Solar energy quota awards look above board

I am Em Law, a Canadian-Malaysian with hands-on experience and track record in the renewables industry. I was in Malaysia the week of July 10 when it was first alleged that there were unfair human manipulation within Seda and Green Technologies Ministry in the award of solar PV licences to 12 companies where the controlling shareholders were Suliana Mohd Sidek (daughter of newly-appointed Petronas chairman Mohd Sidek Hassan) and her husband Todd Michael Morath.

It was highlighted that these companies controlled 45.9MW or 32.4 percent of the total 150MW quota to produce solar energy generated electricity via the Feed-in Tariff (FIT) mechanism managed by Sustainable Energy Development Authority of Malaysia (Seda).

When this article surfaced, I received calls from many personal and business Malaysian friends who asked for my opinion. They were all aware that I had initiated the ReVision Energy Partners Group and that I have been flying back and forth Canada to Malaysia this year with an aim to be a champion in Malaysia's renewables roadmap and to progress ReVision's goals in this renewables space.

I told my friends point blank that it was totally untrue what had been reported and suggested. I must first point out that I have been away from Malaysia for a very long time and am not politically inclined to any party.

I have always been an anak Malaysia at heart awaiting for the right opportunity to come back to Malaysia to contribute positively. The renewables journey that Malaysia wishes to embark has given me this chance.

In my opinion, the fact that things are being said without knowing what you do not know can be dangerous. What was disturbing to me was that many who broached this ‘hot news’ and subject with me during that week when the article first surfaced had such strong mindset that what was insinuated was the truth and further used that as a catalyst to become very negative in relating to me about other issues in Malaysia.

To calm them down, I asked them, “Do you know anything remotely about renewables or the Solar PV industry, how the FIT works, what are the government’s and Seda’s goals in implementing the FIT, why countries all over the world have FIT programs and what are their goals, how they administer their FIT and in particular the award process and why Seda chose the Online award system?”.

Obviously their answer was, “No”. And frankly, there is nothing wrong if my friends or many of my fellow Malaysians do not understand enough or want to spend time to understand the whole mechanism of FIT and the renewables industry because it is not every one’s cup of tea.

Moreover, with the limited time we have in our Lives, we will choose to focus on matters that have direct impact to grow and better our personal and career/work lives. So for many, they do not have time for renewables and/or the FIT programme.

If this is the case, we should then think more deeply when we want to question and/or raise very damaging accusations on a subject that we have limited or no knowledge of. How can we do this if we do not even know what we do not know.

Online system unbiased

Two things were highlighted; first was that there seemed to be unfair award of contracts laced with human manipulation/intervention and secondly, that the solar licences were awarded to companies that have no solar experiences.

Since the beginning of this year, I have been interacting with many stakeholders of the renewables industry in Malaysia which includes the end-to-end supply chain. I have taken great length to find out and understand in depth Malaysia’s FIT Programme, its goals and its implementation strategies and processes.

For a start, it is a fact that our online system is totally unbiased and non-humanised. As long as the individuals and companies meet the requirements, technically and financially (parameters that can be possibly set within a computer system), on a first-come-first-served, they will be successful with their applications provided there are quota for that renewable source.

In Canada (which is on a manual system), when I was the vice president of MKI, we were consultants for a German company who were interested in being a renewables independent power producer in Canada. Our German client was awarded 10 wind projects from 10 separate applications, ranging from 10MW to 20MW so his companies secured a total of 110MW.

He was successful because the companies met all the stipulated requirements. In Ontario’s FIT implementation, amongst other differences with Malaysia’s FIT, there is no requirement of local shareholding (Malaysia requires a 51 percent Malaysian shareholding). It was also a non-issue for the Ontario Power Authority (OPA) that the companies that our German client had set up to apply for the power purchase agreements were brand new or what I term as “special purpose vehicles”.

In Canada, on a high level brief, after award, the proponents with their projects then goes into the implementation phase and are regulated through the checks and measures aligned to project milestones within the entire FIT Framework managed by OPA. At the end of the day, what we have to note is that the successful proponents (or licence holders as are called in Malaysia) are required to put money on the table to do this business and that is the thing that people forget.

Companies who get the projects have to put out huge capital, it is not about just sitting down, doing nothing with no capital and getting free money. If a proponent does not meet a requirement or a milestone within a stipulated time, it will be in default of the terms of the award and OPA has the right to revoke or take measures it deems fit.

Suliana ‘astute businesswoman’

On the subject of Suliana Mohd Sidek having separate companies to apply for the solar licences, in my opinion, that is how projects are done. One sets up a so called “special purpose vehicle” for each project so that all financial accounting is separate and more transparent; also due to huge capital costs, there may be different business partners for each project. To me, this is a normal business approach and practice.

Now superimposing that on what was ‘insinuated’, in my opinion, if there is anything that is true, it is to acknowledge that Suliana Mohd Sidek is an astute business woman who has identified the solar energy industry as a sustainable and growing industry in Malaysia and therefore wants to diversify into this space.

The fact that she set up separate companies to progress this is a business model and it is her prerogative to do this. Her companies competed, got ready the applications, complied with Malaysia’s FIT rules and succeeded.

In fact, I told my friends that all Malaysians were at full liberty to do the same. There should not be unfair restriction to only qualify certain stereotype, company or individual that can start this business and just because she is the daughter of a high profile corporate person does not mean she cannot compete on common ground and succeed.

In fact, unlike what was pointed out, Cypark Resources Bhd secured an equal giant share of the total solar quota, similar to Suliana’s companies. However, unlike Suliana, the companies that Cypark structured to apply and successfully obtained the solar licences had different shareholders in each of the company.

However, again, this is immaterial, what is relevant is how the online system was set up to process applications, the set rules and terms, the check and measure system in monitoring the project milestones to ensure compliance as well as meeting the main goals of the renewables journey for Malaysia.

I have read the rules since ReVision and I are here to stay, to get our hands dirty, no pun intended, to hopefully secure some success, thereafter build and operate quality solar farms. Seda has put in checks and measures in a set of milestones that can result in the solar or other renewables licences being revoked for non-compliance.

On the subject of solar experience, it was suggested that only companies with solar experiences should be awarded. The fact of the matter is that renewables in Malaysia is an emerging industry and if that was to be the criteria, then 99 percent of all Malaysian companies and individuals who applied in the FIT Program will not qualify.

This is a journey for all Malaysians and we will learn together. Even Cypark and Petronas did not possess good knowledge of developing, building and operating solar PV plants when they applied for the FIT but kudos to them for diversifying into this industry. We need to grow a big resource pool of competent companies and individuals to help Malaysia progress its renewables goals and to then reach out to other Southeast Asia countries.

In my opinion, the online system is in fact also a double edged sword because in striving to be so transparent and restrictive, the goal to progress solar PV energy projects and other renewables may be slower (this is also due to the small RE funding to progress renewables) than many other countries. Malaysia is the only country that has such a transparent online system, with strict rules and governance.

In Canada, it is a manual system and some companies get while others do not but the main goal with the Ontario government is the bigger picture - they want to progress renewables in a big way and secure successes. In Malaysia, the solar quota is only 50MW per year based on the small RE (renewable energy) fund but in Canada, it is 1,000s of megawatts, funded by a huge RE fund and supported by significant annual increases in our electricity bills.

To date, the Ontario Power Authority has awarded more than 4,000 MW of renewable power purchase agreements, mostly in solar and wind. Canada has attracted many multinational companies and individuals to progress its ambitious renewables roadmap.

It is also a fact that the main key driver of any renewables footprint requires strong political will. In Ontario, one of our main goals is to close off all the dirty, environmentally and health harmful coal-fired plants.

Ontarians in large do not view nor welcome fossil fuelled electricity generation as a sustainable and right solution and we are prepared to be part of the machinery (contributing via increases in utility bills) to start the journey to increase energy generation through renewables for the betterment of our future generations.

FIT a challenge

So in short, Seda, Fong, Peter Chin's ministry and the Malaysian government will encounter challenges to implement the FIT Programme, be it online or manual. I sincerely believe that they did it online with such aloof approach because they felt it was in the best interest of everyone, recognising the root of the "non-transparency questioning mindset" of many Malaysians but then with it comes a different set of challenges because it is a machine, not a human being so it cannot function to sift out all the nitty gritty information.

At the end of the day, the focus should be on the bigger picture and Seda’s goals for the FIT programme and the renewables industry in Malaysia. I am sure that one of the main goals is for Seda to ensure its aim of generating renewable energy in Malaysia is fulfilled.

Germany has been on this journey for more than 15 years, Canada into its fourth year and Malaysia is only entering its month eight so in baby terms, we are still crawling, and slowly taking our baby steps one at a time. When we find our footing, we will soar. In the European Union, it is mandated by law that by 2020, every EU country must ensure that 20 percent of its total electricity generation comes from renewable sources.

ReVision and I do not have a single project yet but this is not about us. I am a big advocator and supporter of renewables and if I have to be a ‘provocateur’ to help progress and pull more of my fellow Malaysians on this journey for the benefit of our future generations, so be It.

I may be only one individual and ReVision Energy Partners Group may be one Canadian-Malaysian entity progressing renewables in Malaysia but I will help in any way I can to contribute positively.

Likewise, ReVision will put its best foot forward to make a difference in the renewables space and way of doing business in Malaysia. Let us all work together to support Seda and the government in progressing renewables with a bigger footprint.

Industry player: Suzi an 'astute businesswoman'

Copies of this letter were sent to the Sustainable Energy Development Authority of Malaysia (Seda) and Energy, Green Technologies and Water Minister Peter Chin.