renewable energy guideline on small hydropower project ... · the re guideline aims to document the...

E-Guidebook, 1st EditionSeptember 2016

Renewable Energy Guideline on

Small Hydropower Project Development in Malaysia

Up to 30 MW

Implemented by:

Disclaimers

RE-Guidelines for Small Hydropower development in Malaysia are developed by Renewable Energy Support Programme for ASEAN (ASEAN-RESP), a jointly implemented project by

ASEAN Centre for Energy *ACE) and GIZ. ASEAN-RESP is a regional project implemented on behalf of Federal Ministry for Economic Cooperation and Development (BMZ).

Highest effort has been given to ensure and maintain accuracy of the Guidelines. Regulations and procedures for RE project development in Malaysia are complex, include numerous

actors and are likely to be changed or updated over time. It is therefore not possible to cover all aspects and eventualities of RE project development with these Guidelines. Highest

efforts have been made to maintain the accuracy of existing processes however, GIZ and its implementing partners cannot be held responsible for any error and misuse of the

Guidelines. The Guidelines shall not, in any case, replace or be used instead of existing laws, regulations and official guidelines issued by the relevant authorities in Malaysia.

Imprint

Authors

Ir. Shan Suleiman, Khairunisa Shan (SSM Associates, Malaysia)

International Consultants

Jan Benjamin Spitzley (Eclareon, Germany), Dr. Matthias Eichelbrönner (E.Quadrat, Germany)

Editors

Ms. Azah Ahmad (SEDA), Arne Schweinfurth, Thachatat Kuvarakul, Dr Anant Shukla, Ms. Maria-José Poddey

Design & Layout

Thachatat Kuvarakul, Stephanus Widjanarko, Intan Cinditiara (GIZ)

Publisher

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in a joint initiative of:

Sustainable Energy Development Authority Malaysia (SEDA)

Renewable Energy Support Programme for ASEAN (ASEAN-RESP)

ASEAN Centre for Energy (ACE) under Renewable Energy Support Programme for ASEAN (ASEAN-RESP)

Kuala Lumpur, September 2016

www.ssmassociates.com.my

www.eclareon.com

www.equadrat-gmbh.de

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Foreword

Page 1/4>

2011 was a transformative year for the development of renewable energy in Malaysia

with the passing of the Renewable Energy Act [Act 725] and the Sustainable Energy

Development Authority Act 2011 [Act 726]. This in turn ushered in the establishment of

the Sustainable Energy Development Authority (SEDA) Malaysia.

As a statutory body under the direct supervision of the Ministry of Energy, Green

Technology and Water Malaysia, SEDA operates under 5 strategic thrusts as meted out

in the National Renewable Energy Policy and Action Plan (2010) and is primarily

responsible for sustaining the renewable energy agenda in the country. The core

function of SEDA concerns the implementation of the Feed-in Tariff (FiT) mechanism as

a means to foster growth in the nation’s renewable energy (RE) market.

SEDA recognises the potential of small hydro and thus includes it as one of the

resources under the FiT portfolio. The strength of small hydro lies in the maturity of the

technology, and as the cost of harnessing said technology is marginal, small hydro has

the potential to provide electricity at a very reasonable rate. Moreover, small hydro is a

clean form of electricity generation, and being small means minimising one’s ecological

footprint. Not only that, hydro systems also possess a high capacity factor, as well as

the potential to help balance the energy market.

Sustainable Energy Development Authority (SEDA)

Malaysia

Ms. Catherine Ridu

Chief Executive OfficerSEDA Malaysia

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Foreword

In order for the small hydro market to grow, it is important to develop soft infrastructure

such as human capital to support the industry. In this regard, SEDA is also responsible for

providing a conducive environment as a means to support sustainable development of the

small hydro industry; this includes providing competency development training for small

hydro industry players. SEDA also holds workshops and dialogue sessions for its

stakeholders to ensure transparency on the administrative procedures that uphold the

good governance practiced at SEDA Malaysia.

As such, SEDA Malaysia supports the ASEAN Centre for Energy (ACE) and Deutsche

Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in their joint effort to develop

this Renewable Energy Guideline on Small Hydropower Project Development in Malaysia

up to 30 MW.

As Malaysia is one of the active members supporting the ASEAN RE agenda, we hope

that this guideline will help deepen the talent pool regarding the development of small

hydro systems both in Malaysia and around the ASEAN region. We hope this guideline

will be beneficial to all potential developers and investors aspiring to develop small

hydropower projects in Malaysia.

Ms. Catherine Ridu,Chief Executive Officer, SEDA

Page 2/4

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Foreword

Page 3/4

Dr. Sanjayan Velautham

Principal Advisor ASEAN-RESP, GIZ

Malaysia, as one of the front runners in terms of renewable energy (RE) technology implementation

in ASEAN, aspires to achieve targets laid down in the ASEAN Plan of Action for Energy

Cooperation (APAEC) 2016 – 2025, i.e. 23 % share of RE by the year 2025 in ASEAN Energy Mix.

In addition to promote increased share of RE in total energy mix, Malaysia aims to reduce

greenhouse gas emissions by 45% of GDP until 2030, based on the levels of 2005.

Malaysia incorporated RE as early as 1980 with the introduction of Solar Photovoltaic System for

rural electrification. After 21 years, RE was formally adapted in April 2001 under the Five Fuel

Policy with the 8th Malaysia Plan. In 2011, Malaysia established the National Renewable Energy

Policy and Action Plan (NREPAP), which enabled acts viz. Renewable Energy Act 2011 and the

Sustainable Energy Development Act 2011. This resulted in the introduction of Feed-in Tariff (FiT)

and other measures to promote the use of RE.

Successively, Malaysia introduced various financial incentives and strategies such as the FiT

mechanism, Green Technology Financing Scheme (GTFS), Facilitation Fund from TERAJU,

UKAS/PPCU and Pioneer Status/Investment Tax Allowance among others.

The Renewable Energy Support Programme for ASEAN (ASEAN-RESP) - a jointly implemented

programme by the ASEAN Centre for Energy (ACE) and the Deutsche Gesellschaft für

Internationale Zusammenarbeit (GIZ) GmbH on behalf of the Federal Ministry for Economic

Cooperation and Development (BMZ) - is actively supporting ASEAN Member States (AMS)

through various measures. These measures include capacity building, training and Focus Group

Discussions with stakeholders and actors in both the region and worldwide. One such activity is to

streamline the procedures for permitting/approving projects in AMS. In this direction, the

Sustainable Energy Development Authority (SEDA) of Malaysia and ASEAN-RESP have

developed this RE Guideline on Small Hydropower (SHP) Project Development in Malaysia. This

guideline presents an overview of steps involved in the implementation of SHP projects.

>

Executive DirectorASEAN Centre for Energy

Maria-José Poddey

Joint Co-operation on ASEAN-RESP

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Foreword

Page 4/4

Dr. Sanjayan Velautham

The RE Guideline aims to document the existing permits and steps involved in the implementation

of SHP projects in Malaysia in an easy-to-use and concise format. The Guideline provides an

overview of the various steps involved and approval required from concerned departments or

authorities. The RE Guideline provides a means to improve, strengthen and further the

development of SHP in Malaysia. The RE Guideline intends to support the deployment of installed

capacity from presently 18.30 MW to 261.84 MW by 2019 under the FiT mechanism. An overview

of the procedures and steps involved will result in the increase of RE share in the total energy mix,

improved energy security, self-dependence on energy, as well as job creation in the ASEAN

region.

We are grateful to the Ministry of Energy, Green Technology and Water (KeTTHA), Malaysia and

SEDA for their insights and active engagement in the review and development of this Guideline.

We hope that this publication will help increase the understanding of the various permits and

procedures required for SHP project development in Malaysia, thus motivating various

stakeholders to be involved in SHP projects.

>

Ms. Maria-José Poddey

Principal Advisor ASEAN-RESP, GIZ

Executive DirectorASEAN Centre for Energy

Table of Contents

Small HydroPower (SHP)

in Malaysia

Page 8

Small Hydropower in

Malaysia

Potential of small hydropower for

electricity generation; framework for small

hydropower project development in

Malaysia; related regulations; market

condition …

How to use the Guideline

Page 205

List of Abbreviations

Page 203

Procedures: Step-by-step

Small Hydropower (SHP) in Malaysia

Page

15

Foreword

Page 3 & 5

About the

guidelines

Page 11

Procedure: Step-by-step

Small Hydropower in Malaysia

The process for developing a small hydropower plant in

Malaysia may be found in the Gantt’s chart and flow chart.

><

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Malaysia has considerable hydropower potential. There are around 150 river systems

in Peninsular Malaysia alone and approximately 50 systems in Sabah and Sarawak.

The total potential of small hydropower currently stands at 116.6 MW. As of 2012,

there are 58 small-scale hydropower plants in Malaysia. TNB Energy Services (TNB-

ES), a subsidiary of TNB, operates 30 small hydropower plants[1].

As of October 2014, the installed capacity of commissioned small hydropower plants

under the Feed-in Tariff scheme stood at 11.7 MW, resulting in the power generation

of around 73 GWh in 2013. However, based on the number of applications awaiting

approval the total installed capacity may reach as high as 209 MW in 2017[2]. Also of

note: the majority of the hydropower sites currently in use are located in the eastern

part of Malaysia.

In recent years the Malaysian government has sought to promote RE across the

nation. The concept and idea of a Feed-in Tariff (FiT) was proposed by the Malaysia

Building Integrated Photovoltaic (MBIPV note 1) Project as a potential policy to promote

the Malaysia RE Sector in 2004. In pursuit of said policy, extensive studies were

conducted, consultation workshops held and joint co-operation initiated with

international partners to draft a policy along with supporting mechanisms that best fit

Malaysia’s needs.

Background information

[1]: UNIDO: Small Hydropower World (www.smallhydroworld.org); [2]: SEDA 2014

Note 1: Malaysia Building Integrated Photovoltaic (MBIPV) Project was a joint initiative between the Government of Malaysia, the United Nations Development Program (UNDP) and Global Environment Facility to promote a nationwide and sustainable solar PV market in Malaysia. MBIPV was active from 2006 to 2010.

Page 3/5Malaysia Power Sector Small Hydropower

http://www.smallhydroworld.org/

><

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The National Renewable Energy Policy and Action Plan (NREPAP) was proposed in

2009 and adopted in April 2010. The NREPAP consists of five objectives:

To increase RE relevance in the national energy mix

To facilitate growth of RE sector

To ensure reasonable cost of RE

To conserve the environment

To enhance awareness on RE

Not long after, FiT was incorporated into the 10th Malaysia Plan in June 2010 and

later into the National Budget of 2011 for the first time. The RE sector gained a strong

foothold in 2011 when the Renewable Energy Act (Act 725) was passed. It

establishes the framework for RE project development under a FiT scheme. The

Sustainable Energy Development Authority (SEDA) was also established by the

SEDA Act (Act 726). SEDA is a special regulatory body under the Ministry of Energy,

Green Technology, and Water who administrate and manage the implementation of

the FiT mechanism under the RE Act.


Page 4/5

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The Feed-in Tariff for small hydropower projects is between sen 24, sen 25 and sen

26 (~ cent 5.88 US to cent 6.37 US), depending on the installed capacity. The FiT

duration meanwhile is 21 years. There is no digression rate (0%) for small

hydropower plants.


Page 5/5

Installed capacityFIT rate

(per kWh)

Up to and including 2MW 26 sen(US 6.37 cent)

Above 2MW and up to and

including 10MW25 sen

(US 6.12 cent)

Above 10 MW and up to

30 MW24 sen

(US 5.88 cent)

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About the Guidelines

In recent years, ASEAN Member States (AMS) have made a considerable effort to tap into the vast reserves of renewable energy

(RE) in the region. Several countries introduced feed-in-tariffs (FIT) or regulations for RE, as well as other supportive policies, for

example tax and customs exemptions or tax holidays.

Despite those efforts and some promising developments, a large scale market for RE applications has not yet been established in

the region. In particular, complex administrative procedures, a lack of transparency in the project cycle and permitting procedures as

well as insufficient access to financial resources are but some of the obstacles preventing an effective market and satisfactory

industry development.

The ASEAN RE Guidelines were developed to facilitate increased private sector activity and investment in the RE sector of the

ASEAN region. Since the confidence of project developers and investors is a prerequisite to boost region-wide RE deployment, the

provision of transparent project development and permit procedures is indispensable.

To this end, the Renewable Energy Support Programme for ASEAN (ASEAN-RESP), jointly implemented by the ASEAN Centre for

Energy (ACE) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, is devleoping a comprehensive, easy-to-

access and regularly updated online tool which includes complete information on ideal RE project development cycles in the

respective AMS. The ASEAN RE Guidelines:

highlight administrative procedures including requirements for project developers and/or investors;

list legal and regulatory provisions as well as necessary permits;

identify country-specific challenges for project development; and

Provide information on how to obtain financial closure.

The ASEAN RE Guidelines are designed as best as possible to meet the needs of project developers and potential investors, as well

as promote transparency and clarity in the RE projects’ pathway. The Guidelines explain in detail the various procedures and help

identify the risks associated with each step so that proper mitigation measures can be designed and put in place.

Page 1/4

ASEAN RE Guidelines This Guideline

>


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The ASEAN RE Guidelines were developed for different technologies and several ASEAN Member States. To promote RE

development, as a precondition a clear legal framework must exist, along with minimum market readiness. The ASEAN-RESP is

working closely with relevant organisations and projects in the respective member states in order to ensure quality, completeness

and accuracy of data.

A series of four ASEAN RE Guidelines have been developed and published in four ASEAN Member States: Indonesia, Malaysia, the

Philippines, and Vietnam.

Page 2/4

Indonesia

• Biomass/biogas

• Mini hydropower (up to 10 MW)

• Solar PV

Philippines

• Solar PV (small & large)

Vietnam

• Biomass

Malaysia

• Solar PV (small & large)

• Small hydropower (up to 30 MW)



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This guideline is one of three publications in the Malaysia series of the ASEAN RE Guidelines initiative. The other guidebooks in the

series are (1) small solar PV project development and (2) large solar PV project development. They are scheduled to be published in

2016.

The Renewable Energy Support Programme for ASEAN (ASEAN-RESP) identified regional and international consultants for the

development of the RE-Guidelines. This guideline (“Small Hydropower Project Development in Malaysia”) was developed

together with regional consultant SSM Associates Sdn Bhd and in close co-operation with Sustainable Energy Development

Authority (SEDA) Malaysia. The guidelines were reviewed by international consultants Eclareon GmbH and E.Quadrat GmbH, to

ensure that the locally-prepared content can be easily understood by foreign investors / developers.

The primary target groups of the guideline include project developers and investors who are interested in conducting studies of small

hydropower projects in Malaysia to determine the financial feasibility. It is also useful to bankers and policy makers. The objective of

these guidelines is to provide an overview of the processes; they were not written from the perspective of engineering, procurement,

and construction (EPC), engineering consultant, or equipment suppliers.

This particular guideline covers only grid-connected small hydropower projects with a capacity of up to 30 MW. Development of an

off-grid project is subject to different procedures and different technical details. That said, the procedures outlined in these guidelines

are for projects that seek to obtain a FiT as stipulated by the Renewable Energy Act 2011.

Based on the regulatory framework and different governing system, development of small hydropower projects in Sarawak need to

follow different laws and regulations; the procedures are also different. This guidebook covers the legal and regulatory framework in

the Peninsular Malaysia or Sabah areas only.

Page 3/4



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The guideline covers only grid-connected small hydropower projects with a capacity of up to 30 MW. Development of an off-grid

project is subject to different procedures and different technical details. The procedure outlined is for projects seeking to obtain a FiT

as stipulated under the Renewable Energy Act 2011.

Based on the regulatory framework and different governing system, development of small hydropower projects in Sarawak need to

follow different laws and regulations; the procedures are also different. This guidebook covers the legal and regulatory framework in

the Peninsular Malaysia or Sabah areas only.


Page 4/4

On-grid Off-grid

10 – 30

MW Above 30 MWCapacity

RE Project

Type

Included in the Guideline Excluded from the Guideline


2 - 10

MW

Location Sabah and

Labuan

Peninsular

MalaysiaSarawak

RE projects larger than 30 MW are

possible but need special approval

from the Ministry of Energy, Green

Technology, and Water (KeTTHA)

Sarawak is a state in Malaysia with a

higher level of autonomy. Therefore,

the laws and regulations differ from the

federal ones.

Up to 2

MW

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Construction and Installation

Note: The bar length on the Gantt's chart is not to scale. It should be used for qualitative comparison only.

Planning and Development

Financial

Closure

Operation and

Maintenance

Step 1

Step 7

Step 11

Step 2

Step 5

Step 8

Step 3

Site Selection / Evaluation

Support Mechanisms

Administrative Authorisation

Financing

Procurement and Construction

Testing and

Commissioning

Power Purchase Agreement

Step 9

Step 4

Operation & Maintenance

Electricity Production License

Step 6 Corporate Fiscal/Legal

Page 1/3 ><

Procedures: Step-by-Step

Gantt’s Chart Flow Chart Description


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Procedures: Step-by-StepSmall Hydropower Project Development in Malaysia

Site Selection

/ Evaluation

Step 1

Support

Mechanisms

Step 11

Step 2

Administrative Authorisation

Procurement and Construction

Step 7

Testing &

Commissioning

Step 8

Power

Purchase

Agreement

Step 3

Operation

and

Maintenance

Step 9

Corporate

Fiscal / Legal

Step 6


Construction and InstallationPlanning and DevelopmentOperation and

Maintenance

Financial

Closure

Electricity

Production

License

Step 4

Step 5

Financing

Page 2/3 ><


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Procedures: Step-by-Step

To develop a small hydropower project in Malaysia, project developers must first identify and select a suitable

site for building a small hydropower plant.

Concurrently, permission for grid connection must be obtained.

Typically, project developers establish a special purpose company (SPC) to develop, construct and operate a

small hydropower plant. The establishment of such a company must be done from the outset.

Several permits must be obtained from the government and relevant authorities.

A provisional license must be obtained from the Energy Commission, allowing a project developer to generate

electricity in Malaysia.

Financing must be secured from banks or financial institutions.

After the financial closure, procurement and construction may then proceed.

After completing construction of a small hydropower power plant, inspection and testing must then be

conducted.

After COD, operations at the small hydropower plant may commence.


Page 3/3


Overall OverallTOC Step Step

Step 1 | Site Selection / Evaluation

1-3

Appointment of

Technical Expert1-1

SSL (Gantt’s chart)

1-2

Detailed survey

Preliminary Survey and Preparation of Feasibility Study (FS)

Gantt’s Chart Flow Chart More Details…

Conditional sub-step

Mandatory sub-step

2-2

2-1 Power System Study (PSS)

Connection Confirmation Check (CCC)



Appointment of

Technical Expert

1-1

Preliminary Survey

and Preparation of

Feasibility Study (FS)

1-2

SSL (Flow Chart)

Detailed Survey

1-3

Gantt’s Chart Flow Chart More Details… 2-2

2-1 Power System Study (PSS)

Connection Confirmation Check (CCC)



>



><

Sub-step

DESCRIPTION

1-1

Appointment of Technical Expert

According to the regulatory framework of Malaysia, a professional engineer must prepare the project feasibility study (FS), along

with the supporting documents to be submitted to the Sustainability Energy Development Authority (SEDA). Therefore, as the first

step, the project developer/investor shall appoint a technical expert (who is legally able to provide professional engineering services)

to carry out the aforementioned activities.

Typically, a technical expert will be involved in the two stages of project development.

.

Description Documents Fee/Duration Regulations Page 1/7>

Pre-PPA Stage Post-PPA Stage

This is from inception of the project until a power

purchase agreement (PPA) is signed. The

responsibilities of a technical expert include the

following:

Preparation of the FS (Refer to Sub-step 1-2)

Assist the developer in preparing PPA document

Activities relating to Post-PPA or implementation

stage (explained separately in Sub-step 7-1).

Typically, the tasks of technical experts include the

following:

Detailed design of system

Tendering

Supervision of the supply and installation of

equipment and facility

Supervision of the testing and commissioning of

equipment and facility

The same technical consultant may be contracted for both stages.

Alternatively, different consultants may be contracted separately for

each stage. In the latter case, the developer must ensure complete

transfer of information.

References Challenges



><

Sub-step

DESCRIPTION

1-1


This sub-step details interactions between two businesses; there is no regulation governing the exact procedure. Typically, the

applied procedure to appoint a technical consultant could be as follows:

Project developer requests proposals from one or more potential consultants. A request for proposal (RFP) must be prepared.

Consultants submit their proposals. Typically, a proposal from the potential consultant consists of the following information:

Technical proposal - covering the scope and duties to be carried out by the consultant

Financial proposal - indicating the service cost and reimbursable costs

Project developer evaluates and compares the received proposals. A face-to-face negotiation may be arranged, allowing

detailed discussion on deliverables, timeframe, service costs, negotiation on scope of works and terms & conditions.

The developer makes a decision and notifies the winning consultant through a letter of appointment.

Contract between project developer and consultant is signed.

Description Documents Fee/Duration Regulations References Page 2/7Challenges

REQUIRED DOCUMENTS



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Sub-step


1-1

Page 3/7

Only one document is required for this stage: a request for

proposal (RFP). There is no uniform template for a request

for proposal document. Typically, it should consist of the

following:

Project background

Location of the project, possible RE technology

Scope of work and responsibilities of the consultant

Contract timeframe including crucial milestones

The contract duration is typically made until the signing of the

Renewable Energy Power Purchase Agreement (REPPA). In case

the developer/investor plans to use the same consultant for the post-

PPA phase, the consultant will be involve until the commissioning

and handling over of the completed installation to the

developer/investor

List of deliverables

Performance guarantee and warranty period

Description Documents Fee/Duration Regulations

Scope and responsibilities of the developer

This is to indicate what is excluded from the consultant’s scope and

covered by project developer.

Additional terms and conditions (T&C)

The project developer is required to share additional standard terms

and conditions with the hired consultant.




><

Sub-step

FEES / COST DURATION


1-1

Page 4/7Description Documents Fee/Duration Regulations

The fee for Feasibility Study can be found in Sub-step 1-

2. The professional fee for post-PPA activities ranges

from 1.5% to 2.5% of the capital expenditure (CAPEX)

As this sub-step is an interaction between the developer

and consultant, there is no specific timeframe for

finalising the contract.

However, expediting the contract finalisation will keep

project costs to a minimum and serve to limit any

unforeseen cost escalation.


RELATED LAWS AND REGULATIONS



><

Sub-step

§


1-1

Page 5/7

Regulation No. Name

Act

No. 138 Year 1967

Registration of Engineer Act

This act describes the role of Professional Engineer. According to this act, the feasibility study (FS) is deemed

“Professional engineering services” and must be performed by a registered professional engineer only.

Description Documents Fee/Duration Regulations References Challenges

REFERENCE DOCUMENTS / SOURCES



><

Sub-step


1-1

Page 6/7

Document name Description

SEDA Guidelines Guidelines and Determination of the Sustainable Energy Development Authority, Malaysia

This guideline can be downloaded from the official website of SEDA


CHALLENGES AND RISKS



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Sub-step


1-1

Page 7/7

Risk Details

Poor consultation services Engaging inexperienced consultants can lead to poor implementation of the scheme and

improper project planning.

Sunk cost Improper site selection may lead to negative results, e.g., the initial site identified cannot be

developed due to later findings, resulting in the need for the evaluation of more project sites.

This will ultimately inflate sunk costs.

Poor suppliers Unscrupulous suppliers and contractors may try to undermine the authority of and working

arrangement with the consultant. The developer therefore must make clear the scope of work

and deliverables with the consultant as well as the relationship with the suppliers and

contractors. Regular checks must also be conducted to maintain the quality of work and ensure

timely implementation of deliverables/activities.

Description Documents Fee/Duration Regulations >References Challenges



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Sub-step

DESCRIPTION RELATED AUTHORITIES


1-2

Page 1/7

Note 1: The submission of the FS to SEDA is done

during the Feed-in approval holder (FiAH)

application (described in Sub-step 3-2)

This sub-step outlines the processes for conducting a feasibility study (FS) for the

project. This must be done by the contracted consultant (Sub-step 1-1). The FS is to

be carried out to check whether the development of a small hydropower (SHP) project

is technically feasible and economically viable. The FS must be submitted to the

Sustainable Energy Development Agency (SEDA), Malaysia as a part of required

documents for the feed-in Approval Holder (FiAH) application (Sub-step 2-2) as

required by the SEDA Guidelines. The FS will be required by various Financial

Institutes as a basic document for financial closure.

In Malaysia, the Registration of Engineer Act (Act 138) considers the preparation of a

feasibility study (FS) as a “professional engineering service”. Therefore, it must be

performed by a registered professional engineer only.

Typically, a preliminary survey at the site must be performed in this sub-step as well.

This is to ensure that the actual site conditions are suitable for project development.

The project developer shall perform a desktop study and a preliminary site survey.

They will form the basis of the input needed for the feasibility study (FS).

Federal level Sustainable Energy

Development Agency (SEDA)1

– Review and evaluate the FS

State

government

-

Local

government

Local government office –Should be informed about the

survey

Description Documents Fee/Duration >Regulations References Challenges



><

Sub-step

DESCRIPTION

The scope of the preliminary survey should cover the following aspects, at minimum:

Check potential locations, accessibility and availability of:

Water intake

Waterway route

Powerhouse

Transmission route

Power injection point

Electricity demand and load patterns

General geological makeup / features of the site

Collecting other necessary input which will be necessary for the Power System Study (PSS) to be conducted later (see Sub-step

1-3)

A more detailed survey must also be completed but can be executed at a later stage (see Sub-step 1-4)


1-2

Page 2/7Description Documents Fee/Duration Regulations References Challenges




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Sub-step


1-2

Page 3/7Description Documents Fee/Duration

Technical Analysis

The technical analysis aspect of the FS should consist of the

following information / data as a minimum requirement:

Project description

A brief description of the project objective and intended output /

results.

Hydrology data of proposed project site

i.e. rainfall statistics, water discharge, flow duration curve, etc.

Geological assessment of the project site

Assessment of geological information and its impact on the operation

of the project and end user.

Installed capacity [kW or MW] and estimated power

generation [GWh] from the proposed project

Conceptual design

i.e. intake, waterway, powerhouse, electromechanical equipment,

transmission, interconnection facilities, etc.

Economic Analysis

The economic analysis, a vital component of the FS, should

consist of the following basic information / data:

Basic economic analysis, methodology and approaches

Cash flow calculation

Internal rate of return (IRR) analysis

For debt financing, IRR should be more than 10%. For equity

financing, IRR should be more than 12%.

Payback period calculation

For debt financing, expected payback period should be around 8

years. For equity financing, expected payback period should be

around 7 years.

Debt service coverage ratio (DSCR) calculation

DSCR should be kept above 1.3 at all times

Regulations References Challenges



><

Sub-step



1-2


The service cost for FS preparation and finalisation

(including associated preliminary site survey) depends

on proposed project location, project size, etc.

Typical ranges are:

Lower end RM 100,000

(~ USD 24,000)

Higher end RM 300,000

(~ USD 72,000)

Conduction and finalisation of the FS may take around 3

months. However, the duration of the Feasibility Study

depends on a variety of factors, including but not limited

to: viz. project size, technology opted, location, social

factors, etc.





><

Sub-step

§


1-2

Page 5/7

§

Regulation No. Name

Act

No. 138 Year 1967

Registration of Engineer Act

This act describes the role of Professional Engineer. According to this act, the feasibility study (FS) is considered as

“Professional Engineering Services” and must be performed by a registered professional engineer only.





><

Sub-step


1-2


Document name Description

SEDA Guideline Guidelines and Determination of the Sustainable Energy Development Authority Malaysia

This guideline can be downloaded from the SEDA website (www.seda.gov.my)

FiT Application form Feed-in Tariff (FiT) application form

This guideline can be downloaded from the SEDA website (www.seda.gov.my)


http://www.seda.gov.my/http://www.seda.gov.my/




><

Sub-step


1-2

Page 7/7Description Documents Fee/Duration >Regulations References Challenges

Risk Details

Poor FS Incomplete data and inexperienced consultants can lead to poorly prepared FS and

subsequently a refusal of proposal by banks.

Sunk Cost There is a risk of sunk cost for FS, third party soil survey costs to the project developer in case

it turns out CAPEX is too high for realisation.

Change of PSS Delays in completing the FS report due to various unforeseen challenges may affect the

completion of the Power System Study (PSS). Thus, investors are encouraged to engage a

PSS consultant at the earliest opportunity to ensure the power evacuation and required findings

can be determined to complete the FS in a timely manner.



><

Sub-step


Preparation of Power System Study (PSS)

1-3

Page 1/7

Federal level None

State

government The respective distribution

licensee (DL) – Review the application, nominate a PSS

consultant.Local

government

Description Documents Fee/Duration >Regulations References Challenges

After the project has been determined, the project developer must conduct a

Power System Study (PSS). The purpose of the PSS is to identify the feasible

interconnection options for the proposed development of the off-taker’s electricity

grid. It sets the technical and safety requirements for the interconnection and

operation of the RE power plant.

The PSS indicates the stability and load demand/absorption of the nearest viable

grid injection point. Load flow and a short circuit analysis are included as parts of

the study to ensure that the proposed scheme operation is within the limits set by

the electricity transmission/grid code.

According to Technical and Operation Rules (P.U.(A) 120) of the Renewable

Energy Act 2011, the PSS is required for projects with an installed capacity of 425

kW and above. Upon receiving approval by the respective Distribution Licensee

(DL), the Power System Study (PSS) is valid for one year. It can be extended by

another year upon approval from SEDA. The extension requires additional

payment of fees to the relevant authority. The PSS is a pre-requisite for an

application for Feed-in Approval Holder (Sub step 2-2).



><

Sub-step

DESCRIPTION

1-3

Page 2/7


The procedure to be followed for the sub-step Power Step Study is as follows:

1. The applicant submits application to respective DL; e.g., for areas which fall under TNB’s authority, the application shall be

submitted to the TNB Renewable Energy unit (RE TNB)

2. RE TNB (or DL) reviews completeness of the documents submitted and checks for the following:

a. Documentation is in order and proper: RE TNB (or DL) issues order to developer for payment of application fee

b. Developer pays required fees and submits proof of payment to TNB RE (or DL)

c. RE TNB (or DL) after verifying payment details, nominates PSS consultant

d. PSS consultant conducts Power System Study and submits report

e. The Power System Study is one of the main steps for ensuring the success of project development, and due care is required

for the success of the plant.


REQUIRED DOCUMENTS



><

Sub-step


1-3


The study focuses on the site conditions for a power system

and its demand and supply has two major requirements. The

following documents are to be prepared:

Scheme location and plan

Information on placing equipment and related plan

Proposed equipment configuration

Configuration of equipment to be installed along with their

configuration

Equipment parameters/characteristics

Various parameters of equipment which allow for making decisions of

the installed capacity and operation characteristics

Other technical and site information

Further to the above three aspects, any information which is relevant

to future development of project development may be stated at this

stage




><

Sub-step



1-3

Page 4/7

Note: The cost and duration data are based on market survey and an interview with project developer.

Description Documents Fee/Duration Regulations

The fees for the grant of a license are regulated by

SEDA, Malaysia and are fixed. The fees are charged

according to the size of the plant as given below:

Above 425 kW and up to 1 MW

(including 1 MW capacity)

RM 20,000

(~ USD 4660)

Above 1 MW and up to 10 MW

(including 10 MW capacity)

RM 40,000

(~ USD 9320)

Conducting a Power System Study (PSS) usually takes

around 2-3 months. However, several factors can

influence the length of duration, e.g., the project size,

applied technology, equipment availability in market,

location, etc.





><

Sub-step

§


1-3

Page 5/7

Detailed Survey

Regulation No. Name

Legal Reference:

PU (A) 120 RE

Electricity Supply Act 1990

P. U. (A) 120 RE (Technical and Operational Requirements) Rules 2014 of RE Act

2011 (Act)

Official Reference: TNB Transmission Grid Code

TNB Distribution Grid Code

TNB Technical Guidebook for the Inter-connection of Generation of Distribution

Network





><

Sub-step

1-3






><

Sub-step


1-3

Page 7/7

Challenges Recommendation

Validity of Power System

Study is limited

An assessment of situation and next steps is recommended to complete formalities related to

PSS.

Delays in performing PSS

may result in reanalysing

PSS

A pre-check of the situation and next steps is useful in ensuring timely submission of PSS.

Timely submission of PSS will enable timely interconnection of conditions and in identifying

location for the project.




><

Sub-step

DESCRIPTION

1-4

Page 1/5

Detailed Survey

The project developer must contract a licensed land surveyor to perform a detailed survey at the selected project site. In Malaysia,

only a licensed land surveyor may conduct the survey. The purpose of this survey is to identify the topography and contours of the

project site; this enables the project developer to identify potential locations for the facility and components. Identification of

boundaries of the site location, establishment of a profile of the surrounding area, and demarcation survey are parts of sub-step 1-3.

This survey aims to help in the development of a plan for the land acquisition process (Sub-step 2-4)

There is no regulation governing the procedure in this sub-step. It is up to the developer to select a suitable approach to arriving at

an agreement with a land surveyor. Typically, the procedures in identifying and contracting a land surveyor are as follows:

The project developer prepares the Terms of Reference (TOR) to define the scope of work and sends it to potential surveyors.

Interested surveyors submit a quotation to the project developer/investor. The quotation typically consists of the following:

Financial proposal

Detailed scope of work

The project developer compares the quotations received and selects suitable surveyor for the survey work. To officially appoint

identified surveyor, a letter of award shall be prepared and signed for documentation purposes.

Description Documents Fee/Duration Regulations Challenges >

REQUIRED DOCUMENTS



><

Sub-step

Detailed Survey

1-4

Page 2/5Description Documents Fee/Duration Regulations Challenges

The only document required for this stage is the Request for

Proposal (RFP). There is no uniform template for RFP

document. Typically, it should consist of the following:

Project background

Location of the project, possible RE technology

Scope of works and responsibilities of the consultant

Detailed tasks and expected results from the survey must be

communicated.

Contract timeframe including crucial milestones

Project deadlines and milestones must be communicated.

List of deliverables

Reports and necessary drawings, documents must be clearly

mentioned.

Other terms and conditions (T&C)

Additional terms and conditions necessary for a successful survey.



><

Sub-step


Detailed Survey

1-4

Page 3/5

Note: The cost and duration data are based on market survey and an interview with project developer.

Description Documents Fee/Duration Regulations Challenges

The service cost for conducting a detailed survey is not

regulated. This is based on the agreement and

negotiations between two private businesses. It depends

on a project’s size, the location to be surveyed, and

many other factors.

Typically, a project developer can expect the cost to be

between:

Lower range RM 250,000

(~ USD 60,000)

Higher range RM 400,000

(~ USD 95,050)

Conducting a detailed site survey usually takes around

2-4 months. However, several factors can influence the

actual duration and may lengthen or shorten it, e.g.,

project size, applied technology, location, etc.




><

Sub-step

§

Detailed Survey

1-4

Page 4/5

Detailed Survey

Regulation No. Name

ACT 486 Land Acquisition Act

National Land Code

Description Documents Fee/Duration Regulations Challenges




><

Sub-step

Detailed Survey

1-4

Page 5/5

Challenges Recommendation

Small hydro sites are usually

located in remote areas and/or

dense jungles. Thus the working

environment can be very

challenging and tough. This can in

turn lead to delays.

It is imperative to have experienced licensed surveyors who possess sufficient

manpower. It is also a good idea to engage them early on in the implementation process.

The project site and access to said site must be well informed for necessary planning and

co-ordination.

Local communities in some areas

may object to the surveyor

carrying out surveys.

Engage with the local communities early on. Preferably, initial site visits can be co-

ordinated on by respective local officials. Joint briefing and presentations on the benefits

of the project and work to be carried out may also be shared with the affected

people/local communities.

Conflicting interests in land rights

or instances where land sought

cannot be acquired.

To avoid such situations, a thorough check must be conducted during the initial phases of

the Feasibility Study.


Step 2 | Administrative Authorisation

FCSSL

CFL

ADM

EPL

GCP

PCN

PPA

OPM

GCC

FIN

CFL


State Economic Planning Unit (EPU) Consent

Applying for Feed-in Account Holder

Local Authority Approval

Land Acquisition Process for Government/State Land

2-1

2-2

2-3

2-4

ADM (Gantt’s Chart)


Conditional sub-step

Mandatory sub-step

2-5Water Right Agreement


FC


State Economic

Planning Unit (EPU)

Consent

Local Authority

Approval

Water Right

Agreement (WRA)

2-1 2-2

Land Acquisition Process

for Government/State Land

2-3

ADM (Flow Chart)


2-4

Applying for Feed-in

Account Holder

2-5



>



><

Contd …….

Land Acquisition Process for Government/State Land:

Land acquisition approval is usually given by the state authority as it is unlikely for the Central/Federal Government to own land in

rural or remote areas. Applications must be submitted to the relevant state authority; the review of documents is performed by the

district government. Final approval and compensation values are given and determined by the State Executive Committee (EXCO).

Water Rights Agreement:

The water rights agreement (WRA) related to the payable water royalty and the environment/land use protection obligation of the

state. It is a legally binding document between the state and the project developer.

Step Description Page 2/2



><


Sub-step

2-1


Page 1/6

This sub-step is for obtaining state consent for the right to develop a small

hydropower project. As river and water rights are under the jurisdiction of the state,

such consent is required when applying for feed-in approval holder (FiAH) with SEDA

(see Sub-step 2-2).

This step is usually performed in parallel with the Water Right Agreement (WRA)

(Sub-step 2-5). However, in some states, the WRA will be issued as part of the EPU

consent.

According to the Act, the procedures are as follows:

Project developer submits the filled-out forms and all supporting documents to

the State EPU

Joint site visit is to be conducted at the project site

The developer delivers presentation to the development committee (chaired by

State EPU chief)

…

Federal level (none)

State level State Economic Planning Unit

(State EPU) – Evaluate the application, conduct a site visit,

issue a consent letter

Local Level (none)




><

DESCRIPTION

Sub-step

2-1

…

The State EPU sources comments and principal approval from the competent state technical departments

The State EPU issues a consent letter with conditional approval terms

In some states, the water rights agreement/terms are also given along with the EPU consent (Sub-step 2-5)


Page 2/6Description Documents Fee/Duration Regulations Challenges



><

Sub-step

REQUIRED DOCUMENTS

2-1


Note: The exact list of required documents can be different from state-to-state. The list provided in this guidebook is only typical documents usually requested by state EPU office.

The developer must check with the EPU office in the respective state for the exact list.


Filled-out application form

The form can be obtained from the relevant state EPU office

Layout plan of the project scheme

Project description / feasibility study (FS) including:

preliminary technical parameters

economic analysis

(refer to Sub-step 1-2)

Challenges



><

Sub-step


2-1


Note: Indicated fee in USD is only approximate based on the currency conversion of USD 1 = PHP 3.27 (as of October 2014)


The processing fee is calculated per location. It varies

from state-to-state (in some states, there is no fee).

Lower end No fee

Higher end RM 10,000

(~ USD 2,500)

Typically, this sub-step can take around 3 - 12 months.

The exact processing time depends on the state and the

completeness of the documents being submitted.

Challenges



><

Sub-step

REQUIRED DOCUMENTS

2-1


Regulation No. Name

Act 172

(1976)

Town and Country Panning Act (1976)


Challenges



><

Sub-step


2-1


Page 6/6Description Documents Fee/Duration Regulations >Challenges

Risk Details

Rejection from the State EPU The State EPU may reject applications at this stage after the developer has already invested

considerable time and money in conducting a preliminary study, e.g., feasibility study (FS), site

visit, PSS, etc.

Challenges Details Recommendation

Time-consuming

Procedure

The process of obtaining Economic Planning Unit

(EPU) consent may take longer than expected due to

unexpected issues, e.g., conflicts of interest among

several parties aiming to use the same project site for

different purposes (agriculture, mining, etc.)

Project developer should frequently meet

and discuss with the State EPU offices to

expedite approval / consent. It is

recommended that the developer assign a

dedicated team/persons to handle this

issue.

To follow-up on this challenge a dedicated

team may be assigned.



><


Sub-step

2-2

Apply for Feed-in-Account Holder (FiAH)

Page 1/7

This sub-step is on obtaining a Feed-in-Account. An individual who is a citizen of

Malaysia or a company which is majority-owned by a Malaysian or owned outright by

a Malaysian citizen can apply for a Feed-in approval certificate. The approved Feed-

in certificate can be obtained from SEDA.

The application for a Feed-in-Account can be applied for online by providing the

required information and also by submitting a hard copy of the filled-out form.

Required fees must be paid along with the application form.

Valid proof of payment for a FiAH certificate can be obtained from SEDA, provided

the application has been approved.

The final decision on approval is subject to available quota for FiT.

Holder of a Feed-in certificate is eligible to sell Renewable Energy at the Feed-in-

Tariff (FiT) rate as stipulated by SEDA as set out in the RE Act 2011.

Federal level Sustainable Energy

Development Authority

(SEDA), Malaysia

State level (none)

Local Level (none)




><

Sub-step

REQUIRED DOCUMENTS

2-2





Profile Registration Document

The latest audited accounts of the applicant

The memorandum and articles of applicant’s association

Form 8 (Certificate of Incorporation of Public Company) or

Form 9 (Certificate of Incorporation of Private Company) in connection with the Applicant under the Companies Act 1965

All Forms 24 (Return of Allotment of Shares) lodged by the applicant with the Registrar of Companies under the Companies Act 1965

The latest Form 49 (Return giving particulars in Register of Directors, Managers and Secretaries and change of particulars) lodged by the

applicant with the Registrar of Companies and a written confirmation from the company’s secretary on the current shareholding of the applicant

A Share-holding/Ownership Structure Diagram; detailing the shareholding percentages of each ultimate shareholder in the company

Copy of the MyKad of each individual shareholder in the company; or, a certified copy of Form 24 and 49 of each shareholder (if the

shareholder is a company) by the company’s secretary and confirmation letter from the company’s secretary confirming the list of shareholders

Certified copies of Form 24 and 49 of the company(s) where each ultimate shareholder has a shareholding percentage, direct or indirect

An extract of the company’s board resolution authorising the applying person to make present an application on behalf of the applicant and to

execute and submit all document in relation thereto

Challenges



><

Sub-step

REQUIRED DOCUMENTS

2-2





Profile of the applicant together with CVs of the Project management team

Submit hard copy of the Feed-in-Approval form and supporting documents:

Application Form

Declaration Form

Summary of the application according to template from SEDA

Certified Feasibility Study (by Professional Engineer)

Power System Study report and letter of approval from RE TNB/DL

List of FiA held by the applicant, both past and present

Documents supporting ownership of the site of EPU consent letter (Step 2-1)

Certificate of registration of each qualified person with the Board of Engineers, Malaysia as a Professional Engineer (Electrical)

Challenges



><

Sub-step

REQUIRED DOCUMENTS

2-2





Projects requiring loan from bank or financiers are to be supported by the following documents:

Financing agreement with the entity(ies) that will provide or has provided financing to the applicant for the

project, or

Letter of intent/offer letter(s)/financing term sheet(s) from the entity(ies) that will be or has/have provided

financing to the applicant for the project

For self-financed projects, relevant documents confirming the financial capacity (e.g., bank account statement showing credit balance of at

least equivalent to the total capital cost of the RE installation)

For all cases, the applicant must show proof of funds of at least 5% of the capital expenditure in the form of liquid assets

Challenges



><

Sub-step


2-2


Note: Indicated fee in USD is only approximate based on the currency conversion of USD 1 = PHP 3.27 (as of October 2014)


The processing fee is decided by SEDA and must be

paid to SEDA Malaysia

Processing Fees with each

submission

RM 1000

Earnest Money

Issued in the form of bankers cheque (RM

100/MW) and payable to SEDA. The

earnest money is reimbursable within 21

days upon issuance of result/s

RM 100 per MW

Typically, this sub-step can take around 2 weeks. The

exact processing time depends on the completeness of

the application form and supporting documents.

Challenges



><

Sub-step

RELATED LAWS AND REGULATIONS§

2-2



Regulation No. Name

Act 725 Renewable Energy Act (Act 725)

Act 726 SEDA Act (Act 726)


Challenges



><

Sub-step


2-2


Page 7/7Description Documents Fee/Duration Regulations >Challenges

Risk Details

Rejection from the SEDA SEDA may reject applications for FiAH due to non-submission of all documents. At this stage the

developer may have already invested considerable time and money in performing a preliminary study,

e.g., feasibility study (FS), site visit, PSS, etc.


Application rejected Application may be rejected due to non-conformity to

document requirements

A thorough check must be conducted

when preparing the application form

Large number of applications received by SEDA Timely application for FiAH along with

proper documentation



><

DESCRIPTION

Sub-step

2-3

This section describes the procedure for obtaining approval from the local authority(ies) for the physical construction of the power

plant. This approval is usually referred to as Development Order (DO). It grants planning permission with or without conditions for

any development specified in the order;

As this sub-step is about obtaining a permit from the local government, the exact procedure may differ slightly from state-to-state

(province). Some states have one-stop service agencies to handle the applications and permits.

In such cases, the project developer must submit an application to the State Department of Town and Country Planning. This

department serves as an One Stop Centre (OSC). It will co-ordinate with other involved agencies and departments to obtain all

relevant approval for remaining comments. In case any comment is provided, the developer must revise the document accordingly

and resubmit.

However, in states where one-stop service has not yet been implemented, the project developer must approach each individual

local authority in order to obtain the necessary approval.


Page 1/7Description Documents Fee/Duration Regulations References Challenges >



><

Sub-step

RELATED AUTHORITIES

2-3


Note:

Page 2/7

Central level (None)

Provincial level State Department of Town and Country Planning – Receive the application and supporting documents, co-ordinate with various agency to obtain their approval or comments (in case one-stop service system has already been implemented)

Other relevant authorities at the state level – Review the application, grant approval or comments

State Department of Environment (DOE)

State Mineral and Geosciences Department

State Department of Forestry

Local level Other relevant authorities in the local level – Review the application, grant approval or comments Land and Mining District Office

District Office (DO)

Public Work Department (PWD)

Drainage and Irrigation Department (DID)

Tenaga Nasional Berhad (TNB)

Indah Water Konsortium (IWK) - (Sewarage)

District Water Board Office

District/Town Council

Fire and Rescue Department




><

Sub-step

REQUIRED DOCUMENTS

2-3



The exact list of documents differ from state-to-state. All

drawings, plans, and reports must be properly endorsed by

registered professional engineers. Typically, the project

developer is requested to submit the following documents:

Filled-out submission forms

Layout plan

Contour plan for the project site

Proposed power plant development report or a

Feasibility Study report

Refer to Sub-step 1-2

Drainage report based on the Storm Water Management

Manual (MSMA) of DID

Hydraulic and Hydrology report



><

Sub-step


2-3


Note: Generally for small hydropower plant, the processing would sum up to be between RM 1500 and RM 2000 (~ USD 470 – USD 625) in total.


The processing fee is regulated by each state

individually. However, the developer can estimate the

fee based on the following:

Typically, the fee is calculated

from the project area

It is a one-off payment, for small

hydropower schemes this ranges

between RM 1500- RM 2000 (USD

350 – USD 450)

RM 0.10 per m2

(~ USD 0.03 per m2)

As there are several relevant permits needed for this

sub-step, it is difficult to determine an exact timeframe.

Typically, the entire process takes around 3 - 6 months.



><

Sub-step


2-3




Regulation No. Name

Act 172 (1976) Town and Country Panning Act

Act 138 (1967) Registration of Engineers Act

Uniform by-laws as notified from time to time and location specifics



><

Sub-step

REQUIRED DOCUMENTS

2-3


Page 6/7

Document Name Description

Standard forms Based on the state/province or local authority

Guidelines Based on the state/province or local authority




><

Sub-step


2-3



Page 7/7Description Documents Fee/Duration Regulations References Challenges >

Risk Details

Rejection from the

authority

Certain agencies may reject the small hydropower project, leading to additional delays. There is a

risk of sunk cost as a feasibility study and site survey may have already been performed.


Coordination with related

authority

Some agencies may give comments and

responses based on the normal urban

building requirement which may not be

applicable for SHP development

The project developer must engage with relevant

departments, through their technical consultants or

engineers, as early as possible. Some dedicated

presentations and discussions coupled with site

visits may be needed to facilitate the process.

Long lead time Long lead times during the approval process.

There is no clearly defined deadline on the

processing time for all authorities involved.

It is recommended to start the process early and

hold frequent meetings, communicate regularly and

hold follow-up discussions.



><


Sub-step

2-4


Page 1/7

Land acquisition approval is usually given by the state authority as it is unlikely for the

Central/Federal Government to own land in rural or remote areas. Thus, applications

must be submitted to the state authority. A review of the documents submitted is then

performed by the district government. Final approval and compensation values are

given and determined by the State Executive Committee (EXCO).

The applied procedure is as follows:

The project developer submits the demarcation/land acquisition plans (LAP) to

the state authorities using the standard application form(s)

Review of the plans performed by district offices. Comments and/or approval

will be submitted to the developer.

The developer reviews and amends drawings/plans based on comments

The revised documents are tabled at the EXCO meetings and approval given

with compensation values

Contd..

Related Authority

Central level (none)

Provincial

government

State Land/ Mining Office and

Forest Department

Local

government

District Land Office and Forest

Department




><

DESCRIPTION

Sub-step

2-4

…

The state authorities such as the Land/Mining office or the Forest Department notify the developer on the compensation

values

If the developer is not satisfied with the compensation amount, he/she can appeal to the EXCO





><

Sub-step

REQUIRED DOCUMENTS

2-4

Page 3/7


The exact list of documents required differs from state-to-

state. Typically, the project developer is requested to submit

the following documents:

Filled-out application form(s)

Demarcation plans or land acquisition plans (LAP)




><

Sub-step


2-4


Note 1: There may be additional fees for joint site visits for tagging and identifying forest trees/logs for compensation estimation.


The processing fee is regulated by each state

individually. However, the developer can expect the fee

to range between the following:

Lower endnote1 RM 1,500

(~ USD 412)

Higher endnote1 RM 5,000

(~ USD 1,374)

As several permits are relevant, it is difficult to determine

the specific time needed for this sub-step. Typically, the

entire process takes around 6 - 18 months



><

Sub-step


2-4




Regulation No. Name

Act 486 (1992) Land Acquisition Act (Act 486)

- National Land Code



><

Sub-step


2-4



Standard application forms

This form must be obtained directly from the state authorities



><

Sub-step


2-4



Risk Details

Unable to acquire the land The state may reject the project in this stage after considerable efforts have already been invested.


Time-consuming

procedure

This sub-step requires the most time, apart

from the construction period

To obtain approval as soon as possible, early

submission is imperative. It is recommended to

assign a dedicated team to handle and engage

various authorities and offices from the outset to

ensure a speedy process



><


Sub-step

2-5

Water Rights Agreement (WRA)

Page 1/3

A water rights agreement (WRA) is a legally binding document between the state and

the project developer pertaining to the payable water royalty and the

environment/land use protection obligation of the state. Sometimes, the WRA is given

when the state principal approvals are obtained (Sub-step 2-1).

The WRA is usually part of the state EPU approval for small hydro. However, in some

states, the WRA is to be performed separately but in parallel with the obtaining

process for the state EPU consent.

Description Regulations Challenges

Federal level (none)

State level State Economic Planning Unit

(State EPU) – Evaluate the application and grant the WRA

Local level (none)



><

Sub-step

REQUIRED DOCUMENTS

2-5


Page 2/3Description Regulations Challenges

Regulation No. Name

Act 171 (1976) Local Government Act (Act 171)

- Various state By-laws



><

Sub-step


2-5


Page 3/3Description Regulations Challenges


High fee The initial royalty rates may be a bit high and may

affect the economic viability of the scheme. The

comparative rate is set independently by each state

where SEDA does not play a role in regulating.

The developer is to appeal and negotiate

on the rate to ensure fair returns for both

parties

Step 3 | Power Purchase Agreement

FCSSL

CFL

ADM

EPL

GCP

PCN

PPA

OPM

GCC

FIN

CFL


Renewable Energy Power Purchase Agreement (REPPA)

PPA (Gantt’s Chart)

3-1



FC


Renewable Energy

Power Purchase

Agreement (REPPA)

3-1

PPA (Flow Chart)




>



><


Sub-step

3-1


Page 1/7

This sub-step covers the procedures for obtaining a signed Renewable Energy

Power Purchase Agreement (REPPA) from the Distribution License (DL).

The REPPA for small hydropower installations with a capacity up to 10 MW is

different from the REPPA for small hydropower installations with a capacity above

10 MW. REPPA for SHP on a larger scale (10 – 30 MW) has 2 critical differences

from the REPPA for SHP installations smaller than 10 MW. These are:

A delayed implementation of the SHP project without an approved extension

of time for COD will face liquidated damage (RM 1,000 or ~ USD 306) from

the off-taker (the DL). The liquidated damage depends on the duration of

delay and may be as high as 70% of the declared energy generation.

A SHP installation generating less than 70% of the declared average annual

energy (AAE) in the REPPA will be charged a penalty (the calculated formula

is given in the REPPA, also see note) The penalty may amount to a sum,

equivalent to up to 70% of the declared energy generation.

Note: The determination penalty is regulated. The

calculation formula is given in the REPPA. It is: LD =

DC x [ (0.7 x DAA) – MRE ] x 1000, where LD is the

sum in RM payable by the Feed-in Approval Holder

to the Distribution Licensee, DC is the prevailing

displaced cost (in RM/kWh), DAA = the Declared

Annual Availability (in MWh) of such Contract Year,

and MRE = the aggregate Metered Renewable

Energy (in MWh) generated by the Renewable

Energy Installation for every hour of each day


Central

government

SEDA

Provincial

government

(none)

Local

government

(none)



><

DESCRIPTION

Sub-step

3-1


Page 2/7

The applied procedures are as follows:

The project developer submits the documents to the respective DL

The DL reviews the completeness of the submitted documents

The developer and the DL jointly sign the Renewable Energy PPA (REPPA)




><

Sub-step

REQUIRED DOCUMENTS

3-1



Filled-out REPPA document

Form HP 1 – for small hydropower plant up to 10 MW

Form HP 2 – for small hydropower plant above 10

MW and up to 30 MW.

3 sets of REPPA are required. The standard form of REPPA can be

downloaded from the official website of the Sustainable Energy

Development Authority (SEDA) at www.seda.gov.my

FiAH certification

Refer to Sub-step 2-2

Supporting documents as appendices of REPPA

Description of the SHP plant

Description of interconnection facilities and the

connection point

Description of communication facilities

The list of appendices are according to the REPPA standard list

http://www.seda.gov.my/



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There is no fee for this sub-step This sub-step usually takes around 2 to 3 months



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Regulation No. Name

Act 725 (2011) Renewable Energy Act (Act 725)

Act 726 (2011) Sustainable Energy Development Authority (SEDA) Act (726)




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Guidelines and Determination of the Sustainable Energy Development Authority Malaysia

This guideline is known as “SEDA Guidelines”. It can be downloaded from the SEDA website (www.seda.gov.my)

Official REPPA form (Form HP 1)

Form HP 1 is for small hydropower plants of up to 10 MW. It can be downloaded from the SEDA website (www.seda.gov.my)

Official REPPA form (Form HP 2)

Form HP 2 is for small hydropower plants above 10 MW and up to 30 MW. It can be downloaded from the SEDA website (www.seda.gov.my)

http://www.seda.gov.my/http://www.seda.gov.my/http://www.seda.gov.my/



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