KUALA LUMPUR (Jan 11): The government is understood to be assessing the reinstatement of the imbalance cost pass-through (ICPT) mechanism on the Green Electricity Tariff (GET) following the expiry of ICPT exemption at end 2022 for those who subscribed to the green energy tariff, which totalled 1,995 users presently.

The ICPT exemption, introduced during the launch of the GET as a temporary incentive to encourage adoption of the scheme, was implemented throughout 2022.

It is unclear whether the government will proceed with the implementation of the ICPT mechanism on GET starting this month, or to extend the exemption.

Details are still being drawn up, a spokesperson for the Ministry of Natural Resources, Environment and Climate Change said when contacted by The Edge. The Energy Commission, meanwhile, had yet to reply at press time.

Under the GET scheme, subscribers pay a surcharge of 3.7 sen/kWh to receive a Renewable Energy Certificate (REC), and be certified as users of renewable energy as proof of carbon emissions reduction efforts.

With the GET, carbon-conscious consumers without their own renewable energy installation can take up the grid's renewable energy quota to improve their ESG — environmental, social and governance — score. These consumers are also supporting further development of the local renewable energy sector, as proceeds from the surcharge will be used to support the nation’s RE development initiatives and agenda.

The scheme, first announced in late-2021, was implemented at the start of 2022. When it was rolled out, the GET surcharge of 3.7 sen/kWh was on par with the ICPT surcharge imposed on non-domestic users who did not subscribe to the GET.

However, under the new January-June 2023 (1H2023) ICPT surcharge — which has risen to up to 20 sen/kWh following a surge in prices of coal and natural gas used for power generation — a wide gap between the two surcharges has emerged.  

The ICPT mostly passes on price swings in fossil fuel used in power generation, aside from renewable energy displacement costs.

This raises the question as to whether subscribers to green energy in Malaysia should be exposed to the volatility of fossil fuel price swings when the source of the energy they use is not fossil-fuel based.

Meanwhile, it is unclear how much the tariff imposed by renewable energy plants, such as the hydro power dams, to the grid offtaker is.

In the solar space, the highest tariff under the Large Scale Solar 4 (LSS4) stood at 24.81/kWh. This is about the same as the energy price from the most expensive thermal plant currently, according to data from the grid offtaker, the Single Buyer.

It is learnt that the government is also looking at a periodic review of the GET surcharge to reflect costs related to renewable energy installation in the long run.

According to Tenaga Nasional Bhd's website, the GET initiative's 1,995 subscribers comprise both domestic and non-domestic users, with total subscriptions of 336.58 gWh per month.

Back to the 1H2023 ICPT surcharge of 20 sen/kWh, this is imposed on medium-voltage (MV) and high-voltage (HV) users as well as multinational corporations (MNCs). The surcharge is set at 3.7 sen per kWh surcharge on farmers and animal breeders as well as lower voltage (LV) non-domestic users such as micro businesses. Domestic users receive a rebate of 2 sen/kWh in the period.

On top of the GET and the ICPT tariff surcharge (or rebate), electricity tariff in Malaysia includes a base tariff of 39.95 sen/kWh, which takes into account transmission grid operations and capital expenditure, returns on regulated asset base under Tenaga Nasional Bhd, and power purchase cost charged by power plants to the grid. The base tariff is reviewed every three years.