part 1: overview of cogeneration and its status in asia - Fire

Policy framework for promoting cogeneration 43
thermal energy used in the thermal process on an annual average must be at least 45 per
cent of the total energy from oil and/or natural gas (based on Lower Heating Value).
In case of the electricity being exported from a cogeneration facility to the power utilities, the
cogenerator will be qualified as a small power producer if the following criteria are met:
I. Electricity export capacity to utilities should not exceed 60 MW (this can be raised to
90 MW on a case by case basis)
II. The cogenerator must generate and supply electricity to the public utility during the
utility’s system peak months of March, April, May, June, September and October, and
the total hours of electricity production supplied to the utility must be no less than
7,008 hours per year.
The cogenerator is responsible for the cost of system interconnection which includes the
costs of the transmission and distribution systems, metering, protective devices and other
expenses arising from undertaking to purchase electricity from the cogenerator.
The cogenerator is also responsible for the cost of equipment inspection which refers to the
utility system and the expenses to be incurred from corrective actions that may arise in
addition to the normal practices of the utility.
If the electric export contract period is more than 5 years, the qualifying cogenerator can
obtain the capacity payment and energy payment based on long term avoided costs of
electric utility. Otherwise, the cogenerator can obtain only energy payment calculated on the
basis of short run avoided energy cost of utility.
Cogenerators are allowed to use electricity from the public utility as back-up power. In this
case, they must pay demand and energy charges to the utilities.
Cogenerators must be billed energy charges (Baht/kWh) at the same price as other
electricity consumers pay, but they pay only half of the demand charges (Baht/kW/month)
which are applicable to other small power producers.
In Malaysia, the energy policy is geared towards cutting down on the use of oil and
promoting the use of non-oil indigenous resources such as gas, hydro and coal. Major gas
infrastructure developments are being carried out and greater use of gas for power
generation is planned.
The Electricity Supply Act (ESA) of 1990 provides a legislative framework for regulating any
activity in the electricity supply industry in Malaysia. Together with any regulations that can be
made by the Minister (of Energy, Telecommunications and Posts) under section 53 of this
Act, it forms the regulatory framework for those who opt for cogeneration. 2 Benefits of
cogenerators under ESA are:
• Electric utilities must sell power to cogenerators’ facilities;
• Electric utilities must provide inter-ties with cogeneration systems, if requested by the
cogenerator;
• Electric utilities must operate in parallel with a cogenerator facility if the cogenerator
wishes to do so;
2 F. X. Jacob, “Development of cogeneration and its regulation in Malaysia”, National Seminar on
Energy for Future Generation, Malaysia, 1995.