Challenges in Bioenergy
Project Rollout
in Malaysia
Presentation by
Ir. Mohamad Adan Yusof
Mensilin Holdings Sdn Bhd
27 April 2010


Urgency to develop national economic
models that incorporate climate protection
and biodiversity management as part of
strategies to alleviate global warming.
Imminent need to switch fast to renewable
energy to mitigate the impact of rising
fossil-fuel cost on the economy, as well as
avert the negative implications of
depleting mineral resources, on top of
reducing greenhouse gas emissions

The main appeal of renewable energy that it
does not cause pollution, can be derived from
abundance of byproducts / wastes generated from
palm oil and forest industries
 naturally replenishable resources such as solar,
wind, hydro, wave and geothermal heat, is


Electricity generation in Malaysia is still largely
dependent on fossil fuels - coal, oil
and natural gas account for around 85% of
total electricity generation in the country

Renewable resources make up only around 1%.
Major
drivers
Bad
experiences
Financing
•Price of RE electricity
•Always lagging project development costs
•Regulatory impediment
•DOE – different interpretation with different bosses
•Government subsidy removal U-turn
•Failed projects (biodiesel, biomass)
•Undermining overall confidence in bioenergy
•Underperforming projects and NPLs
•Economic upheavals strangle projects
•Banks have yet to develop an appetite for bioenergy
•Projects are undertaken by SME with poor credit worthiness
Price of RE
electricity –
PPA issues
Regulatory
impediment
•Always lagging project local development costs
•No economic case to support project financing
•Process of PPA is still long winded
•Bio energy cost increased due to escalation in transport cost
•Mismatch of expectation between financial Institution and small players
•DOE – different interpretation with different bosses
•Biomass projects are considered heavy industry and polluting – Not True
•Promotion by government negated by others – No coherent effort
•Government subsidy removal U-turn
•Government reinstated gas and petroleum subsidy Mar 09
•RE projects becomes less attractive and relegated
Failed projects
(biodiesel,
biomass)
Underperforming
projects and NPLs
Success stories
are limited
•Undermining overall confidence in bio energy
•Very few biodeisel manufacturers are making money
•Failed projects – tsunamied new initiatives
•Bio energy projects struggled to adapt to violent rapid changes
•Global economic upheavals strangled bio energy projects
•Lack of new capitals
•Large bio energy companies in Europe collapse with the recent economic crisis
•Banks very skeptical of bio energy projects
•Still a pipe dream
•Huge unleashed potential subdued
Banks have yet
to develop an
appetite for bio
energy
Projects are
undertaken by
SME with poor
credit worthiness
• Commercial banks are still unaware of potential
• Bioenergy poor performance has induced
negative perception
• Risks are amplified due to economic instability
• SME do not command large funds
• Banks are less merciful to SME (and so is DOE)
• Low credit rating means high financing costs
Growing market for CER and GHG emission trading
Demand for fundamental GHG projects growing
Spillover from China, Brazil and India
New players in the market seeking projects
Oil fluctuations and market realignment
New government polices on Green Technology
Opportunities – Emission Trading Market Exponential
Growth USD 164b in 2008
Growing market for CER
and GHG emission trading
Exchanges are sprouting to trade CER
Chicago Carbon Exchange – CCX
Tianjin Carbon Exchange
USA new administration pro GHG
market
Demand for fundamental
GHG projects growing
•Emission trading creates demand
•Fundamental projects are sought
after
•CER post 2012 are being contracted
•International funds seeking projects
Spillover from China, Brazil and India
Investors seeking new fields in south east
Asia
Growth in China creates new confidence
for Greenfield projects in Malaysia
Growing market for CER and GHG emission trading
Demand for fundamental GHG projects growing
Spillover from China, Brazil and India
New players in the market seeking projects
Oil fluctuations and market realignment
New government polices on Green Technology
Large Scale
Implementation
as a stimulus
package
Mainstream
RE into the
energy
portfolio
Provide funding
to projects – a
stimulus
package
Introduce GLC
led
implementation
Address
the
challenges
Economies of scale
• Implementation has
the opportunity to
reduce unit cost
Credit worthiness
•GLCs are readily
bankable
Major player and major
resources
•Proper implementation
agenda
•Policy & programmes
can be synchronised
Bioenergy from POM (major inherent
bioenergy asset)
•Integrated waste management system
•Biomass power – 5 Mwe
•Biogas power – 1 Mwe
•No of POM = 400
•Total distributed generation potential = 2,400
Mwe
•Investment per MWe = RM 10 million
•Total injection into rural economy = RM 24
billion
Impact of National Savings
•Avoided gas generation = 2400MWe x 8000h
•GHG reduction = 2400x8000x0.6 =
11,520,000 tonCO2e
•Savings from NG subsidy ; assuming 1kWh =
RM 0.30
•2400 x 8000 x 300 = 5,760,000,000
RM/year
•National Payback: 24/5.76 = 4.2 years
Rural Electrification
Rural Industrialisation
•Using bioenergy as a tool for
improving RE
•Anchor tenant – palm sludge diesel
•Small gasification plants for isolated
areas
•Distributing power from bio energy
centres
•Other tenants – cottage industry
•Supports the ECER, poverty alleviation,
Millennium goals, green technology
policies
Rural per capita income increased through employments created
Fabrication and manufacturing industry stimulated
Rural electrification objectives achieved
IHL research and development accelerated
Potential regional export for Bio energy technologies
MENSILIN HOLDINGS Sdn. Bhd
Main plant:
PLO 481, Jalan Besi
Kawasan Perindustrian Pasir Gudang
81700 Pasir Gudang, Johor D.T.
MALAYSIA
Tel .: +607 252 6235
Fax: +607 252 0237
Business office:
73, Jalan 7/132 Gasing Indah
46000 Petaling Jaya,
Selangor D.E.
MALAYSIA
Tel: +603 7785 0396
Fax: +603 7785 0397
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