are

accrued in the later years of the plan.

Table 1: The cash-flow of Malaysia Energy Efficiency Action Plan

RM Mill. Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Total

Public

Funding46 74 94 97 110 111 112 113 114 116 988


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Plans progress with relevant methods and tools as well as update the progress in a

periodic manner to stakeholders.

Action 2: Funding for energy efficiency, which will provide the budget for

incentives for energy efficiency initiatives and administrative costs for the project

team as well as related activities undertaken by other institutions.

Action 3: Government led initiatives, will pioneer the energy efficiency

implementation, by getting government institutions and government link companies

(GLC) to set the example for efficient energy use. The government will take the lead

in the implementation of the various initiatives to create a market pull for energy-

efficient green technologies as well as reducing energy wastages.

Action 4: Capacity Building, to educate and train students and professionals in

energy efficiency in order to create a mass of knowledgeable professionals to

implement energy efficiency. The Plan will create awareness on energy conscious

behaviour among the general public and contribute to building human capacity in

government institutions to promote and implement energy efficiency policies and

programmes.


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Key initiative 2:Minimum Energy Performance Standards (MEPS). TheMEPS

will set the minimum energy performance for energy consuming equipment to be

sold in the market. By introducing MEPS to equipment, it can ensure that low

efficient technologies are not dumped in the market. Currently, MEPS has been

introduced for refrigerators, fans, air conditioners, televisions and lamps. MEPS will

be extended for more equipment under the Malaysia Energy Efficiency Action Plan.

Key initiative 3: Energy Audits and Energy Management in Buildings and

Industries. Energyaudits are consultancy services for identification of energy saving

potentials in facilities. It has been demonstrated in earlier studies that savings of 10%

or more are readily available at low or no cost, just by introducing better practices and

reducing leaks etc. Energy audits and energy management will be done in commercial

buildings and industries. As a kick start activity, government facilities will be subjectto energy audits and energy management as well.

Key initiative 4: Targeted rebate and support programmes. Energy efficiency

programmes will be designed and implemented to create a market transformation

towards more energy efficient technologies. Rebate programmes will be made

available to provide support to cover the incremental capital costs for energy efficient


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Programmes EE Refrigerators EE Lightings EE Air-

Conditioners

EE Fans

Policy Tools MEPS MEPS MEPS MEPS

Labeling Labeling Labeling LabelingIncentives

(Cash Rebates)

Incentives

(Cash Rebates)

Incentives

(Cash

Rebates)

Awareness Awareness Awareness Awareness

Public Fund

(RM, Mill)

50 2 19 17

Private Fund

(RM, Mill)

1,118 127 1,294 751

Electricity

Savings

(GWh)

2,079 3,056 5,983 645

Table 4: Programmes for energy-efficient equipment


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4. Strategic Actions

This chapter outlines the content of the five strategic actions, which form the base for

the Malaysia Energy Efficiency Action Plan. All of these are crucial for the proper

implementation of the key initiatives and in achieving the desired impact of the

interventions.

4.1 Action 1: Establish A Malaysia Ten-Year Energy Efficiency Action

Plan Project Team

The first action under the Malaysia Energy Efficiency Action Plan is to establish a

project team to administer and implement Malaysia Energy Efficiency Action Planprogrammes. The Malaysia Energy Efficiency Action Plan Project Team will be

instrumental in implementing the energy efficiency programmes under the Malaysia

Energy Efficiency Action Plan. The team also will play a coordinating role with other

relevant agencies on the Malaysia Energy Efficiency Action Plan implementation.

The Malaysia Energy Efficiency Action Plan project team will be established by

MEGTW. The main duties of the project team are to:


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officer. The officer will manage the funds for the operation of the team as well as fund

allocations and disbursement to the Malaysia Energy Efficiency Action Plan

programmes.

The data management and monitoring unit function is to compile energy data and

provide data analyses. The function includes the monitoring of the progress of the

Malaysia Energy Efficiency Action Plan with a set of relevant indicators. The

effective implementation of the Malaysia Energy Efficiency Action Plan is dependent

on how well its progress is monitored. Corrective steps on the Malaysia Energy

Efficiency Action Plan progress will be based on the monitoring report. In this regard,

the Unit will report to the Project Team Leader.

A major part of the communication and data management will be using informationtechnology and information should to a great extent be made available on-line. The

Malaysia Energy Efficiency Action Plan Project will have a web-portal with all

relevant information regarding its activities in order to ensure easy access to

information and material by the end-users. Internal information shall be made

available on an intranet, where all relevant background information as well as budget

and fund information is kept up-to-date. The dissemination and sharing of information


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4.2 Action 2: Funding for Energy Efficiency

The necessary funding for the implementation of the Malaysia Energy Efficiency

Action Plan will be limited to seed capital that will enable the private sector to invest

in energy efficiency technologies and projects. Funding is budgeted for two main

purposes: a) Administration of the plan including design of programmes and

campaigns, and b) Incentives as catalyst to implement energy efficiency technologiesand projects for the private sector.

The amount of funding necessary for the effective implementation of the Malaysia

Energy Efficiency Action Plan is about RM 104 million per year or RM 1,040 million

over the plan period. A total of RM 52 million from the public budget is needed for

the overall administration of the plan implementation. The funding from the

government will induce the private sector to invest in energy efficiency technologies

and projects in a magnitude of RM 9.5 billion. Figure 6 provides the breakdowns of

plan annual budget breakdowns. The funding and investment will lead to energy

savings with a monetary value of RM 14.6 billion, based on fixed 2010 prices and

tariffs. The public funding for the plan implementation will be sourced from the

Federal Government and the Malaysia Electricity Supply Industry Trust Account


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4.3 Action 3: Government Led Initiatives

Although the major impact from energy efficiency is envisaged to be from the private

sector, the role of government institutions and government-linked companies are

crucial for the successful introduction of energy efficiency initiatives. The

government can, through circulars, direct its institutions to practice energy efficiency

in its operations.

The government shall therefore be the pioneer in implementing internal policies for

purchase of energy efficient 5-star energy labelled appliances and equipment,

implement energy management and conduct energy audits in large facilities. This will

create a market transformation towards energy-efficient technologies and practices, as

suppliers will be encouraged to make energy efficient technologies and services

available in the market. This effort by the government will enable the private sector to

follow suit in a faster pace as the government will have been the ice-breaker in the

market.

4.4 Action 4: Capacity Building


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the energy efficiency initiatives are targeting market transformation towards energy-

efficient technologies, it is critical that local manufacturers upgrade and develop their

products to meet the highest degree of energy efficiency and play a major role in the

market. This will not only enable them to market their products in Malaysia, but also

improve the possibilities of exporting their technologies as energy efficiency is an

important parameter for buyers in the developing and developed world. This is also in

line with the governments policy on developing a knowledge based economy with

the development of more intelligent and advanced, green technologies.


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5. Key Initiatives

The identified key energy efficiency initiatives presented in the section 2.4 is further

elaborated in this section in terms of programmes to be implemented under the

National Energy Efficiency Plan over a period of 10 years. The programmes are

designed to ensure attention to the energy efficiency measures that are introduced for

the consumers and provide the necessary incentives to kick-start the introduction ofnew technologies and processes.

The programmes will mainly be funded by the private sector, as the capital

investments in energy-efficient measures are to be made by the consumers. The

programmes will encourage and enable the consumers to implement the measures by

promoting technologies and processes and removing market barriers such as

additional costs for energy-efficient technologies. As the market transformation

towards new energy efficient technologies takes place and more energy efficient

technologies become available the additional costs will be lowered, and this reduces

or eliminates the need for incentives.

5.1 Overview of Key Initiatives and Programmes


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Table 5: Key Initiatives

Key Initiative Description Programme

Savings

in 10 years

(GWh)

Energy Ratingand Labelling

- Star energy rating of

appliances and mandatory

labelling.

- Promotion of 5-star

appliance

- Rebates to purchase 5-star

rated appliances

Refrigerators 2,079

Air-conditioners 5,983

Ceiling and Stand Fans 645

Minimum

Energy

Performance

Standards

(MEPS

- Promotion of MEPS

Compact Fluorescent

Lamps3,056

High Efficiency Motors 934

Energy Audits in

Buildings and

Industries

- Support for energy audits

in commercial, industrial

and government facilities

- Implementation of low

cost measures and process

Large Commercial

Facilities1,565

Large Industrial Facilities 8,384

Large Government

Facilities927


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5.2 Key initiative 1: Rating and Labelling of appliances

Energy rating and labelling has been a key in the market transformation of household

appliances towards more energy-efficient models. It has been successfully applied

worldwide in Europe, USA, Japan, Australia, Thailand etc. for more than a decade

and has resulted in significant improvements in the energy efficiency of the

technologies. Energy labels allow the consumer to be informed about the energyconsumption of the appliances they wish to purchase. As the purchase decision for

electrical decision should be made on the basis of life cycle cost i.e. both the initial

purchase cost and the operational cost for electricity, it is necessary to have the

electricity consumption displayed on the products, so that the consumer can evaluate

the cost and compare both the purchase price and operational cost of various models

on display in the shops.


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voluntary label has been introduced in the market for refrigerators. The labelling can

be expanded to more appliances during the plan period, as experiences with the

market transformation by labelling the above types of appliances are evaluated.

Programme: 5-star Refrigerators

A programme to promote 5-star refrigerators is proposed. The programme will be

based on promoting the existing 5-star rating and label for refrigerators, which wasintroduced on a voluntary basis in 2005. The 5-star rated refrigerators are available in

the market, but their market share is still considered to be low, compared to

conventional refrigerators, which are rated as 3-star. The 5-star rated refrigerators are

more than 25% more energy-efficient than the average 3-star refrigerators. As nearly

all households in Malaysia own a refrigerator and this is often the appliance that

consumes the most electricity, if the household is without air-conditioners, then there

lies a high potential for energy savings by introducing more energy-efficient

refrigerators.

The programme will be targeting the sale of new refrigerators to transform the market

into more efficient models. In order to ensure that 5-star models are available in the

market, a rebate will be given to encourage buyers to choose the 5-star model over


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The programme will be designed to promote 5-star air conditioners by mandatory

labelling and a rebate will be provided for the purchase of 5-star models and to offset

the incremental cost. The rebate will create a market pull and transform the market to

make more 5-star models available in the stores. The rebate will only be introduced in

short campaign periods.

Programme: 5-Star Ceiling and Stand FansCeiling, stand and table fans are present in almost

all homes and many homes have 3-4 fans. The

Energy Commission has created an energy rating

standard for fans and 5-star fans are at least10%

more efficient than conventional fans. By

introducing mandatory rating and labelling, the

buyers will be kept informed about the energy

efficiency of the fans in the market.

The promotion will be a combination of advertisements as well as a rebate scheme,

where rebates are used to encourage buyers to choose 5-star fans and to offset the

incremental cost. The rebate will only be given over short periods to create a


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of CFLs. However, incandescent bulbs

consume about 5 times more electricity than

CFLs and only last about 1000 hours, whereas

CFL will have a lifetime of at least 6000 hours.

The extra cost of CFLs is normally paid back in

about 1000 hours, so this energy efficiency

technology is highly feasible.

The programme will phase out incandescent light bulbs by prohibiting their sales in

the market. By the middle of 2014, the sale and import of all incandescent light bulbs

for which there exist a CFL as an alternative will be prohibited. Until the ban becomes

effective, campaigns on energy-efficient lighting will be made to increase awareness

on the benefits of CFLs. This will allow the consumers and vendors to prepare for the

transition.

Phasing-out of incandescent light bulbs started in EU in 2009 and it is expected that

almost all incandescent will be off the market by 2012. Also, other countries such as

Australia, Canada and Philippines among others have announced bans on

incandescent bulbs.


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the period 2014, awareness and promotion campaigns will be carried out to inform the

industries about the benefits of energy efficiency motors (IE3) motors and the phasing

out of low efficient types (IE1). Similarly importers and manufacturers of motors and

equipment with integrated motors will be targeted for promotion and awareness

campaigns.

5.4 Key initiative 3: Energy Audits in Buildings and Industries

Energy audits include the mapping of a facilitys energy consumption in order to

identify areas where energy efficiency can be implemented. Energy audits are done

periodically.

Often the energy audit will reveal no-cost measures such as energy wastages fromequipment that is left on, but not being used or improvements in the processes that

leads to energy savings. The outcome of an energy audit is recommendations on

energy efficiency measures to be implemented and an evaluation of their costs and

benefits. Energy audits are typically done by external consultants with expertise in

energy auditing methods and the particular type of facility.


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The total requirement for auditors will gradually increase to 500 full-time auditors in

2020 and the work load will be maintained until the end of the plan.

The energy savings that can be expected from energy audits are at least 5% of the

total energy consumption of the installations concerned. Most of these savings are

derived from eliminating energy wastages and accelerated change of in-efficient

equipment which is beyond their economical and technical lifetime. Larger energyefficiency projects are not considered in the savings calculations but will most likely

also take place in many of the facilities which will significantly increase the savings.

Programmes: Energy Management in

Commercial, Industrial and Government

Facilities

Energy management is the day-to-day

monitoring and management of the energy

consumption in a facility. Programmes will

be initiated to mandate facilities to

implement energy management by

appointing an energy manager and prepare


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labelling programmes as it is expected that the facilities with energy management will

demand energy-efficient technologies.

5.5 Key initiative 4: Targeted Rebate and Support Programmes

The targeted rebate and support programmes are part of the

campaigns for introducing 5-star rated appliances and conducting

energy audits. In addition, it is planned to initiate a funding

scheme that will provide support to a number of prescribed energy

efficiency activities, so-called Standard Measures. Standard

Measures are technologies or projects that are pre-evaluated for

their energy savings and cost-benefit and the necessary amount of

support is assessed based on the payback period for the measuresand the incremental investment costs compared to conventional

technologies.

Standard Measures have been successfully applied in Denmark

and Thailand and allows effective procedures for promotion of

energy-efficient technologies and implementation. The typical


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Individual projects can also be considered. For these a case by case assessment is

conducted in order to evaluate the feasibility of the project and the amount of support

to be given. Standard measures will be introduced in 2014 on a trial basis for a few

selected measures and about 300 applications. In the subsequent years the Standard

Measures will be further expanded and support will be given to about 1500

application from 2018 and onwards.

5.6 Key initiative 5: Energy Efficient Building Design

The commercial sector consumes about one-third of all electricity in the country and a

large share of this is used in buildings for cooling, ventilation, lighting, appliances etc.

The future increase in energy consumption in the commercial sector will come from

new buildings. Therefore, a programme to ensure that these new buildings are

designed and built with consideration of energy efficiency is of high importance.

Surveys have shown that new buildings are consuming energy around 200-250

kWh/m2, which could be reduced to about 135 kWh/m2 by applying the Code of

Practice MS1525:2007 on energy efficiency and use of renewable energy for non-

residential buildings.


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6. Monitoring of the Malaysia Energy Efficiency Action Plan Progress

The implementation of the Malaysia Energy Efficiency Action Plan requires effective

monitoring by the Government. As the MEGTW overseas the implementation of the

Malaysia Energy Efficiency Action Plan and the the Malaysia Energy Efficiency

Action Plan Project Team executes the plan it is critical that the progress of

implementation is monitored periodically by the Data Management and MonitoringUnit of the Malaysia Energy Efficiency Action Plan Project Team. In this regard, the

annual planning and resources allocation for the Malaysia Energy Efficiency Action

Plan is prepared with clear indicators for the expected annual implementation target.

One of the key factors to promote energy efficiency improvement successfully is to

understand how energy is being used, and ways in which energy can be used more

efficiently. By understanding them, not only the energy efficiency improvement can

be done with great success but it will also help to monitor and evaluate the

performances in terms of energy efficiency improvements. To gain such an insight, an

appreciation of the many complexities which make up economic and social activities,

and the ways in which these interact is required.


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6.1 Energy Efficiency Monitoring Framework

The Malaysia Energy Efficiency Action Plan is aimed to address the challenges and

barriers surrounding the efforts to promote energy efficiency improvements. The

earlier draft of this document was reviewed by a group of energy efficiency experts

from Asia Pacific Economic Cooperation (APEC) under the APEC Peer Review on

the Energy Efficiency Policy (PREE). In its review report on the Malaysia EnergyEfficiency Action Plan, PREE has made strong recommendations for the Malaysia

Energy Efficiency Action Plan to have a monitoring framework. The recommendations

made by PREE are:

1) Develop a set of energy efficiency indicators for economic sectors and sub-

sectors;

2) Carry out factorisation techniques on the indicators to remove the non-energy

factors as well as to create economy-wide indicators by aggregation;

3) Define the data needs, energy data, economic data, according to the energy

efficiency indicatorsneeds;


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6.1.1 Energy Efficiency Indicators

One of the main challenges in executing energy efficiency strategies and action plans

effectively and efficiently is to quantify the achievements from the available data. To

make this happen, one of the useful tools in energy efficiency implementation is the

energy efficiency indicators. In general, an energy efficiency indicator is a ratio to

measure energy use against a unit of output. In the industrial sector, for example, themeasures are normally energy use per Ringgit of production or energy per physical

unit of production. In the building sector, energy intensity is expressed in terms of

energy per square metre of floor space and in the transport sector; energy intensity is

measured in terms of energy use per passenger-km or energy use per ton-km.

At sub-sectors level, energy intensity is defined as the ratio of energy use per unit of

activity. Thus, if Eitis the energy use for sub-sector i and Ait is the activity for sub-

sector i, the sub-sector intensity is defined as:-

it

it

itA

EI

When two or more sub-sectors for which the activity is measured on a common basis


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Where, Activity index shows the changes in the level of activity, Structure index

shows the effect of changing economic structure and Technical index shows the effect

of technological improvement.

Index factorisation analysis has been adopted internationally as one of the best tool to

study the impacts of economic structure, activities and energy technologies on energy

use. For energy efficiency index factorisation, the arithmetic mean Divisia indexmethod has been the often used index factorisation. The Divisia index is a weighted

sum of logarithmic growth rates, where the weights are the components share in the

total value, given in the form of a line integral. It allows a decomposition of the

percentage change in energy use into separate changes in total activity, economic

structure, and energy intensity at the sub-sectors level.

6.2 Reporting the Malaysia Energy Efficiency Action PlanImplementation Progress

The Malaysia Energy Efficiency Action Plan Project Team needs to report the

progress of the Malaysia Energy Efficiency Action Plan implementation as one of the

Malaysia Energy Efficiency Action Plansmain monitoring tools. In the reporting, the


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FINAL DRAFT

7. Annex 1: MEEAP Summary Table

Item Unit Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Lifetime

Annual Savings GWh 260 829 1,685 2,678 4,007 5,380 6,778 8,201 9,650 11,125 50,594 121,178

Residential GWh 24 75 195 337 528 735 948 1,167 1,393 1,625 7,028 22,023

Commercial GWh 54 170 354 585 978 1,388 1,804 2,227 2,657 3,095 13,314 38,040

Industrial GWh 172 553 1,064 1,644 2,347 3,062 3,787 4,524 5,273 6,034 28,460 60,228

Cumulative Savings GWh 260 1,089 2,774 5,452 9,460 14,840 21,618 29,819 39,468 50,594 50,594 121,178

Demand Savings MW 42 135 275 437 654 877 1,105 1,337 1,574 1,814 1,814

Capacity Savings MW 53 169 343 546 817 1,097 1,382 1,672 1,967 2,268 2,268

Benefits RM (Mill ion) 78 249 505 804 1,176 1,562 1,955 2,355 2,764 3,180 14,627 33,991

Public Funding RM (Mill ion) 46 74 94 97 110 111 112 113 114 116 988 988

Private Funding RM (Mill ion) 112 294 486 617 1,065 1,101 1,119 1,138 1,157 1,177 9,518 9,518

Administration RM (Mill ion) 4 4 5 5 5 5 6 6 6 6 52 52Total Payments RM (Mill ion) 162 373 585 719 1,181 1,217 1,237 1,257 1,277 1,299 10,558 10,558

BCR 1.4 3.2

Cash Flow RM (Mill ion) 84- 124- 80- 84 5- 345 718 1,099 1,486 1,881 4,069 23,433

Total fuel savings TJ 2,760 8,734 17,144 26,857 39,923 53,175 66,402 79,606 92,793 105,964 493,358 1,181,654

Gas Savings TJ 1,656 5,241 10,286 16,114 23,954 31,905 39,841 47,764 55,676 63,578 296,015 708,992

Coal Savings TJ 1,104 3,494 6,858 10,743 15,969 21,270 26,561 31,843 37,117 42,386 197,343 472,661

GHG savings ktCO2eq 212 670 1,316 2,062 3,064 4,082 5,097 6,111 7,123 8,134 37,870 90,704

BAU GWh 110,544 117,177 124,207 131,660 139,560 147,933 156,809 166,218 176,191 186,762NEEMP GWh 110,284 116,348 122,523 128,982 135,552 142,553 150,031 158,017 166,541 175,637

Savings Pct 0.2% 0.7% 1.4% 2.0% 2.9% 3.6% 4.3% 4.9% 5.5% 6.0%

neeap for comments final january 2014

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