MBIPV Project Brief

BACKGROUND AND CONTEXT1. Since independence in 1957, Malaysia has undergone tremendous growth and prosperity byshifting the economic activities from labor-intensive industries to energy and capital-intensiveindustries, particularly heavy industry. In recent years, Malaysia’s energy consumption hasincreased and become comparable to larger energy consumers worldwide. In 2002 the energyconsumption was 2.8 MWh per capita and projections show a significant increase in the energydemand. The electricity supply for the future demand is focused on coal and gas.2. However, there is a growing awareness and concern in the supply of energy particularly on theissue of carbon emissions and global warming. Under the Third Outline Perspective Plan (OPP3),the government is undertaking efforts to manage both non-renewable and renewable energy (RE)resources to cater for the demand of the rapidly growing economy. Furthermore, to supplementthe conventional supply of energy, new sources of energy such as renewable energy (RE) arebeing encouraged. Thus, the OPP3 has adopted RE as Malaysia’s fifth fuel resource, in additionto oil, gas, coal, and hydro.3. With the Malaysian economy coming out of the recent economic downturn (1997-2000) that hitthe ASEAN region, coupled with an optimistic medium term outlook of the Malaysian economy,future demand for electricity is expected to increase significantly. In the next years, the demandis forecasted to grow at an average rate of 6 to 8% per annum. System peak demand is forecastedto increase from 10 GW in 2000 to 15 GW in 2005 and 22 GW in 2010 for the peninsula. A totalof 10 GW of new generation capacity will be planted up and commissioned between 2003 untilthe year 2010, 6 GW will be coal fired power plants and the remaining 4 GW will be natural gasfiredpower plants. This additional coal and gas-fired generators (10 GW in total) will emit from2010, additional 34 million tons CO 2 (coal) and 8 million tons CO 2 (gas) per year! This will leadto a tremendous increase in GHG emissions, thus causing more serious problem to the globalenvironment.4. To mitigate the problem, Malaysia is increasing its efforts to promote renewable energy andenergy efficiency, especially in buildings. Malaysia has one of the fastest growing buildingindustries worldwide, where the corresponding energy demand would significantly increase inthe next coming years. Conducive conditions such as forecast increase in electricity demand,available building spaces and the huge untapped solar energy potential point clearly towards animplementation of the BIPV (building integrated photovoltaic) technology in Malaysia.Considering the synergies and benefits of BIPV application, the technology will have animportant and sustainable impact to the buildings market and is able to substitute part of theconventional fossil-fired electricity generators.5. The baseline scenario shows that currently, biomass is being actively developed as RE resourcedue to its availability. Other RE resource such as solar energy, in general, and solar energyapplications like grid-connected BIPV, in particular, has remained in the sidelines mainly due toits relatively high cost. In the case of grid-connected BIPV, there is a perception that thetechnology is ‘exotic’ and ‘unproven’ in Malaysia. Initial assessment indicates that the currentbusiness environment does not support widespread adoption of grid-connected BIPV technologyas a commercially viable RE technology in Malaysia, despite the fact that the BIPV performanceis better and the absolute energy cost is lower that those systems installed in Europe and Japan.Due to the present high initial price and lack of the enabling environment, the economics of theBIPV technology is unattractive. However, the technology price can only be reduced when there4

is a sustainable BIPV market. Unfortunately, a sustainable market cannot be established for aslong as the economics of the technology is unfavorable. Thus, it is a “chicken and egg” situation.6. Without appropriate activities in the establishment of an enabling environment for BIPV – bothfor the public and private sectors – the current state-of-affairs will undoubtedly lead touncoordinated efforts, characterized by no improvement in quality issues, policy and institutionaldeficiencies, inadequate investment in improving the technical skills and no cost reduction for thetechnology. A sustainable market and thus cost reduction achieved through improvement oftechnical skills, better procurement and lower transaction costs, scale of volume and localmanufacturing cannot be established without the appropriate activities.ENERGY AND ELECTRICITY SECTOR7. Recognizing the importance of the energy availability to stimulate economic growth, theMalaysian government has adopted three key energy policy objectives in the 1980s. Malaysia’s5-year development plans are formulated based primarily on these policies, which play a crucialrole in the government’s planning for a sustainable energy system. The main objectives of thenational energy policy are as follows:• Supply Objective: To ensure the provision of adequate, secure, and cost-effective energysupplies through developing indigenous energy resources both non-renewable and renewableenergy resources using the least cost options and diversification of supply sources both fromwithin and outside the country.• Utilization Objective: To promote the efficient utilization of energy and discourage wastefuland non-productive patterns of energy consumption.• Environmental Objective: To minimize the negative impacts of energy production,transportation, conversion, utilization and consumption on the environment.8. In 1981, the Government adopted the Four-Fuel Strategy, complementing the National DepletionPolicy, aimed at ensuring reliability and security of supply. The strategy was effectively designedto reduce the country's over dependence on oil as the energy source. The strategy aims for a fuelsupply mix of oil, gas, hydropower and coal in electricity generation. As much as possible, localresources of these fuels will be used to enhance security of supply.9. The grid connected electricity demand in Malaysia has increased from 4,000 MW in 1990 to11,050 MW in 2001. The total peak demands achieved in Peninsular Malaysia, Sabah andSarawak were 10,060 MW, 420 MW and 570 MW respectively. Before the economic crisis in1997, the demand grew at 10% per annum. In the next few years, the demand is forecast to growat an average rate of 6 to 8% per annum. The energy demand trends show a high correlation withthe country’s Gross Domestic Product (GDP). The sales of electricity of the three main utilities inMalaysia increased by 5.9% from 59,040 GWh in 2000 to 62,510 GWh in 2001 while sales ofTNB increased by 5.9% from 54,250 GWh to 57,440 GWh during the same period. Theforecasted values of electricity sales for the TNB integrated system are 83,788 GWh in 2005 and126,924 GWh in 2010. Out of the sales, 53% was for the industrial consumers, 28% forcommercial, 18% for domestic and 1% for others. The total number of customer accounts of thethree utilities in 2001 was 5.87 millions with 83.36% from domestic sector, 15.65% fromcommercial, 0.42% from industrial and the remaining 0.56 % from other customer.5

10. The total utility grid connected generation capacity in Peninsula at the end of 2001 was about12,600 MW of which 4,450 MW or 35% contributed by six IPPs and the remaining owned byTNB. In Sabah at the end of 2001, the grid generation capacity is 790 MW where 38% of thepower generation is contributed by five IPPs and the SESB. While in Sarawak, out of the totalgrid generation capacity of 880 MW, 320 MW owned by two IPPs and the rest owned bySESCO. In Peninsula Malaysia, out of the 12,600 MW installed capacity to the grid, 65% is gasturbine/combined cycle block, 13.5% hydro, 11.4% coal fired plant, 10.3% gas/oil plant (duelfuel) and less than 0.1 diesel engine. In 2001, about 80% of the electricity generated in PeninsulaMalaysia was by gas.11. Electricity peak demand is forecasted to increase from 10 GW in 2000 to 15 GW in 2005 and 22GW in 2010 for the peninsula. A total of 10,000 MW of new generation capacity will be plantedup and commissioned between 2003 until the year 2010, 5,700 MW will be coal fired powerplants and 4,300 MW natural gas fired power plants. By the year 2010, the fuel mix in PeninsularMalaysia will be 50% oil and gas, 40% on coal and the rest is on hydro and other renewablesources of energy.Table 1: Electricity Generation MixActual: 1993-1999; and Projected: 2006-2010Energy Form\Year 1993 1995 1999 2006 2010Gas 64% 70 % 70 % 45% 45%Oil 10% 9% 16% 5 % 5 %Coal 14% 11% 7% 40% 39 %Hydro 12% 10% 7% 7 % 6%Renewable Energy - - 1 % 3 % 5%Source: Malaysia Energy CentreRENEWABLE ENERGY INITIATIVES IN MALAYSIA12. The Third Outline Perspective Plan (OPP3) and the Eighth Malaysia Plan (8th MP) are the twomain policy references for the promotion and development of renewable energy (RE) inMalaysia. The Third Outline Perspective Plan (OPP3) is Malaysia’s ten-year development planfor the period of 2001 to 2010. Under the OPP3, the government shall continue to undertakeefforts to manage both non-renewable and renewable energy (RE) resources to cater for thedemand of the rapidly growing economy. The main thrusts of OPP3 are as follows:• To ensure an adequate, secure, quality and cost-effective supply of energy;• To promote efficient energy utilization and minimize negative impacts on the environment;• To supplement the conventional supply of energy, new sources of energy such as renewableenergy (RE) would be encouraged.13. In the year 2000, the Government introduced the Fifth-Fuel Policy. The policy identified RE asMalaysia’s fifth fuel resource, which includes RE forms such as biomass, solar and wind. Withthis objective in mind, greater effort is being undertaken to encourage the utilization of renewableresources, such as biomass, biogas, solar and mini-hydro, for energy generation. Under theEighth Malaysia Plan (2001-2005), the Malaysian Government would intensify efforts toencourage the utilization of RE resources for the energy generation to supplement the supply6

from conventional energy sources. The Government has also set a target to achieve 5% of thenation’s electricity production (about 600 MW) through RE by 2005. The strategies adopted tointensify the development of RE would include: (1) Promotion of various RE sources; (2) REdemonstration projects; (3) Research commercialization; and, (4) Extension of financial andfiscal incentives to potential developers.14. In line with the Government announcement to adopt RE as the fifth fuel resource, the SmallRenewable Energy Power (SREP) Program was launched to encourage and intensify REutilization. The types of RE resources considered are biomass, biogas, municipal waste, solar,mini-hydro and wind. The SREP focus is to facilitate expeditious implementation of gridconnectedrenewable energy resource-based small power plants. It is envisaged that in the 2001-2005 period, the SREP would provide valuable experiences that could be utilized to develop andfine-tune RE strategies towards long-term increment of RE share in the power generation mix.15. From the environmental perspective, the utilization of all RE resources in the country wouldresult in a reduction of about 70 million tons of CO 2 by 2020 1 . Hence, in addition to reduction ofGHG emissions, the local environment would also be improved due to the reduction ofparticulate matter in the air. While most of the applicants under SREP are either biomass or minihydrobased, not a single application has been received for PV based power generation. Theobstacles are due to relatively high investment costs and lack of know-how to implement projectsamong the targeted potential users and developers.SOLAR ENERGY RESOURCE UTILIZATION IN MALAYSIA16. Malaysia lies entirely in the equatorial region with an average daily solar radiation of 4,500kWh/m 2 , with sunshine duration of about 12 hours. Ambient temperature remains uniformly highthroughout the year. Average ambient temperatures are between 27 to 33 °C. Most locations havea relative humidity of 80 – 88%, rising to nearly 90% in the highland areas, and never fallingbelow 60%.17. The Klang Valley (Kuala Lumpur, Petaling Jaya) has the lowest irradiance value, whereas aroundPenang (Georgetown, north-west coast) and Kota Kinabalu (East Malaysia) have the highestvalues measured. However, compared to Germany, an installation in Kuala Lumpur receives 1.3times higher global solar irradiance. A solar PV installation in Malaysia would produce energy ofabout 900 to 1400 kWh/kWp per year depending on the locations. Areas located at the northernand middle part of the Peninsula and the coastal part of Sabah and Sarawak would yield higherperformance. An installation in Kuala Lumpur would yield around 1000 - 1200 kWh/kWp peryear.STATUS OF SOLAR PV TECHNOLOGY APPLICATION IN MALAYSIA18. Despite the abundant resource, solar PV applications in Malaysia are limited to mainly standalonePV systems, especially for rural electrification where the technology costs are highlysubsidized. Other minor applications being promoted include telecommunication, street andgarden lighting and recently, for powering parking ticket dispensing machines.1 Based on a 1999-2000 study on the national development strategy for RE as the Fifth Fuel.7

19. The National Electricity Board (now Tenaga Nasional Berhad) initiated the use of PV system forrural electrification in the early 1980s. The first of these was the installation of stand-alone PVsystems for 37 houses in Langkawi, followed by other projects in Tembeling (seventy houses)and Pulau Sibu (fifty houses). Later in the 1990s two rural electrification pilot projects, of 10kWp and 100 kWp respectively were implemented in Sabah with the support from the NewEnergy and Industrial Technology Development Organization (NEDO) of Japan. In the late1990s the Ministry of Rural Development has undertaken the provision of photovoltaic systemfor rural electrification. It is estimated that the total capacity for stand-alone systems in Malaysia,including Sabah and Sarawak, in the year 2000 was 1.5 MWp, however, some of the installationshave been dismantled.Fig. 1: Solar Irradiance Map of Malaysia20. The favorable environment for rural PV application in Malaysia has prompted the giant PVmanufacturer BP Solar (49% ownership) together with Projass Sdn Bhd (51% ownership) to setup PV module fabrication plant in this country. The plant, which was launched in April 2000, iscapable of producing 5 MWp per year when operating at full capacity. In the past 3 years, theannual production of the plant was approximately 500 kWp.21. Only recently, Malaysia demonstrated several pilot grid-connected solar PV technologies. TheMalaysia Electricity Supply Industry Trust Account (MESITA), Ministry of Science, Technologyand the Environment (MOSTE) and Tenaga Nasional Berhad (TNB) mainly funded theseinstallations. The projects employed mainly add-on PV technology and did not specifically applyimproved PV applications such as BIPV. The target of these projects was mainly to showcase thegrid-connection of PV systems rather than the reduction of the PV system cost. Since the onset ofgrid-connected PV applications in the country in 1998, an annual installed capacity of about 908

kWp has been achieved. By end 2003, the installed capacity of grid-connected PV was about 450kWp realized in 14 applications.Fig. 2: Examples of Grid-Connected PV Installations in MalaysiaCumulative Installed Capacity (kWp5004504003503002502001501005001998 1999 2000 2001 2002 2003Fig. 2-1: Cumulative BIPV Installed CapacityFigure 2-1 shows the cumulative of BIPV (grid-connected PV) systems available in Malaysiaduring the period 1998-2003. The first system, funded by TNB and MESITA was installed in1998. The high increase in the year 2001 is mainly due to a one-off installation of 362kWpcapacity by Technology Park Malaysia.9

BIPV TECHNOLOGY AND INDUSTRY STATUS22. One of the most attractive applications of PV technology is the use of PV in buildings. It is alsocommonly known as Building Integrated Photovoltaic or BIPV. A PV system, either a standaloneor a grid-connected, is classified as a BIPV system whenever the PV is aestheticallyintegrated into the building architecture and envelope. Most of the BIPV applications are gridconnectedsystems that are applied in urban areas. The utilization of solar energy through PV hasa huge potential, offering several advantages. When integrated into the fabric of a building, it candisplace other material and replace conventionally building material, thus off-setting the PV cost.A variety of roof tiles and sheet materials are also available in the international market, and thereare purpose-designed mounting and integration systems available to improve appearance andweather proofing, as well as making the installation process easier. BIPV needs no extra land,and it generates electricity at the point of use, thus reducing electricity transmission losses. WhenBIPV capacity is appropriately sized, it can displace purchase of electricity, with possibility toexport the surplus to the grid.23. The technical potentials of BIPV in the residential and commercial sectors are huge. Consideringonly the lower PV capacity value of 1 kWp for every 10 m2 of available building roof surfaces inthese sectors, the technical potential is around 11,000 MWp or 11 GWp, which could providemore than 12,000 GWh solar generated electricity. Today, this would cover 20% of the nationalenergy demand.24. A survey to assess the current competency level of existing local PV service providers (17companies) and one module manufacturer (BP Solar) in Malaysia has been conducted during thePDF-B exercise. Valuable information concerning the companies and their level of know-howwere obtained. Based on the survey, there are only two companies so far that provide very goodservices to their clients and include training and education for their employees.25. However, there are many companies that lack capability to improve their service and quality.Thus, comprehensive installation and maintenance guide, training material and courses areneeded. Such activities (capacity building) are important and will enhance the development of theindustry. The other important step is to provide the market with quality installation, reliableproducts and basic awareness for the clients. Hence, this will improve the public confidence onthe technology.26. Some important feedback from the survey conducted among the local PV service providers andmanufacturers includes:• Government needs to be committed on BIPV policies and implementation;• Sharing of experiences among the field experts based on their own process andimplementation, problems faced and immediate solutions;• Consumer groups and industry players need to be represented with opportunity to highlightconcerns and to be adequately addressed;• Development of a group of experts who understand the PV industries;• Competent and reliable after sales services.10

27. The climate for business opportunities in the field of PV is encouraging. Malaysia is currentlypromoting the continued diversification of industrial base towards high-end manufacturing andthe development of the value-added services sector as part of the move towards a knowledgebasedeconomy. In the Malaysian Investments Act 1986, alternative energy sources like thedevelopment and production of fuel cells, polymer batteries, PV components and solar cells arespecifically mentioned. Tax reductions for new companies provide attractive incentives for startup.Nevertheless, the incentives have to be reviewed when considering a local production ofeither PV inverters or modules. Malaysia is now encouraging high-tech electronic products forwhich attractive incentives are being offered to promote investments and reinvestments intechnology and capital intensive projects. The electronics cluster would be built around thesemiconductor sector (cell production) and the industrial equipment sector (module and invertermanufacturing).28. The local PV manufacturing facilities can benefit from the existing infrastructure and wellestablished manufacturing sector in Malaysia such as the precision machining and the productionof electronic assemblies and sub-assemblies, components, moulds, tools and dies, metals andplastics, and automated machinery and equipment. Supply for the mounting structure or anymetal part is readily available. The industry is well established and produces high qualitymaterials. Custom-made products can be ordered without problems. Thus, frames for the modulesmade of extruded Aluminum can be easily produced.29. The well-established local electronic industry can supply components to the invertermanufacturers. State-of-the-art materials are available without inherent restriction to the supplychain. Thus, in short to mid-term, a local production of inverter is possible. Possible suitablepartners for joint venture on inverter manufacturing can be from Europe. Companies, like SMA,or Sputnik cover the worldwide market with approximately 50% of all sales and can be verystrong partners for the local industry. In addition to providing technical and business know-howto the Malaysian venture, they are interested to expand their businesses in the Asia region andhence, joint ventures may be possible.30. A solar PV module manufacturing unit can be established with an investment of around US$ 40Million for a 25 MWp output. If a market is established or the forecast is positive, then potentialinvestors will be able to establish a manufacturing line within 4 years. A significantmanufacturer, RWE Schott is currently reviewing its strategy, which may include a strongerpresence and involvement in the ASEAN market. Other potential investors are from Japan (e.g.Sharp) or Germany (e.g. IBC Solar). These companies are closely watching the policy directionof the GoM in BIPV and are expected to review their strategy in tandem with developing theBIPV sector. To establish and operate a solar PV module manufacturing unit economically(where wafers are imported) requires a long-term market perspective of about 6 MWp per year 2 .31. Cell manufacturing may also be considered and become an option in the long-term (20 years).Depending on the development of the market, the existing wafer manufacturers (e.g., Shin-EtsuHandotai Malaysia Group supplying close to half of the worldwide demand of 8-inch diameterwafers) can adapt to the new business needs. The European wafer companies are currentlyconsidering such strategy in expanding their business in solar cell production.2 Reference: Information from RWE-Schott, one of the major international PV manufacturers.11

INSTITUTIONAL AND FINANCIAL FRAMEWORK STATUS RELEVANT TO BIPV32. In the Fifth-Fuel Policy, much emphasis is on Energy Efficiency (EE) with programs likeDemand Side Management (DSM), Energy Audit in Government Buildings (EAGB) andMalaysian Industrial Energy Efficiency Improvement Project (MIEEIP). The current institutionaland policy support regards biomass as the most viable RE option. Solar energy is not reallyconsidered as one of the RE resources referred to as the 5th fuel. Presently, the use of biomass asenergy source is the most preferred option and receives the highest attention.33. In May 2001, the government announced the launching of the SREP Program. Small powergeneration plants (less than 10 MW) that utilize renewable energy can apply to sell electricity tothe utility through the distribution grid system. Project developers are required to negotiatedirectly with the relevant utility on all aspects relating to the renewable electricity purchaseagreement, including the selling price on a "willing-seller, willing buyer" and "take and pay"basis. The renewable energy electricity producers will be given a license for a period of 21 years,which will be effective from the date of commissioning of the plant. Under this Small RenewableEnergy Power Program, the utilization of all types of renewable energy, including biomass,biogas, municipal waste, solar, mini-hydro and wind, are allowed. In order to coordinate theimplementation of the government's strategy to intensify the development of renewable energy asthe country's fifth fuel resource, a Special Committee on Renewable Energy (SCORE) has beenset up under the Ministry of Energy, Communications and Multimedia. SCORE is responsible indriving the Small Renewable Energy Power Program (SREP).34. One of the key elements in realizing the potential from RE sources is the support fromgovernment and main institutions such as the Energy Commission (EC) and the Malaysia EnergyCenter (PTM). EC’s commitment is vital to ensure that all energy forms and options are viablefor the market. PTM is taking the lead role to assist the industry and the government to developrenewable energy in line with national objectives. In addition, the Centre for Education andTraining in Renewable Energy and Energy Efficiency (CETREE) together with PTM arecarrying out the public awareness activities that enhance the positive attributes of renewableenergy and energy efficiency measures. Moreover, Capacity Building Project in IntegratedResources Planning (IRP) at Government and related agencies provides input to the MalaysianGovernment as to the present and future challenges of the energy sector as well as the policyoptions available.35. RE has been given fiscal incentives in terms of tax relief and waiver of import duties sinceNational Budget 2000. The incentives are part of the Government effort to encourage theimplementation of RE projects as part of the fifth fuel policy. Starting from National Budget2002, solar energy is classified as one of the components for RE and therefore receives the sametax benefits to the other RE fuels. The fiscal incentives for PV are applicable until 2005.Incentives for PV are integrated in the Renewable Energy fiscal incentives covering thefollowing areas: Tax Break, Capital Allowance and Import Duties and Tax waiver. The fiscalincentive is an effective tool to create awareness amongst the stakeholders. It gives thetechnology the status of preferred industry. Because many parties analyze the tax incentives, theimmediate exposure given by analyst will spread the message and taken seriously. Nevertheless,it is important to structure a good tax incentive for BIPV in the effort to create awareness andenhance its attractiveness. BIPV requires specially designed fiscal incentives that have an impactin the implementation chain especially in the retail end of the market. Unlike Biomass, BIPV ismuch smaller and applicable to different market segments such as commercial complexes and12

domestic consumers. Hence the current fiscal regime, which is embodied in the Malaysianbudget, does not provide specific incentives to encourage and increase the take up rate of BIPV.36. There is no known financial incentive provided for BIPV. A customized financial incentiveprogram for BIPV is necessary to encourage the development of PV in Malaysia. Experience inother countries can be adapted to the Malaysian context without compromising overall GoMpolicies and strategies.37. Current BIPV application suggests that commercial and domestic market segments have the mosteconomic potential for BIPV. Therefore, there is a need to structure incentives to tap the potentialof these two markets. The features of tax breaks and financial mechanism should be designed toencourage the individual domestic owner to consider PV as part of their overall budget as well asencourage the small commercial enterprises to evaluate the potential of installing such a system.38. One of the important key factors in increasing the popularity of the grid-connected BIPV systemis that it should guarantee the technical requirements necessary to ensure the safety and thereliability of the system, without interfering with the utility grid. Hence, a Working Group onUtility Interfaced PV was established by SIRIM to develop standards for installation of gridconnectedPV systems. The code of practice will be ready for public comment by end of 2004and will be implemented by later part of year 2005.39. A National Standard on energy efficiency and use of renewable for non-residential buildings (MS1525:2001) has been developed. This standard gives guidance on the effective use of energyincluding the application of renewable energy in new and existing non-residential buildings.BIPV will be included in this MS 1525 standard within the full project activities.PREVIOUS AND ONGOING PROJECTS RELEVANT TO BIPV40. Under the MESITA and Tenaga Nasional Berhad co-funding, six pilot grid-connected solar PVsystems were installed between 1998 and 2001. The PV system configurations were locallydesigned with PV power capacity ranging from 2.8 kWp to 3.8 kWp. The PV modules andinverters used were imported from various parts of the world. The system performances indicatedthat some of the pilot PV systems are capable to produce electricity of about 1,200 kWh/kWpannually 3 .41. Additionally, the recent energy efficiency (EE) initiative by the Ministry of EnergyCommunications and Multimedia Malaysia (MECM) is to showcase an example of a low energyoffice. The outcome of the initiative is expected to further pave the way towards efficient energyutilization in buildings and towards sustainable building development. Among others, it wouldalso provide a possible opportunity to introduce zero energy-building concepts throughintegration of solar PV into the building envelopes.42. In 2002, NLCC Architects Sdn Bhd of Malaysia and Fraunhofer Institute of Solar Energy ofGermany have constructed a 3.2 kWp BIPV project in SIRIM. Ministry of Science, Technologyand the Environment of Malaysia (MOSTE) through the Industrial Grant Scheme (IGS) fundedthe project. The Prototype Solar House has 3 PV systems (1.1 kWp monocrystalline module, 1.13 Based on results from TNBR’s pilot grid-connected solar PV research project (2002).13

kWP amorphous silicon PV module, and 1.1 kWp polycrystalline module) integrated into 3different types of roofs.43. Unfortunately, these initiatives are all “one-off” projects and are not leading to a sustainableBIPV market. With the proposed GEF supported project on BIPV, Malaysia would be able tofurther demonstrate BIPV technology that would significantly complement the energy efficiencyinitiative. It is vital that the proposed BIPV project components would pave the way towardslong-term cost reduction of BIPV technology. Thus, the total Government efforts to promote andaccelerate renewable energy and energy efficiency developments in Malaysia would becomemore successful. Furthermore, this new BIPV project will make use potential synergies with theother GEF supported projects currently under implementation, i.e. the Malaysia Industrial EnergyEfficiency Improvement Project (MIEEIP), and the Biomass-based Power Generation and Cogenerationin the Malaysian Palm Oil Industry Project (Biogen).BASELINE AND ALTERNATIVE SCENARIOS44. The South East Asian region is one of the fastest growing regions in the world with significantdemand for electricity. The current maximum electricity demand in Malaysia is about 10,000MW and is projected to grow by about 6% to 8% annually. To meet this demand, Malaysia willcontinue to install new conventional power plants. Coal fired power plants are very popular dueto the price and potential shortage of fuel and natural gas supply. In immediate future, the coalenergy mix for power generation in Malaysia will be more than doubled. To mitigate theenvironmental pollution caused by the increase share of coal in the country’s energy mix,renewable energy is being promoted. In Malaysia, biomass is currently being favored as REresource due to its availability. BIPV would unfortunately be left out as an RE alternative sinceits cost is still very expensive, and it would remain as an "exotic" technology. The results of thepilot grid-connected PV project that were implemented between 1998 and 2002 manifested thoseperceptions. Although the total system cost has gone down by 60% within that period, the capitalrequirement BIPV systems are still very expensive at US$7,200 per kWp 4 . Hence the paybackperiod would be more than sixty years under the current Malaysian scenario. Thus, the high costof BIPV technology is the main obstacle itself. Thereby, BIPV technology could never bedeveloped into a commercially viable RE technology in Malaysia, even though the BIPVperformance is better that those systems installed in Germany and Japan.45. Under a baseline scenario, some efforts on BIPV will continue through private initiatives andsome activities of the MECM, PTM, CETREE and SIRIM such as information and educationcampaigns, and development of standards. Upcoming activities under the baseline scenario focuson two R&D projects targeting local manufacturing of BIPV components and marketenhancement activities, such as demonstration of BIPV in government buildings and a gridconnectedPV program. A testing facility on safety for inverter products will be established atSIRIM and will provide valuable experiences and feedback for the R&D sector. But, as in thepast, these activities will be promoted in a fragmented manner and it is up to the public and theprivate sector to spur the technology towards widespread and cost-attractive applications.46. This proposed GEF supported alternative will enable the widespread use of BIPV systems andthus, cost reduction of the technology. The successful implementation of identified and designedinterventions packaged into 4 project components will establish a suitable environment for a4 Ibid.14

sustainable national BIPV market with higher penetration in buildings sector, resulting in furthercost reduction:a. BIPV information services, awareness and capacity building programs;b. BIPV market enhancement and infrastructure development;c. BIPV policies and financing mechanisms program; and,d. BIPV industry development and R&D enhancement program.47. The proposed alternative presents an unique chance to establish a sustainable programconsidering the needs and goals from all stakeholders and also taking into account the lessonslearned from international programs, thus to avoid the “stop-and-go” problem many countrieswere facing in the past. The project will increase the knowledge and awareness of the public andpolicy makers to endorse a national BIPV in the next Malaysian Plan, as well as strengthen thehuman capacity in R&D, manufacturing and installation, resulting in local manufactured productsand lower installation cost for BIPV applications.48. By year 2010, the total installed grid-connected PV capacity is forecast to be 2 MWp, whichtranslates to an increase in installed PV capacity of 330%, relative to the baseline of 450 kWp inyear 2004 (see Fig. 3). Attributed to this will be the avoidance of CO 2 emissions from powergeneration in the country in the amount of 2,604 tons CO 2 per annum, which translate to 65,100tons CO 2 over the PV lifetime period of 25 years. This is based on the PV capacity of 1.5 MWp,which will be installed during the implementation of the MBIPV project (2005 and 2010) 5 .During the course of the MBIPV project, the CO 2 reduction will be minimal, as the projectpurpose is not the installation of large-scale applications. Instead, the project will bring aboutsuitable frameworks for a sustainable BIPV technology application via national follow-upprograms, and establishment of local BIPV manufacturing industry that will contribute towardscost-reduction of BIPV system components.2,500Cumulative Installed Capacity (kWp2,0001,5001,000500Alternative ScenarioBusiness-As-Usual Scenario02004 2005 2006 2007 2008 2009 2010Fig. 3: Forecast Cumulative BIPV Installed Capacity5 1MWh of PV electricity is equivalent to 0.62 tons of CO 2 emission avoided, based on the current power generationmix in Malaysia. Average PV energy yield is 1200 kWh/kWp per annum (Source PTM & TNBR).15

49. Figure 3 shows the forecast cumulative BIPV installed capacity between the year 2004 to2010 under two scenarios, i.e. business-as-usual and alternative. The alternative scenario,which the MBIPV project intends to facilitate is characterized by an increase of about 330%of BIPV installed capacity (1.5 MWp) within the forecast period.3,000CO2 emission avoided (tons)2,5002,0001,5001,00050002004 2005 2006 2007 2008 2009 2010Fig. 3-1: Forecast Cumulative CO 2 Emission Avoidance50. Directly, the project is expected to induce a cost reduction of minimum 20% (Fig. 4) by the year2010, relative to the baseline in year 2004 (at a turn-key system price of 7 US$/Wp). Incomparison, the ‘business-as-usual’ scenario forecasts a cost reduction of only about 10%. Thehigher cost reduction will be realized from improved product procurement processes due tomarket competition, increased level of competency of PV installers, and availability locallymanufactured BIPV system components (e.g., mounting structure). In addition, the continuousprice reduction will happen due to international market pressure (mainly in Japan and Europe) tofurther reduce the technology cost. Hence, this MBIPV project is also contributing to the globalefforts to reduce the BIPV technology cost via the sustainable market development.51. Figure 4 shows the projected BIPV system cost reduction under two scenarios, i.e. business-asusualand alternative. The cost reduction of about 10% under the business-as-usual scenario isattributed to anticipated international cost reduction of the PV technology. The cost reduction of20% under the alternative scenario is based on the development of a new BIPV market inMalaysia at a 300% growth rate within the forecast period. The cost reduction projection is alsobased on IEA-PVPS findings where PV system cost reduction range is 15% to 20% for a new PVmarket, or 10% to 17% for an established PV market.16

87System Cost (US$/Wp)654321Business-As-Usual ScenarioAlternative Scenario02004 2005 2006 2007 2008 2009 2010Fig. 4: Projected BIPV System Cost ReductionCHALLENGES ASSOCIATED TO BIPV TECHNOLOGY APPLICATION IN MALAYSIA52. The challenges associated to BIPV application in Malaysia are: (a) Lack of awareness; (b)Capacity of local service providers is weak; (c) Suitable policy, fiscal and financial framework isabsent; and, (d) High cost of BIPV system. The main problem identified for lack of BIPVpenetration and integration in the Malaysian market is the initial high cost of the technology. Incomparison to other countries and markets, the cost of BIPV in Malaysia is significantly higherper Wp. This is due to taxes, the small market, and the inexperienced consumers and serviceproviders. The lack of awareness on the potential, both environmental and long-term economicbenefits, led the public to believe that the technology is exotic and not directly beneficial exceptfor special cases. The high costs have its roots in the import costs of the products and theminiscule market that it serves. The absence of a significant market does not encourage localproduction of BIPV products or components and hence, the continued dependence on imports.The small market presence of PV systems, mainly off-grid and stand alone products, do notcreate the critical mass of service providers. The small numbers of service providers, many aretechnically and financially strapped, can only offer limited services. Because of these limitations,the quality of service is also low.53. Although GoM has indicated its preference for Renewable Energy as an alternative source ofenergy, there are limited fiscal and financial frameworks that directly support the widespreadapplication of BIPV systems. Buy-back policy from utility favors biomass and mini hydrogeneration sources, which are comparatively more than 500 times larger than a typical BIPVsystem. The obstacles identified above have a compounded effect that restrains the widespreadapplication of the technology in Malaysia.PROJECT RATIONALE AND OBJECTIVES54. The increasing demand and consumption of fossil fuels in Malaysia, which in the near futurecould lead to a growing dependence on fuel imports, poses one of the major energy managementchallenges for the Malaysian Government. Increasing dependence on fossil fuels, particularly in17

the power sector, will result in rapid increase in GHG emissions in the country since this sector isa major source of GHG emissions.55. The ongoing UNDP-GEF funded MIEEIP and Biogen projects are the clear manifestations ofMalaysia's commitment to reduce GHG emissions from energy-related development andeconomic activities. In this proposed project, Malaysia aims to further reduce GHG emissions,this time from its power sector through the replacement of the fossil fuels used in powergeneration with renewable energy (RE) resources, particularly PV in buildings. This project willemphasize the potentials of BIPV technology resources in electricity production and buildingindustry, their significant contribution to the reduction of future GHG emissions in Malaysia, andtherefore the need to accelerate the use of renewable energy sources in the country.56. The MBIPV project has been designed to be consistent with GEF Operational Program No.7(OP-7) on “reduction of the long-term costs of low greenhouse gas-emitting energytechnologies”, and GEF’s Strategic Priority No.5 (SP-5) of “global market aggregation andnational innovation for emerging technologies”. The proposed project is also in line with one ofUNDP’s strategic goal under its multi-year funding framework (MYFF) for the period 2004-2007, which is managing energy and environment for sustainable development, and in particularwith MYFF Service Line 3, which is on (1) frameworks and strategies for sustainabledevelopment; and (2) access to sustainable energy services57. The proposed project will address the cost reduction of the BIPV technology and will coordinatewith ongoing RE and EE activities. The project will achieve these goals primarily by buildingcapacity in three major areas: (a) Policy and education; (b) Technical skills and marketimplementation; and, (c) Technology development support.58. The project’s global environmental objective is to mitigate GHG emissions from the powergeneration sector of Malaysia, which presently accounts for a large share of the country's totalGHG emissions. The sector is forecast, based on a "business as usual scenario" to produce GHGemissions 30% higher than its 2000 level by end of year 2010.59. The main goal of the MBIPV project is the reduction of the growth rate of GHG emissions fromfossil fuel fired power generators, through the widespread implementation of BIPV application toreplace part of the current fossil fuel utilization, and the cost reduction of BIPV technology.Based on the fact that BIPV prices will go down when PV production increases, and PVproduction increases when BIPV demand increases, the MBIPV project strategy to induce a costreduction impact on the technology relies in creating and sustaining a market demand for BIPV(market driven strategies). The impact of the strategy could subsequently spill over to theneighboring countries and contribute to the global market. The immediate objectives of thisproject are:• Significant improvement of awareness and understanding level in the public and policy sectorand of the competency level of local PV service providers;• Implementation of BIPV technology application demonstrations and enhancement of localBIPV markets;• Development and implementation of an effective financing mechanism and economicassessment model to support BIPV applications, which are acceptable and will be utilized bypotential BIPV users;18

• Establishment and enforcement of a sound and reliable institutional and policy frameworks tospur towards sustainable and widespread BIPV applications;• Optimization of BIPV technology applications towards optimum energy production and lowcost applications; and,• Availability of low cost BIPV products through local manufacturing development andtechnology transfer.60. The project is expected to help catalyze the wider adoption of grid-connected BIPV applicationsnot only in Malaysia, but also possibly in the other ASEAN countries where Malaysian financialand industrial interests are increasing.61. Based on the 10-year assessment by IEA-PVPS (report is available from www.iea-pvps.org), thePV system cost can decrease by 15% to 20%, if there is a doubling of the market size. Therefore,the focus of this project is to create a growing and sustainable BIPV market with all supportivemechanisms to be in place. The project is not targeting large capacity installations of BIPV, butinstead will focus on the demonstration of the BIPV technology applications and the creation of asustainable BIPV market. The sustainable BIPV market development and the subsequent pricereduction are to be achieved over a long-term period (at least 10 years), i.e. beyond thecompletion of the project. The project strategy involves the implementation of cost-reduction andcapacity building activities, including demonstration schemes showcasing the value-added ofBIPV technology in Malaysia. The monitoring and evaluation of the implementation of thevarious program activities will follow suit. In parallel, activities for the dissemination of theresults and recommendations will be carried out. The various project components are designedspecifically to achieve the long-term cost reduction of grid connected BIPV applications inMalaysia. These are designed to draw and build on the existing capacity already available inMalaysia in a number of government and private sector institutions. The combined effect of theactivities in all project components is expected to "jump-start" BIPV applications in Malaysia.62. The proposed MBIPV project is made up of four (4) components that will address in anintegrated manner the long-term cost reduction of the BIPV technology, and adoption ofsupportive regulatory frameworks to establish the desired environment for a national sustainableBIPV market. Each component of the project will consist of several specific activities designed toachieve successfully the component objective, thereby contributing to the achievement of theproject purpose and goal.63. In Component 1, extensive promotion and education campaigns will be carried out to generateawareness and understanding among the public. The developed BIPV training courses willimprove the local competency level of relevant stakeholders. Component 2 will showcase andevaluate different but relevant BIPV application technologies and develop the local BIPV market.This will provide adequate knowledge and experience to architects, engineer, project developersand others for the future sustainable implementation of a follow-up program. One relevantstandard (MS 1525: 2001) will be updated and new guidelines (PV code of practice) will bedrafted providing technical assistance in BIPV application. In Component 3, supportiveframeworks will be recommended addressing policy, financial and institutional issues to establisha favorable environment for a long-term market development and to set a target for a follow-upBIPV program in the 10th Malaysian Plan. Component 4 will encourage the local industry totransfer promising application from R&D to products ‘Made in Malaysia’. Cost of BIPV productwill be reduced through local manufacturing and technology transfer. A testing facility on19

product performance will be established to ensure the quality and reliability of the localmanufactured products, and to increase the level of expertise for the R&D and industry sectors.BENEFITS OF THE PROJECTGLOBAL BENEFITS64. Additional coal and gas-fired power plants are planned to be on-stream by 2010 to meet systempeak demand, which is expected to increase from 10 GW (2000) to 22 GW in 2010 in PeninsularMalaysia. These additional conventional power generator units will emit an additional 34 milliontons CO 2 (coal) and 8 million tons CO 2 (gas) per year starting from 2010. This will lead to atremendous increase in GHG emissions, causing more serious problem to the globalenvironment.65. The MBIPV Project is expected to generate widespread BIPV replication via the National BIPVProgram within the 10th and subsequent Malaysia Plans. The potential BIPV installed capacity isabout 20 MWp by year 2020. Over a lifetime of 25 years, the operation of the 20 MWp BIPVwould result in the avoidance of CO 2 emissions equivalent to 34,720 tons CO 2 per annum thattranslate to 868,000 tons CO 2 over the PV lifetime period of 25 years. The potential of global andregional benefits are substantial, as the outputs of this GEF supported project will be shared withneighboring countries. It is anticipated that due to the replicability of the project, identicalprojects will be implemented in other ASEAN countries, contributing to further reduction ofglobal GHG emissions. An initial assessment on market potential identifies a possibility of 200MWp installed capacity for the ASEAN and Pacific region, contributing to a reduction of CO2emissions equivalent to 340,000 tons per year.NATIONAL BENEFITS66. Malaysia has one of the fastest growing building sector world-wide, where the energy demandwill significantly increase in the next coming years. The available building spaces (facades androofs) offer significant untapped potentials for PV application in buildings. BIPV serves dualpurposes, as a building element and as an electricity generator. Considering the synergies andbenefits of BIPV application, the technology will have an important and sustainable impact to thebuilding market, and will be able to substitute part of the conventional gas-fired peak electricitygenerators. Yet, these benefits remain largely untapped. Phasing in PV therefore requires a shiftfrom centralized to decentralized power production.67. Grid-connected BIPV applications provide multitude benefits for Malaysia. The ability of the PVsystem to generate electricity close to the point of consumption ensures that transmission anddistribution losses are kept to a minimum level, thereby promoting energy efficiency. The utilitycould gain the most benefit through the associated reduced financial risk. Installations of BIPVby the public do satisfy a portion of the peak demand. Furthermore, the utility will not have tobear those capital costs and could defer a portion of the investment of future peak powergenerators. More importantly, the utility will be able to reduce the dependence on natural gas asthe peak fuel resource. In any case, the most important benefits of BIPV, especially in urbanareas, will be the opportunity to utilize PV technology without the need of land-use. As the costof land is significant in urban areas, BIPV will allow the utilization of PV technology to generateelectricity without incurring the additional cost of land-use.20

68. The BIPV development will benefit the nation from the point of sustainable development andenvironmental protection, such as the reduction of GHG emissions (CO 2 , NO X , SO X ), the reduceduse of land for power station, and the reduced dependence on conventional fossil fuels where theprice will fluctuate and the supply could be interrupted. Subsequently, the project will also spurtowards local industry growth. This will lead to creation of new business and job opportunities.PROJECT COMPONENTS AND EXPECTED RESULTS69. The MBIPV project purpose is to improve significantly the overall capacity (technical, policy,planning, institutional, fiscal, financial) both in government and the private sectors, to develop,design and make use of the BIPV energy potential, and to develop the local industry, leading tocost reduction of the BIPV technology and the desired environment for a national sustainableBIPV market. The project goal is to have a long-term cost reduction of the BIPV technology andadoption of supportive regulatory frameworks to reduce the annual growth rate of GHGemissions from fossil fuel fired power generators through the widespread implementation ofBIPV application that will replace part of the current fossil fuel use in Malaysia.70. The proposed project will address in an integrated manner the four main components namely:• BIPV information services, awareness and capacity building programs;• BIPV market enhancement and infrastructure development;• BIPV policies and financing mechanisms program; and,• BIPV industry development and R&D enhancement program.Each component of the project will consist of several specific activities designed to achievesuccessfully the overall objective.71. Component 1: BIPV Information Services, Awareness and Capacity Building ProgramsThis project component will improve general public and stakeholders’ acceptance towards BIPVtechnology. This is to be achieved by enhancing the level of understanding and awarenessthrough extensive education campaigns and capacity building programs, targeting the generalpublic and the decision/policy makers. Hence, this project component will focus on:1.1. Integrated Information & Awareness Building Programs on BIPV: The understandingon BIPV technology among the staff of the information resource center at the MalaysiaEnergy Center (PTM) will first be improved. A BIPV website will be developed andoperated by the resource center. A centralized dissemination of information on the benefitsof BIPV will be coordinated and implemented. A National BIPV Campaign will belaunched for public awareness and to alert the private sector on BIPV technology. Variousseminars, conferences and a road show will be conducted. This component will alsocoordinate promotional activities for the other project components. GEF support isrequired for technical assistance in the development of the promotion strategies andimplementation of awareness building programs that is essential to improve publicperception on BIPV technology.1.2. National BIPV Database: The information resource center will establish and manage anelectronic database that is linked to the BIPV website. By accessing the database through21

providers. System commissioning will involve the power utility. The systems operationwill provide references on BIPV benefits and further system improvements for theadaptation to local conditions. GEF support is required for hardware and technicalassistance for these BIPV technology application demonstrations.2.4. Evaluation of Demonstration Sites: Further BIPV demonstrations in government andprivate buildings will be promoted. A total of 400 kWp (200 kWp each for the governmentand private sectors) of BIPV capacity will be proposed and evaluated with interestedstakeholders. The 400 kWp target capacity is essential to provide adequate learningexperiences and actual market exercises in applying BIPV technology. Essentially, thebuilding owners will secure the necessary financing, with incremental financial assistancefrom GEF to offset the technology incremental cost, provided that the BIPV concept isfully integrated during the building design stages. GEF support is required for technicalassistance and the technology incremental cost.2.5. Design and Evaluation of Technical and Commercial Viability for DemonstrationProjects: The detail engineering design and specification, as well as the technical andcommercial viability of the total 400 kWp BIPV demonstration projects will be prepared.Assistance will be given to the project developers to secure the necessary financing. Tenderdocuments will become available for issuance. This activity will ensure that adequatesupports are available to the project developers in order to realize the BIPV demonstrations.GEF support is required for the associated technical assistance activities.2.6. BIPV Demonstration in Government and Private Buildings: Procurement andinstallation of BIPV systems for the BIPV demonstrations will be conducted with closecooperation with the project developers. System commissioning will involve the powerutility. Necessary support via the quality service providers will be given to ensuresuccessful operation of the BIPV systems. The systems operation will provide furtherreferences on BIPV benefits and system improvements. The demonstration projects willprovide adequate knowledge and experience to relevant stakeholders for the future designof the follow-up national program (post 2010). GEF support is required for the associatedtechnical assistance activities.2.7. Review and Promotion of National PV Program "Suria 1000": The grid-connectedsolar PV program will be developed to become a national BIPV program, called “Suria1000”. The concept of the national program, incorporating a bidding approach, will berevised and improved to provide local BIPV market penetration. Extensive marketingcampaign to launch the “Suria 1000” targeting the public sector will be carried out. Thenational program will make BIPV to become attractive where the BIPV systems will beoffered at special discounts and affordable prices. GEF support is required for the technicalassistance in designing and promoting this national program.2.8. Implementation and Operation of "Suria 1000": A national BIPV program called “Suria1000”, targeting the residential (500 kWp) and commercial sector (500 kWp) will belaunched. The national program will enhance the new BIPV market and will provide directopportunities to the public and industry to be involved in renewable energy initiatives andenvironmental protection. Every year, a limited number of BIPV systems will be offered tothe public through a bidding approach. This will be done through local mass media andadministered by the project team. A reserve bidding price (minimum price) for the public to24

id will be set, where the reserve bidding price will then be increased in each subsequentyears. This will facilitate the creation of sustainable BIPV market upon the completion ofthe program. Bidding results shall be announced (will also be available from the BIPVwebsite). Successful bidders shall install the BIPV system at their premises. The costs ofthe PV systems would be borne by the successful bidders at the bidding price, furthersupplemented by the Energy Commission (ST) and the PV industry (via discount for thehardware) if necessary. GEF support is required for the technical assistance to manage thenational program successfully.2.9. Monitoring & Evaluation of BIPV Demo Projects: Monitoring and evaluation of theBIPV systems under the “Suria 1000” and BIPV demonstrations will be conducted by theMalaysia Energy Center (PTM). Emphasis will be given to the performance of the BIPVsystems to allow for further optimization of BIPV technology to suit the local environment.BIPV market prices and economics will also be monitored and evaluated. The analysis willbe made available to the public via the national PV database. GEF support is required fortechnical assistance to carry out the monitoring and evaluation.2.10. Dissemination and Promotion of Demonstration Program Results: The results of theevaluated showcases and demonstration projects will be disseminated through theinformation resource center (in PTM) from time to time. A national workshop presentingthe results of the demonstration program and the “Suria 1000” will be conducted at the endof the project period. GEF support is not necessary for this activity.2.11. Design of a Sustainable Follow-up Program: Based on the activities and outcomes fromComponent 3, and the results from the monitoring and evaluation activity, a follow-upnational BIPV program will be developed for implementation in the 10th Malaysian Planperiod. The inclusion of the program in the Malaysia Plan will be coordinated with relevantactivity in component 3. GEF support is required for the technical assistance to developthe national program proposal.73. Component 3: BIPV Policies and Financing Mechanisms ProgramThis component will involve activities intended to enhance the capacity of policy makers incoming up with appropriate, proactive and integrated plans, and policies that will facilitate aconducive climate for BIPV development that will lead to further cost reduction. Based onvarious targeted research activities, a suite of policy, legal, institutional, financial and fiscalmeasures will be developed and proposed to the Government of Malaysia. These frameworkswill enable the formulation of a national BIPV target in the 10th Malaysia Plan (2011-2015),supported with suitable and customized mechanisms for the local condition. The sustainability ofthe GEF supported project will be achieved with the integration of a national BIPV target in the10th MP and an appropriate environment created for higher penetration of BIPV. The 10th MPtarget will be significant enough to further accelerate the market development and enhance thePV industry in the country, leading to the long-term cost reduction of the technology. Theactivities under this project component will focus on:3.1. Techno-economic Analysis of Grid-connected BIPV: This activity will involve studiesthat will analyze the present perceptions on BIPV as well as to project the prospectivedemand for BIPV in the country. An analysis of the potential costs and value-added ofBIPV technology, as well as the monitoring of the price evolution of BIPV technology in25

national and international market will be carried out. Suitable financial models, such asCapital Asset Pricing Model that would be best suited to do a total economic evaluation onBIPV technology, will be developed and promoted. The financial model will provide moreaccurate assessment for financiers to justify the investment on BIPV technology. A reviewon the past experience on regulatory schemes and buy-back mechanism of selectedcountries (e.g.: green tax, environmental price) will be conducted. The studies that will becarried out will come up with suggested recommendations regarding the options onacceptable environmental tax and feed-in tariff. The assessment report highlighting costbenefits of BIPV, peak tariff and technical issues will be submitted to the Government,with NSC endorsement. GEF support is required for the associated technical assistance.3.2. Design and implementation of Government Incentives to Utility and BIPVManufacturing Industry: This activity will create incentives for local BIPVmanufacturing industries, especially targeting the small and medium industries (SMI).Suitable incentives will also be developed to attract foreign investors and business partnersto collaborate with the local industry. Incentives will be formulated to encourage local andforeign industry participation and investments. This activity will also identify, develop andimplement a suitable buy-back mechanism for electricity generated from BIPV that wouldprovide win-win conditions to the public and utility. To offset the additional cost borne bythe utility due to higher buyback electricity tariff, a suitable incentive will be developedand adopted. The utility incentives and buyback tariff will be developed based on findingsof the techno-economic analysis, as well as incorporating other similar incentives on REand EE initiatives. This special buy-back tariff will ensure faster payback periods to thepublic on their BIPV investments. Together with a lower BIPV cost due to localmanufacturing, the investment for BIPV application could become economically viable andwill enable the widespread use of BIPV in Malaysia. The formulated incentives will berecommended to the NSC for endorsement. GEF support is required for the associatedtechnical assistance activities.3.3. Analysis on Existing and New Financial Mechanism and Fiscal Incentives: Thisactivity will involve the conduct of a study on available tax benefits (as identified duringPDF-B activities) with the aim of furthering improvements for better market environment.In addition to the public, project developers and system suppliers, the tax benefits will alsobe extended to manufacturers to promote local manufacturing. Critically, the mechanismfor Government fiscal incentives will be made simpler to foster better implementation. Theformulated mechanisms and incentives will be recommended to the NSC for endorsement.GEF support is required for the associated technical assistance.3.4. Fiscal and Financial framework for a Sustainable Follow-up Program: Based on thepreviously mentioned activities, appropriate frameworks for BIPV, encompassing fiscalaspects, favorable buy-back electricity tariff, and industry support policy will be formulatedand submitted to the NSC for endorsement. The Government will subsequently implementthe endorsed frameworks. GEF support is required for the associated technical assistance.3.5. Study on Past Experience and Impacts of International Regulatory Schemes: Studieson the various regulatory schemes worldwide regarding the past experiences and impact ofBIPV will be undertaken. Attention will be given to international regulatory schemes thatcreated sustainable BIPV markets. Sets of recommendations will be prepared and submittedto NSC. GEF support is required for the associated technical assistance.26

3.6. Review and Integration of BIPV in Existing Regulations: Further reviews of existingnational regulatory provisions including lessons learned from the SREP and other existingframework will be conducted to determine contextual relevance to BIPV. To enhance thesustainability, the BIPV approval will be incorporated into the existing SREP approvalmechanism. Further improvement in the approval process to facilitate BIPV installationswill be developed. A review on solar energy roadmap and other existing mechanisms in therelated sectors (building, utilities, etc.) will also be undertaken. Additional regulatoryprovisions for BIPV in Malaysia will be developed and recommended to MECM. GEFsupport is required for the associated technical assistance.3.7. Institutional and Policy Framework for Sustainable Follow-up Program: Anappropriate institutional and policy framework for a sustainable follow-up BIPV programwill be formulated and submitted to MECM. A clear GoM policy on the promotion,development and utilization of sustainable BIPV technology will be endorsed andincorporated into the 10th Malaysian Plan. GEF support is required for the associatedtechnical assistance.3.8. Policy and Financial Framework Implementation, Monitoring and ImpactAssessment: All of the component 3 activities will lead towards implementation of suitableinstitutional and financial frameworks for a sustainable BIPV application in the 10th andsubsequent Malaysia Plans. An annual evaluation of the framework implementation will beconducted during the 10th Malaysian Plan period. It will involve monitoring and evaluationof the endorsed follow-up BIPV program, accompanied by the recommended policy andfinancial frameworks. An impact assessment on the BIPV market sustainability andreplicability will be conducted annually. GEF support is required for the associatedtechnical assistance.3.9. Dissemination of Results of Policy Impacts: Discussions and meetings will be organizedfrom time to time with all relevant stakeholders to provide updates and to gain feedback onthe proposed BIPV supportive frameworks. A final seminar addressing the developedinstitutional and financial frameworks, financing and incentives schemes, and BIPVapplication mechanisms will be presented to all relevant stakeholders. Proceedings of theseminar highlighting the recommendations for the follow-up program and the adoption inthe 10th Malaysian Plan will be prepared and distributed to relevant agencies. GEF supportis required for the associated technical assistance.74. Component 4: BIPV Industry Development and R&D Enhancement ProgramThis project component will strengthen the human capacity in R&D and manufacturing of BIPVcomponents, thus providing the opportunity for exporting locally manufactured products andknow-how to regional markets. Local manufacturing and product services are crucial parts of thedriving force towards cost reduction in many PV programs world-wide, while creating many newjob opportunities (e.g. PV Rooftop Programs in Europe and Sunshine Program in Japan). Inaddition, R&D activities in BIPV architectural integration and components such as inverters areimportant for development of BIPV products. The market products could be made cheaper due tolocal manufacturing costs, cheaper tax, and meets directly the local BIPV system specification.Once the market is established, the economics of scale would lead to further cost reduction, whilegood after-sale services would protect the market. Therefore, promotion of local manufacturing27

and improvement of BIPV product services as well as R&D are very essential in reducing thelong-term cost of BIPV technology. Generally, this project component will focus on:4.1. R&D on Cost Reduction of Local BIPV Products and System Optimization for LocalConditions: Solar PV can be integrated as building elements to suit specific buildingrequirements. However, architects, engineers, developers and consumers need moreinformation in order to fully utilize BIPV application in Malaysia. Local universities willcarry out research and development activities with support from international collaboratorsto develop aesthetically pleasing and cost effective BIPV system. In addition, R&D activitywill develop local inverters for market commercialization. GEF support is required for theassociated technical assistance for the upgrading of the technical capacity of localuniversities in producing commercially viable BIPV products.4.2. International Collaboration and Technology Transfer Program: In tandem withactivity to upgrade the local industry capabilities, international collaboration and transfertechnology schemes will be developed and initiated. The local university and industrycapabilities will be improved through suitable partnership with foreign manufacturers.International collaboration and joint ventures will upgrade the local industry to acompetitive level. This could include transfer of technology, knowledge sharing, jointventure or direct foreign investment. Memorandum of agreements will be signed to initiatethe collaborations. The suitable environment created under activities of component 3 willbe used to attract foreign investors and manufacturers, as well as ensuring availability offinancial mechanisms to support local manufacturing. GEF support is required fortechnical assistance to establish the international collaboration.4.3. Upgrading Local BIPV Industry Capabilities: Assessments of local industry andmanufacturer will be conducted. International business meetings will be organized toprovide matchmaking opportunity between international and local industry. Throughpartnership or collaboration, as well as the R&D activities and international matchmaking,the Malaysian manufacturing sector will be able to upgrade their present capabilities formanufacturing of BIPV products. After-sales service is one of the most critical issues inprotecting the market and improving public confidence on BIPV technology. Thus, thisactivity will also develop situations to provide reliable and quality after sales services. Thiswould require enhancing the capabilities of suppliers and contractors in providing technicaland product supports. Additionally, different business models will be developed to providedirection in local BIPV industry development. Within the project period, a locally designmounting structures and a pre-commercialized local inverter will be produced throughincubations between the universities, local industry and international partners. GEF supportis required for the technical assistance to upgrade the local industry and develop thebusiness models.4.4. Establishment of BIPV Testing Facility: To ensure the successful deployment of BIPVtechnology, a testing facility to evaluate the quality of BIPV products will be established.This quality testing facility will be incorporated into the safety testing facility implementedby SIRIM (a national testing and standard development agency). Such a facility willenhance the quality and reliability of products. This will also ensure that Malaysia will notbe dumped with cheap but low quality BIPV products. International collaboration will beestablished to assist SIRIM and other relevant agencies to develop the facility. In the mid tolong-term, this facility can lead to the establishment of a center of excellence for R&D and28

testing of BIPV products in the ASEAN region, where Malaysia can become a productcertification center. GEF support is required for the technical assistance in setting up theproduct testing facility.PROJECT RISKS AND SUSTAINABILITYPROJECT RISKS75. While all efforts are made to ensure the effective design and implementation of the projectactivities, there are some risks that have to be addressed to ensure success of the project. Thedifferent risks that were identified during the project formulation and the recommendedmitigation measures are as follows:Table 2: Project Risks and Mitigating ActionsRisk Level of Risk Mitigating ActionsModerateLack of competency and awarenessfrom the Government sector - Shift ofgovernment energy program prioritiesleading to reduced technical andbudgetary supports on BIPVtechnology development; Insufficientmanpower and infrastructure in PTMand MECM leading to slow executionof activities; And reluctance ofGovernment to implement therecommended policy for BIPV marketsustainability.Component 3 of the MBIPV Project willspecifically focus on creating a suitablepolicy (Renewable Portfolio Standard),and financing mechanism towards BIPVmarket sustainability beyond thecompletion of the project. This will alsobe achieved with the support and resultsof the other MBIPV projectcomponents, particularly Component 1.The MBIPV project strategy also givespriority in engaging a very strong andhighly competent project team in orderto obtain high success in implementingthe project activities. The MBIPVProject Team will also maintain itsestablished close cooperation andrapport with respective key GOMagencies such as the Economic PlanningUnit (EPU), the Ministry of Energy(MECM), and the Energy Commission(EC), as well as the Malaysia EnergyCenter (PTM), which is expected to bethe project base.The National Steering Committee willalso comprise of key representatives anddecision makers from various importantstakeholders to further ensure theproject success. In addition, the soon tobe established National PV Council willprovide strong advocacy to theGovernment to ensure that the various29

Risk Level of Risk Mitigating Actionsrecommended policy and enablingenvironments for BIPV areimplemented. These strategies willensure that the risk for the policy of notbeing implemented is moderate.Lack of Cooperation by the PrivateSector - Failure to establish andcontinuously implement (monitor)approval schemes for one stop BIPVservice providers; Private sector notparticipating adequately in the projectdue to lack of interest.Technology Risk – Failure of BIPVproducts to perform as claimed bymanufacturers resulting to customerdissatisfaction.Market Risk – Unwillingness ofconsumers to buy BIPV products dueto bad experiences in the past and highinitial cost may lead to failure of theproject to induce increased sales andwidespread use of BIPV; Investmentsfor BIPV applications may not beavailable; Actual BIPV cost may notreduced as anticipated.ModerateLowModerateThe implementation of the showcasesand demonstration projects followed bythe “Suria 1000” will encourage existingservice providers as well as create newplayers and a competition to service thegrowing market.Implementation of BIPV products andinstallation codes and standards,labeling and warranty requirements.Consumers will be educated on use andapplication of wide range of BIPVproducts as well as consumer protectionprograms of the government. Inclusionof capacity building for improvingBIPV products and componentstolerance to local conditions.MBIPV will empower consumers tomake real time and informed decisionmaking when buying BIPV products.Financing, tax incentives, and masspurchasing programs will be developedand their implementation facilitatedunder the project to help reduce the costof BIPV especially for the residentialsector. The present workingrelationships with banks will be furtherenhanced to ensure cooperation fromfinancing institutes.The cost reductions in the IEA-PVPSparticipating countries have shown torange from 15% to 20% (or 10% to 17%for a larger market) in about every twoyears recently (international surveyreports are available from www.ieaprpv.org).The renewed commitment byJapan and some European countries, inaddition to the recently announced ThaiPV program will continue to generatemarket pressure towards PV costreduction. The expected improved30

OVERALLRisk Level of Risk Mitigating Actionscompetency level of the local BIPVindustry will also significantlycontribute to the overall cost reductionof BIPV in Malaysia.Moderate76. The overall project risk is moderate. The MBIPV is designed to facilitate close coordination andconsultation of the relevant stakeholders in each of the proposed activities. Activities that providepolicies, standards, guidelines and incentives, tools and procedures to implement BIPVprograms, information and education are sufficient to ensure mitigation of the risks. Governmentagencies, NGOs, manufacturers, and commercial and industrial establishments/associations havecommitted to financially support the project and use part of their budget in 2005 to 2010 for theMBIPV activities.SUSTAINABILITY77. BIPV is a proven reliable and in some cases already a cost-effective technology in theinternational market. In order to encourage, and sustain interest in the application of thistechnology, this project will build the technical capacity of the private and government sectors, todevelop, design and make use of the BIPV technology. The private sector, in particularly, hasexpressed interest in advancing the development of BIPV applications in a well orchestrated andcoordinated approach that will create a long-term sustainable market. It will also help create asustainable demand for and supply of BIPV systems through disseminating information,enhancing the market and developing the local industry towards BIPV products manufacturing.These efforts should establish a suitable environment for widespread adoption of grid-connectedBIPV technology as a viable RE technology in Malaysia.78. Sustainability of the project is ensured through the outputs of the different project components,e.g., endorsed policy and financial frameworks, updated standards and new technical guidelineson BIPV, optimized systems fitting the local climate, quality programs in place, informed andeducated consumers and policy/decision makers, increased know-how and upgraded capacity ofservice providers, easy accessible information center, enhanced R&D activities supported with anup-to-date testing facility and upgraded industry for local manufacturing. Component 3 of theproject will recommend an appropriate institutional and policy framework supported with anappropriate financing mechanism for a sustainable follow-up BIPV program to be implementedin the government policies at the end of the project.79. In the final year of the project, a follow-up national BIPV program will be designed consideringthe different achievements and lessons learned. The follow-up program, with a long-term targetthat is to be achieved in the 10th Malaysia Plan and in the subsequent 5-year development plansof the country, will create a significant impact to the local BIPV market with a possibility tospill-over to the neighboring countries. The national target will give stimulating signal to theindustry to expand their businesses and further reduces the cost for BIPV technology, due to theeconomies of scale. A follow-up National Roof-top Program within the 10th Malaysia Planperiod is expected to stimulate a sustainable BIPV growth of average 30% per annum, betweenthe years 2010 to 2020. With the expected institutional frameworks and financial incentives inplace, BIPV will possibly have a direct payback period of less than 15 years by the year 2020.31

The 15 years payback period can be achieved when the long-term targets of the MBIPV projectare met as follows (please also refer to Annex A2):• BIPV system cost is reduced to US$ 3.30/Wp due to market forces (today is US$ 7.0/Wp);• The BIPV energy yield improves to 1,400 kWh/kWp/year due to improvement inperformance, quality, and reliability (present average BIPV performance is 1,200kWh/kWp/year);• The feed-in tariff for BIPV is US$ 0.16/kWh, which is supported by enabling regulatoryframeworks and provision of incentives (presently, the feed-in tariff is US$ 0.06/kWh).80. The cost reduction can be achieved even without taking into consideration the other indirectvalue-added and savings generated from BIPV application such as reduced air-conditioning load,improved energy efficiency and energy losses reduction, and enhanced building aesthetic andimage without additional maintenance cost. Since the BIPV system is an integral part of abuilding and typically the building life is more than 20 years, the payback period will certainly beattractive. The expected BIPV industry development will subsequently improve the costeffectiveness of the technology. By the year 2020, it is expected that a total installed capacity of20 MWp of BIPV would be achieved from replication of the technologies demonstrated underthe MBIPV project. This translates to an annual avoidance of about 34,720 tons of CO 2 emissionsfrom the power generation sector. BIPV cost is expected to reduce by another 30% within the 10-year period (2010 to 2020) after the MBIPV project. Significant examples from countries likeGermany and Japan have demonstrated the critical need of an improved environment for BIPVmarket that will ultimately lead towards significant cost reduction.81. Figure 5 is derived from Annex A2, showing the projected BIPV market development and costreduction trend in Malaysia. Annex A2 shows the projected BIPV market development duringthe period 2006-2020 and their economics (payback period) under various enabling environmentsupports:•••Year 2006 – 2010: MBIPV project implementation (9 th Malaysia Plan);Year 2011 – 2015: 10 th Malaysia Plan period;Year 2016 – 2020: 11 th Malaysia Plan period.82. Figure 5-1 shows the relationship between BIPV system project payback period under thevarious market support measures (feed-in tariff and BIPV system discounted price). FiguresFigure 5 and 5-1 are inter-related. The targeted enabling environment for BIPV marketsustainability and replicability, during and post MBIPV project are as follows:• Feed-in tariff: The tariff will be on net-metering basis (US$0.07/kWh) during the period2006-2009 (MBIPV project period). The tariff will then be increased to US$0.18/kWh in theyear 2010 due to the introduction of Renewable Portfolio Standard (RPS). However, the tariffwill be reduce accordingly based on the rate of actual BIPV system cost reduction. Starting2016, the tariff is expected to stabilize at US$0.16/kWh (or will continue to reduce toUS$0.13/kWh depending on the BIPV cost reduction and the consumer electricity price).32

Cumulative Installed Capacity (kWp)25,00020,00015,00010,0005,000BIPV CapacityBIPV Cost7,0006,0005,0004,0003,0002,0001,000BIPV System Cost (US$/kWp)02006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200Fig. 5: Forecast Cumulative BIPV Installed Capacity andSystem Cost Reduction Under Alternative Scenario4,50040.0Alternative Feed-in Tariff (US$/kWh)0.20.180.160.140.120.10.080.060.040.020BIPV System Price (US$/kWp)4,0003,5003,0002,5002,0001,5001,0005000Feed-in Tariff (Alternative)BIPV Discounted Price (Suria Program)Payback Period2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202035.030.025.020.015.010.05.00.0Payback Period (Years)Fig. 5-1: Projected BIPV System Payback Period withEnabling Environments Under Alternative Scenario• BIPV discounted price (Suria 1000 Program): This price is not the actual BIPV cost but asubsidized price in the form of reducing discount incentive to be introduced under the Suria1000 Program (between year 2006 to 2015). However, starting from the year 2016, theincentive will be removed, thus the system price will be the actual BIPV system cost. Fig 5-133

shows the corresponding BIPV discounted price with the BIPV cost in Fig. 5, reflecting theeffect of the incentive provided. See also Annex A2.83. The National PV Council (NPVC) will continue to spearhead and sustain the activities after theproject life. The NPVC’s capacity will be fully enhanced during the project and linked to otherongoing initiatives.STAKEHOLDER PARTICIPATION AND IMPLEMENTATION ARRANGEMENTS84. During the conduct of the PDF B exercise from August 2003 until February 2004, a large numberof stakeholders were consulted in the formulation of this proposal through participation inworkshops, discussions, etc. These stakeholders include government agencies, banks, utilities,engineering firms, universities, service providers, and PV manufacturers, project developers,architects and NGOs. To continue with the broad consulting approach, the project will draw uponthe National PV Council consisting of representatives from relevant government agencies,NGOs, the PV industry, the utility and other stakeholders. The following table presents thestakeholders and their roles for the MBIPV project:StakeholdersEnergyCommissionMESITA.National PVCouncilSIRIMThe End UsersTable 3: Stakeholders and Their Roles in MBIPV ProjectRoles in MBIPV ProjectEnergy Commission (EC) will play a main supporting role in the provision ofcash support to the project. The MBIPV project is a natural complementaryactivity to EC’s energy efficiency units, which includes a suite of initiativeson demand side management.The private sector led MESITA will also provide monetary support to theproject. It has approved a contribution of about US$ 1 million and isexpected to lend its support in terms of future implementation strategiesThe Business Council for Sustainable Development Malaysia (BCSDM) willhost the National PV Council, which will act as the key promoter of the PVindustry in particular BIPV. The NPVC will be responsible to thedevelopment of industry players, approvals for BIPV service providers andcoordinating the BIPV quality assurance. It is expected that local playerssuch as manufacturers and service providers will aggregate their resources toassist the NPVC in achieving the desired results.As part of the sustainability program especially in the development of localindustry capabilities, SIRIM will play host to the test laboratories. SIRIM’scapacity to test will be upgraded with the inclusion of BIPV componenttesting. SIRIM will also play a lead role in the development andimplementation of new standards for BIPVAmong the major stakeholders are the end users themselves. The public’sparticipation will be mainly in the implementation stage when BIPV systemsare made affordable and offered to the masses. It is expected that the publicawareness program coupled with the strong supporting framework andcompetent service providers will propel the implementation of BIPV intogreater heights.The BIPV Industry Among the direct beneficiaries of the MBIPV project are the industry playerscomprising of fabricators, manufacturers and service providers. Initially, to34

StakeholdersTenaga NasionalBerhadUniversities andResearchInstitutionInfluentialProfessionalsNonGovernmentalOrganizationsRoles in MBIPV Projectcreate the BIPV market, suppliers/major manufacturers will participate in cofinancingactivities especially in the provision of the main components.However, in the later years when the cost of BIPV systems is reasonablylower, the participation from the industry is to sustain the momentum ofimplementation by addressing the manufacturing and or fabrication worksthat can be localized as well as provide good service to the end users.One of the main stakeholders in this program is the state utility firm TenagaNasional Berhad (TNB), which will play the role of grid-connectionprovider. In many cases, the supply from the BIPV systems are insignificant,nevertheless, the acceptance and support by the utilities to the concept ofpurchasing energy from micro generators are important market makersespecially to the end users. In general, capacity development on BIPVapplication will be extended to Sarawak Electricity Supply Corporation(SESCO) and Sabah Electricity Sdn Bhd (SESB).The universities play a lead role in the development and enhancement oflocal competencies. The universities will lead the way in research anddevelopment of products and systems that can be manufactured locallyArchitects, engineers and designers will play a crucial role in integratingBIPV in the overall building market. Well informed professionals such asarchitects will be able to propose use of BIPV systems and products toclients. The availability of good design engineers will ensure that the risk oftechnical failure is mitigated. Included in this category of stakeholders are theGovernment building designers such as the Public Works Department (JKR)and local authorities who approves the design submissions.The supporting role of NGO’s especially consumer association to influencespending habits of the end users will also help to promote the technologyeven further. The long-term impact of consumer confidence will beinfluenced by NGOs and hence the importance of addressing them as astakeholder of the MBIPV project85. The proposed MBIPV project is fully consistent with national policies and has been endorsed bythe Government of Malaysia. The Ministry of Energy, Communications and Multimedia(MECM) is the executing agency of the MBIPV project. The UNDP Country Office in KualaLumpur, together with the UNDP-GEF Regional Coordinator for Climate Change in the Asia-Pacific region will undertake the GEF oversight. MECM will be responsible to UNDP for theachievement of the project objectives, for all project reporting, including the submission of workplans and financial reports. The project will be executed in accordance with UNDP NationalExecution (NEX) Procedures. The day-to-day operational management of the MBIPV projectwill be the responsibility of the National Project Team (NPT).86. A national steering committee (NSC) will be established to provide overall guidance, monitoringand successful implementation of project objectives. The NSC will have members from variousstakeholders, such as Government Ministries, Government departments and agencies, TNB,SIRIM, universities, professional institutions, industry representatives, consumers associations,NGOs and the UNDP. The committee would be set-up to be responsible for overall direction.The MECM as the executing agency would chair this committee.35

87. MECM will assign the execution of the project to PTM, and the NSC will endorse theappointment. A National Project Team (NPT) will be set-up to be responsible for the overalloperational and financial management and reporting of the UNDP-GEF funds in accordance withthe rule and regulations for nationally executed project (Figure 5). It will be responsible for thestaffing, planning and implementation of project activities, provide mechanisms and technicalinputs necessary to integrate the results of various activities, ensure satisfactory performance ofthe project members and contractors, and provide official reports to the Project Director and theNSC as needed. It will be based at PTM and will be composed of the Project Leader (CTA),several full-time personnel (financial, administrative and assistance to the program manager) and,four full time national consultants to implement the four components of the MBIPV. Fourinternational experts and local subcontractors will support the NPT when needed to undertake theproject activities.88. Successful project execution will require close cooperation of the above mentioned stakeholders.The executive agency will ensure the delivery of the project outputs and the judicious use of theproject resources. The NPT will be responsible to the implementing agency and provide themechanism and technical inputs necessary to integrate the results of the various activities. It willalso ensure the satisfactory performance of the project members and contractors that will bedirectly involved in the project implementation. Some of the NPT’s tasks include, but not limitedto, the following:• Preparation of work plans, budget, and TORs of trainers, and subcontractors;• Monitoring and evaluation of progress of project activities;• Arranging of regular review meetings and ensure effective coordination of project activities;• Preparation and dissemination of project reports and other information materials;• Maintenance of books and records required for financial record-keeping and internal control;• Submission of timely and accurate financial reports and progress reports to UNDP and NSC.Additionally, the project will also engage:• A market survey agency to undertake market potential and perception study;• A marketing and promotion expert to develop the project promotion and marketing strategy;• A business development consultant to assist in the development of BIPV business models.89. A Project Review Committee (PRC) will be established to provide technical advice and specificrecommendations (if necessary) to improve project impact and implementation to the NPT. PRCwill monitor and evaluate the successful implementation of the project activities and outcomes.The EC will chair the PRC.36

Implementing Agency(UNDP)National Steering Committee(Chair: MECM)Executing Agency(MECM)UNDP-GEFOversightProject Review CommitteeMonitoring & Evaluation(Chair: EC)Project DirectorProject Leader(Chief technical advisor - CTA)Deputy Chief Technical AdvisorAdmin Support PersonnelComponent 1Component 2Component 3Component 4BIPV information services, awarenessand capacity building programsBIPV market enhancement andinfrastructure developmentBIPV policies and financingmechanisms programIndustry and R&D enhancementprogramNational Project TeamFig. 6: MBIPV Project Implementation Arrangement90. Considering the typical gestation period for obtaining GEF funding commitment, actual projectdevelopment, evaluation and approval, it is anticipated that the project will kick-off by January2005. It will operate for a period of 5 years concluding on 31 December 2009. Annex E showsthe tentative schedule of project activities. A detailed project implementation plan will beformulated after the GEF's approval of this Project Brief.INCREMENTAL COSTS, PROJECT FINANCING AND SCHEDULE91. The total estimated project cost is US$ 24,959,160, whereas the baseline activity amounts to US$20,259,738 and the incremental cost is US$ 4,699,420. The GEF funding request is US$4,699,420. The project budget is distributed as presented in Table 4.Table 4: MBIPV Project Budget (US$)Component Baseline Incremental Alternative % Share1) BIPV information services, awarenessand capacity building programs1,667,900 1,030,365 2,698,265 10.82) BIPV market enhancement andinfrastructure development11,446,980 2,207,986 13,654,966 54.73) BIPV policies and financingmechanisms program1,145,400 703,489 1,848,889 7.44) BIPV industry development and R&Denhancement program5,999,460 757,580 6,757,040 27.1Total (US$) 20,259,740 4,699,420 24,959,160 10037

92. The fund request from GEF will be utilized in the various capacity building and training activities(US$ 764,210), for the further enhancement of the market and purchase of necessary hardware(US$ 1,200,000) and, subcontract costs (US$ 184,210). Personnel and mission cost for allcomponents amount to US$ 2,551,000, which will be utilized to provide technical assistance inthe various cost-reduction activities and also in the endorsement of appropriate frameworks. Thecosts for the GEF supported incremental activities that will be carried out in each of the projectcomponent, amounts to a total of US$ 4,699,420. Table 5 summarizes the distribution of theproposed GEF contribution by component.ComponentNo.Table 5: Distribution of the Proposed GEF Contribution (US$)PersonnelMissionCostTraining &CapacityBuildingHardware&EquipmentSubcontractsTotal(US$)1 607,040 35,430 361,579 0 26,316 1,030,3652 938,240 43,430 0 1,200,000 26,316 2,207,9863 544,480 27,430 0 0 131,579 703,4894 343,520 11,430 402,630 0 0 757,580Total (US$) 2,433,280 117,720 764,209 1,200,000 184,211 4,699,420% Share 51.8 2.5 16.3 25.5 3.9 10093. Table 6 presents the summarized amount of project funds from the individual entities thatcontributed to the MBIPV project cost. The baseline contribution of US$ 12,699,610 (in cash)comes from the Government, private sector and selected international donors/entities. From thatamount, US$ 7,967,503 is allocated towards BIPV market enhancement, upgrading the localindustry and infrastructure development, as well as for the BIPV information services, awarenessand capacity building programs. The private sector (made up of potential local and foreign BIPVmanufacturers and industry) and MESITA provide US$ 4,732,107 for the hardware cost for thenational kick-off BIPV program “Suria 1000”, the different demonstration projects, BIPV systemmonitoring activities, and capacity development. Baseline in-kind contributions come from thedifferent government agencies and institutes, as well as from the private sector. These includethose from MECM, EC, PTM, SIRIM, Public Works Department (JKR), EPU, CETREE,universities, etc at US$ 3,707,236. A total of US$ 3,852,894 is contributed by the private sector(e.g. TNB, project developers, industry, building owners, etc), and by some internationalcompanies (e.g. Fraunhofer ISE, international PV companies, etc.). Table 7 presents the detailsources of co-financing and their status.Table 6: Project Budget Contributions (US$)Contributor Cash In-Kind Total %ShareGEF $4,699,420 $0 $4,699,420 18.8%MECM $1,014,871 $684,210 $1,699,081 6.8%Energy Commission $4,250,000 $52,632 $4,302,632 17.2%GOM (SIRIM & others) $2,652,632 $2,970,394 $5,623,026 22.5%MESITA $918,947 $0 $918,947 3.7%Private Sector (local & international) $3,863,160 $3,852,894 $7,716,054 30.9%Total $17,399,030 $7,560,130 $24,959,160 100.0%38

Table 7: Co-Financing Sources (US$)Name of Co-financierAmountClassification Type(source)*(US$)StatusMECM Government 9 th MP budgetallocation1,014,871 Confirmation tofollowEnergy Commission (EC) Government Grant 4,250,000 Confirmation tofollowMESITAElectricity Grant918,947 ConfirmedSupply IndustryMOSTE, MOE Government 9 th MP budgetallocation555,263 Confirmation tofollowSIRIM Government 9 th MP budgetallocation1,768,422 Confirmation tofollowPTM, Angkasa Government Investment 328,947 ConfirmedPublic Private Investment 2,894,737 ConfirmedCountry Heights, SoonHoe, Sime UEPPrivate (propertydeveloper)Investment 488,423 Expression ofinterestISESCOInternationalorganizationGrant50,000 Confirmation tofollowFraunhofer ISEInternationalorganizationGrant100,000 Confirmation tofollowShell Solar, SMA, AES, International Grant and/or 330,000 ConfirmedSputnikindustry discountSharp, RWE-Schott, BPSolar, Mitsubishi,Expression ofinterestUnisolar, IBC solarMECM Government In-kind 684,210 ConfirmedPTM Government In-kind 605,921 ConfirmedEPU, MOSTE, SIRIM, Government In-kind 1,430,263 ConfirmedJKR, EC, MIDA,CETREEUKM, UM, UiTM, UTM University(Government)In-kind986,842 Confirmation tofollowTNB Utility In-kind 698,947 ConfirmedPutrajaya Corporation, Property owner In-kind 1,263,158 ConfirmedGazeboCountry Heights, BankRakyatPropertydeveloperIn-kind15,789 Expression ofinterestBCSDM NGO In-kind 131,579 Confirmation tofollowBestium, Meriah Local industry In-kind 842,105 ConfirmedFraunhofer ISE, ShellSolar, SMA, AES, SputnikInternationalorganization,industryIn-kindSub-Total Co-financing 20,259,740* Letters of participation/interest are attached901,316 Confirmed39

94. The incremental cost analysis is presented in Annex A. Annex E: Project Schedule provides anoverall work plan for the project implementation. The project will be implemented over a periodof 5 years.MONITORING, EVALUATION AND DISSEMINATION95. The project implementation will be monitored and evaluated in line with UNDP rules andprocedures and the GEF guidelines for M&E. UNDP will undertake this activity withcooperation from the GEF focal point in Malaysia and the project's executing agency. UNDP'sextensive experience in monitoring large programs will be drawn upon to ensure that the projectactivities are carefully documented. Data will be collected on the key performance indicators andresults of the monitoring and evaluation survey will be used to implement changes to the project,if necessary and for future reference in the development of similar projects. Based on the overallproject objectives and the performance indicators, quarterly project reports and combined annualperformance and project implementation review reports will be prepared and submitted to UNDPand NSC. These will indicate how the quarter's and annual activities contribute to the overallobjectives. Performance indicators will then be prepared for each quarter. This will be used tomeasure performance. In addition, this monitoring will be used to continuously refine the projectapproach and activities.96. The NPT will present the project status and accomplishment to the PRC every quarter. Aquarterly work plan based on project objectives and performance indicator will be presented,evaluated and adjusted as and when necessary. The annual performance and projectimplementation review reports will provide a more in-depth summary of work-in-progress,measuring performance against both implementation and impact indicators. Any adjustments inproject approach will be reported to the NSC that will meet every 6 months, to evaluate andapprove the adjustments recommended. The project is subject to annual tri-partite reviewmeetings to come up with specific recommendations (if necessary) to improve project impact andimplementation and two independent evaluations during the project period. One will beconducted in the mid-term (first quarter of the third year) and the other will be scheduled uponproject completion. A terminal report would be completed prior to the completion of the projectdetailing achievements and lessons learned. Additional independent evaluation may be conductedif UNDP and the GEF deemed it necessary.97. An independent review will be conducted at project completion, and annually during the next 5years to monitor and evaluate the implementation of the different frameworks (institutional,policy, fiscal and financial) in the national policy. The objectively verifiable indicators forachieving the national target in the 10th Malaysia Plan will be monitored and evaluated. Anannual evaluation report would be completed detailing achievements and recommendations foradjustments.98. The NPT will undertake continuous, self-monitoring of project activities. They will also carefullymonitor external conditions related to the critical assumptions listed in the project frameworkdesign (Annex B). At the outset, the project team in consultation with UNDP and otherconcerned stakeholders will prepare detailed and measurable performance indicators for theoverall project. The indicators will apply not only to project activities, but also progress made inthe implementation of the pilot plants and other potential sites. The project framework design(Annex B) states all the success indicators or objectively verifiable indicators for each activity40

that will be carried out under this project. These indicators are the parameters that will bemonitored by the PRC and NSC under this project. The annual growth in installed BIPV capacityin the country provides a clear indication of the realization of the project's purpose. As such, thisis one parameter that has to be monitored and evaluated during the course of projectimplementation. In addition, the cost reduction of the BIPV technology is also another indicatorthat has to be monitored and evaluated. Surveys will be conducted during the second half of thefirst year and the second quarter of the fifth year (final term) of the project to track the currentstatus of the BIPV market. The success indicators or objectively verifiable indicators for eachobjective and activity in the project framework design will be monitored and evaluated during thecourse of project implementation. The extent by which the GEF developmental goal is achievedcan be evaluated from the monitored results.99. This project has been designed taking into account the relevant lessons learned from previousUNDP/GEF sponsored energy projects. One of the most important lessons learned from theprojects implemented to date is that long-term energy supply contracts is a critical issue that hasto be resolved prior to project implementation. This is essential for project financing. The projectwill coordinate with all the project stakeholders, particularly those implementing parallel projects(DSM, EE) whose results feed in, or are important links to the MBIPV project. The continuousmonitoring and evaluation of the endorsement of the policy framework in the 10th Malaysia Plan,after completion of the project period, will bring sustainability of the project with desired benefitsin the long run.100. Techno-economic analysis, evaluation of regulatory schemes and financing mechanism,financial and policy framework formulation, lesson learned from demonstration projects andshowcases of BIPV and market introduction of local manufactured products will be presented inInternational forums, seminars and workshops planned throughout the project. Informationdissemination can be carried at the resource center located at Malaysia Energy Centre (PTM).The information resource center will establish and manage electronic database and website onBIPV during and after the project. All relevant evaluation reports will be uploaded for thewidespread dissemination.41

ANNEX A: INCREMENTAL COST ANALYSISBROAD DEVELOPMENT GOALS1. Since independence in 1957, Malaysia has undergone tremendous growth and prosperity byshifting the economic activities from labor-intensive industries to energy and capital-intensiveindustries, particularly heavy industry. In recent years, Malaysia’s energy consumption hasincreased and comparable to larger energy consumers world-wide. In 2002 the energyconsumption was 2.8 MWh per capita and estimations show a significant increase in the energydemand. The supply for the demand is focused on coal and gas. However, there is a growingawareness and concern in the supply of energy particularly on the issue of carbon emissions andglobal warming. Under the Third Outline Perspective Plan (OPP3), the government isundertaking efforts to manage both non-renewable and renewable energy (RE) resources to caterfor the demand of the rapidly growing economy.2. In line with the Fifth Fuel objectives of the Government of Malaysia (GoM) and its energytargets in the next 5 years, the Malaysia BIPV Technology Application Project (MBIPV) wasconceived with the primary aim of reducing the long-term BIPV system cost by establishingsustainable and widespread BIPV technology applications that will offset the greenhouse gas(GHG) emissions from the electricity supply industry. Subsequently the project can be replicatedto neighboring countries and thus contributing a significant input on the overall global reductionof GHG emissions.3. This proposed project seeks GEF’s support to ensure that the GHG emissions from the fossilfuel-fired power generation is reduced through the utilization of PV in the building (BIPV) asviable alternative energy sources, as well as improving the energy efficiency of the buildingsectors.BASELINE SCENARIO4. The baseline conditions for this project consists of what the GoM would do without GEF support.BIPV technology remains untapped mainly due to its relatively high cost and the generalperception that the technology is ‘exotic’ and ‘unproven’ in Malaysia. Without this project, thecountry would have limited success in establishing a suitable environment for widespreadadoption of grid-connected BIPV technology as a viable RE technology. The current GoM’simplementation strategy is to focus on EE and biomass. PV receives some focus mainly in ruralapplications (stand-alone systems) especially in Sabah and Sarawak. However, the synergisticpotential of BIPV with the building industry and its impact on demand side managementespecially peak demand has not been fully recognized.5. Considering the business-as-usual scenario, the few activities and implementation lead touncoordinated efforts, characterized by no improvement in quality issues, policy and institutionaldeficiencies, inadequate investment in improving the technical skills and no cost reduction for thetechnology. A sustainable market and thus cost reduction achieved through improvement oftechnical skills, better procurement and lower transaction costs, scale of volume and localmanufacturing cannot be established without the proposed activities. The few present andplanned activities of the MECM, ST, MESITA-fund and SIRIM are complementing the activitiesof the proposed MBIPV project and will be integrated. A program on grid-connected PVapplications will only create short-lived impact to the local market. Testing facilities42

development will in general address product safety. These are regarded as baseline activities.Overall, the baseline expenditures are estimated at US$ 20,259,738.GLOBAL ENVIRONMENTAL OBJECTIVES6. The global environmental objective of the MBIPV project is to reduce the growth rate of GHGemissions from fossil fuel-fired power generation by reducing the cost of the BIPV technologythereby paving the way for widespread applications of BIPV systems. The proposed project’smain strategy is to formulate reliable and effective institutional and policy frameworks, supportedwith appropriate financial mechanism and establishment of a sustainable market for BIPV. Theproposed project activities will, upon completion, effectively support the integration of a BIPVtarget in the 10th Malaysia Plan (2011-2015) and ensure the sustainability of the BIPV programand the long-term cost reduction of the technology. It is projected that a potential installedcapacity of about 20 MWp BIPV can be realized by the year 2020, and this will lead to furthertechnology cost reduction. The MBIPV has been designed to be consistent with GEF OperationalProgram No.7 on “reduction of the long-term costs of low greenhouse gas-emitting energytechnologies”, and GEF’s Strategic Priority - “global market aggregation and national innovationfor emerging technologies”.7. The potential of global and regional benefits are substantial, as the outputs of the GEF supportedproject will be shared with neighboring countries. It is anticipated that due to the replicability ofthe project, identical projects will be implemented in other ASEAN countries, contributingfurther to the reduction of global GHG emissions. An initial assessment of the potential estimatesfor 2015 yearly sales of around 200 MWp for the ASEAN and Pacific region, contributing to areduction of CO 2 emissions equivalent to 340,000 tons per year.GEF ALTERNATIVE8. The baseline assessment that were carried out under the GEF PDF-B funded project preparatoryexercise estimates for the peninsula a total technical potential of BIPV in the range of 11 GWpPV capacity. Today around 450 kWp grid-connected PV capacity is installed leaving a hugeuntapped potential for PV applications in the building sector. Malaysia is forecast to face asignificant increase in demand of peak power. A total of 10 GW of new generation capacitybased on coal and natural gas-fired fired power plants will be planted up and commissionedbetween 2003 until the year 2010. This will lead to a tremendous increase in GHG emissions,thus causing more serious problem to the global environment. The underlying factors such asforecast increase in energy demand, the huge potential of available building spaces and untappedPV capacity point clearly towards adoption of the BIPV technology as an alternative.Considering the synergies and benefits of BIPV application, the technology will have animportant and sustainable impact to the buildings market and is able to substitute part of theconventional fossil-fired peak electricity generators. The successful outcome of the proposedactivities will make the BIPV become commercially viable as alternative to supply Malaysia’speak electricity demand in the medium term.9. Currently high-priced imported and local products, non-existent policies for the sale of PV-basedelectricity to the grid and other supportive regulations do not encourage people to use PV inbuildings and leaving an enormous potential untapped. The private sector, particularly the PVservice providers, has expressed interest in advancing the development of BIPV applications in awell orchestrated and coordinated approach that will create a long-term sustainable market.43

Subsequent to the project, a follow-up national BIPV program will be integrated as a target in the10th Malaysian Plan. This target will have a significant impact, due to the economies of scale aswell as the world-wide development trend and cost reduction of PV. Without the proposedactivities, the widespread application of BIPV will not take place and no impact on the long-termcost-reduction of BIPV systems is achieved. The GEF support will be instrumental in assistingMalaysia to fully harness the huge potential of the BIPV technology. Total project expenditure isUS$ 24,959,160. Of this amount, GEF is requested to provide US$ 4,699,420 as incremental costrequired to reduce the long-term cost of the BIPV technology by addressing local manufacturing,improving the local capability, and formulating supportive regulatory frameworks.10. The proposed MBIPV project is made up of four components that will address in an integratedmanner the long-term cost-reduction of the BIPV technology and adoption of supportiveregulatory frameworks to establish the desired environment for a national sustainable BIPVmarket. Each component of the project will consist of several specific activities designed toachieve successfully the overall objective.In Component 1, an extensive promotion and education campaign will be orchestrated togenerate awareness and understanding in the public and policy making organizations. Trainingcourses developed with focus on BIPV will improve the local competency level of relevantstakeholders. Component 2 will showcase and evaluate different BIPV application technologiesand develop the local BIPV market. The BIPV demonstrations (500 kWp) will provide adequateknowledge and experiences to architects, engineers, project developers and others for the futuresustainable implementation of a follow-up program. In parallel, relevant building standard will beupdated and new PV installation guidelines will be drafted providing technical assistance to theindustry. In Component 3, supportive frameworks will be developed and recommendedaddressing policy, fiscal, financial and institutional issues in order to establish a favorableenvironment for long-term market development and set a target for a follow-up BIPV program inthe 10th Malaysia Plan. Component 4 will encourage the local industry to transfer promisingapplication from R&D to products ‘Made in Malaysia’. BIPV product cost will be reducedthrough local manufacturing and technology transfer. A BIPV testing facility will be establishedto ensure the quality and reliability of the local manufactured products and to increase the levelof expertise for the R&D sector and the industry.11. COMPONENT 1: BIPV INFORMATION SERVICES, AWARENESS AND CAPACITY BUILDING PROGRAMThis project component will enhance the level of understanding and awareness in an extensiveeducation campaign and capacity building program. Today, insufficient understanding of theBIPV technology at policy making level and public sector hampers the widespread use of thetechnology. The level of awareness for the public in general and especially policy makers will beraised to the point that they understand the technology, aware of its true benefits and ecologicalsignificance, understand the purpose and appreciate the function of the technology. Policymakers shall further appreciate the possibilities for the market and the industry, and are able tointroduce suitable policy, regulatory initiatives and special electricity tariff for gridinterconnection.Because of limited proficiency of the local PV industry, BIPV receives a negative perception atpolicy level and in the public. The limited capabilities of the service providers resulted in highpriced and often badly systems, thus creating further obstacles instead of proofing thetechnology. Several activities will address this problem to improve the level of competency with44

selected training courses. To ensure the quality in the installation, the service providers will becertified after successfully undergoing and passing the training courses. A national body onquality control (watchdog) will be responsible for any quality disagreements and legal issues.With the proposed activities, the GEF supported project will increase the technical skills of thelocal industry, hence providing increased quality work and reduced installation cost, due to anincrease in know-how and experience.The baseline cost of US$ 1,667,900 represents the current information and promotion activities inthe national information resource centre (PTM) and of GoM with focus on EE and Biomass overthe next 5 years. The additional activities, which require US$ 1,030,365 as an incremental cost toimplement under the MBIPV project, will among others enhance the information resource center,develop and conduct training courses and increase awareness and interest in public and policysectors. The total project component cost is US$ 2,698,265.12. COMPONENT 2: BIPV MARKET ENHANCEMENT AND INFRASTRUCTURE DEVELOPMENT PROGRAMThe technical feasibility and economic viability of BIPV technology will be addressed in anumber of demonstration projects. These projects will further provide a wider level of acceptanceand better understanding on the technology and its benefits. The demonstration projects will alsoserve to provide first hand experiences for improvements in the training of the stakeholders aswell as increased efforts in R&D activities. The BIPV demonstration projects will beimplemented in a two-tiered approach for market penetration. In the first approach, fourshowcases will be implemented on selected newly constructed premises (a) GovernmentBuilding: New MECM office building (LEO) with a 4 kWp semi-transparent system over themain entrance; (b) Commercial building: Hotel Park&Ride, Putrajaya with 44 kWp semitransparentsystem covering the link way; (c) Highly visible public building: Café Gazebointegrating 40 kWp as roof and shading system; and, (d) Residential: 4 kWp roof integratedsystem on three adjoining buildings (in total 12 kWp). These BIPV showcases, with a total PVcapacity of 100 kWp, will be implemented in the first two years to provide key references on thevalue-added of BIPV technology that will be fully integrated into four different buildingenvelopes. The potential of the cost reduction and the benefits will be measured to provideimprovements for the adaptation to local conditions with focus on the individualities of these fourmain building categories. The BIPV showcases are an incremental activity that will requirefunding from GEF.In a second approach, demonstration projects on government and private buildings will beimplemented. A total of 400 kWp BIPV capacity will be installed over a period of 4 years. Thisis the minimum capacity required to generate significant impact. The GEF incremental costfunding of US$ 2,207,986 is approximately 20% of the total cost of the BIPV technologydemonstrations, and will be used to offset the additional cost of the demonstrations and enhancethe market on different levels with BIPV showcases. The project partners, i.e., end-users,industry and other donors will pay for most of the hardware cost. The demonstration projects willprovide adequate knowledge and experience to relevant stakeholders for the future design of thelong-term program and technology applications.The other key activity will establish and operate a national BIPV program “Suria 1000” targetingthe residential and commercial sectors. In total, 1000 kWp will be installed over 4 years period toprovide direct opportunities to the public and industry to be involved in renewable energyinitiatives and environmental protection. Incremental cost will involve education, on-the-job45

training and the design and operation of “Suria 1000”. The GoM (through the EnergyCommission), public sector and the PV industry will shoulder the other costs including hardware.To ensure the sustainability of the market enhancement, the government, the PV industry, thepower utility, NGO’s, and the financing sector will co-operate closely together. Promotioncampaigns will disseminate the BIPV success stories for further positive development of theBIPV technology. The total cost to implement Component 2 is US$ 13,654,966. The baselinecost is US$ 11,446,980 and includes publishing of relevant standards integrating BIPV andguidelines for technical reference to the stakeholders, as well as activities to implement gridconnectedsolar PV applications. This also includes the cost required for different demonstrationsof BIPV in government and private buildings.13. COMPONENT 3: BIPV POLICIES AND FINANCING MECHANISMS PROGRAMThis component will involve activities intended to enhance the capacity of policy makers incoming up with appropriate, proactive and integrated plans and policies that will facilitate thedevelopment of a conducive climate for BIPV, and therefore further cost reduction of thetechnology. Based on various targeted research activities, a suite of policy, legal, institutional,financial and fiscal measures will be proposed to the government of Malaysia. These frameworkswill enable the formulation of a national BIPV target in the 10th Malaysia Plan (2011-2015),supported with suitable and customized mechanisms for the local condition. The sustainability ofthe GEF supported project will be achieved with the integration of a national roof-top target inthe 10th MP and an appropriate environment created for higher penetration of BIPV. The 10thMP target will be significant enough to further accelerate the market development and enhancethe PV industry in the country that will lead to long-term cost reduction of the technology. Theseadditional BIPV policy and planning capacity enhancement activities of the MBIPV project willcost US$ 703,489 to implement. The current usual planning and policy-making activities withfocus on general solar energy applications are regarded as the baseline cost for this projectcomponent. This amounts to US$ 1,145,400 and the total cost of this project component is US$1,848,889.14. COMPONENT 4: B IPV INDUSTRY DEVELOPMENT AND R&D ENHANCEMENT PROGRAMCurrently, there are very limited BIPV products manufacturing capacity and capability in thecountry. Malaysian manufactured BIPV products will remain much to be desired. Despite therecognized need to develop and enhance local manufacturing capacity and capability, the effortssuch as R&D and industry participation are uncoordinated and spurious. Testing facilities willcontinue to be developed but focusing on safety issues. The baseline cost activity is estimated atUS$ 5,999,460. This project component will systematically strengthen and organize the humanresource capacity in R&D and manufacturing, thus creating the opportunity of exporting theMalaysian manufactured products and know-how to regional and global markets. The total costof this project component is US$ 6,757,040. The additional activities will require an incrementalcost of US$ 757,580 and will enhance the R&D activities on product development, providetechnical assistance to improve the testing facility on quality products, and to increase theinvolvement of the industry. Partnership or joint ventures with international companies willupgrade the local companies. The technical infrastructure for testing and certification will also beimproved to ensure high quality products for the local and international market.46

INCREMENTAL COSTS15. Table A-1 shows the incremental cost matrix. The baseline and alternative courses are presentedtogether with the cost of achieving them.16. The indicative budget for each project component is as follows:Component Baseline Incremental Alternative % Share1) BIPV information services,awareness and capacity building 1,667,900 1,030,365 2,698,265 10.8programs2) BIPV market enhancement andinfrastructure development11,446,980 2,207,986 13,654,966 54.73) BIPV policies and financingmechanisms program1,145,400 703,489 1,848,889 7.44) BIPV industry development andR&D enhancement program5,999,460 757,580 6,757,040 27.1Total (US$) 20,259,740 4,699,420 24,959,160 10017. The distribution of the proposed GEF contribution by component is as follows:ComponentNo.PersonnelMissionCostTraining &CapacityBuildingHardware&EquipmentSubcontractsTotal1 607,040 35,430 361,579 0 26,316 1,030,3652 938,240 43,430 0 1,200,000 26,316 2,207,9863 544,480 27,430 0 0 131,579 703,4894 343,520 11,430 402,630 0 0 757,580Total (US$) 2,433,280 117,720 764,209 1,200,000 184,211 4,699,420% Share 51.8 2.5 16.3 25.5 3.9 10018. The following table shows the distribution of the baseline costs:Budget Contributors TypeComponent1 2 3 4TotalGoM (MECM, EC, Cash 549,150 4,630,730 236,520 2,501,103 7,917,503SIRIM, JKR, PTM, etc) In-kind 454,276 987,828 829,933 1,435,199 3,707,236Private & industry sector Cash 0 3,929,475 0 852,632 4,782,107(MESITA, public, local& International entities)In-kind 664,474 1,898,947 78,947 1,210,526 3,852,894Total (US$)Cash 549,150 8,560,205 236,520 3,353,735 12,699,610In-kind 1,118,750 2,886,775 908,880 2,645,725 7,560,130% ShareCash 32.9 74.8 20.6 55.9 62.7In-kind 67.1 25.2 79.4 44.1 37.3Total (US$) 1,667,900 11,446,980 1,145,400 5,999,460 20,259,740Share (%) 8.2 56.5 5.7 29.6 10047

TABLE A-1: INCREMENTAL COST MATRIXComponents Cost Baseline Alternative Incremental1. BIPV Information Services, Awareness and Capacity Building ProgramsTotal BaselineFunds$ 1,667,900 Business-as-Usual Scenario: Proposed Situation: Additional Features:PTM (information resource centre)is working on solar energy and REin general but not specifically onBIPV. No educational material orpublication addressing PVtechnology in buildings (BIPV), andfor improving the understanding andinterest of public and government inBIPV. The competency level of thePV service providers remains lowdue to non-availability of specifictraining courses and qualityassurance.An extensive campaign on awarenessbuilding for the public and the policymakers is conducted. Technicalcompetence of the local PV industryis improved through a comprehensivetraining and capacity buildingprogram. Relevant institutions areestablished to provide national coordinationon PV quality control andon dissemination of information.Training, education andinformation materials on BIPVare published, coordinated andregularly distributed. A websiteand database on national andinternational BIPV is providingeasy accessible information. ANational PV Council isestablished and responsible forPV quality aspects for end-usersand service providers. Aninternational BIPV event ishosted in Malaysia to buildawareness for decision makers.FundsRequestedfrom GEF$ 1,030,365Domestic Benefits: Domestic Benefits:Increased awareness on RE Enhanced understanding and positivetechnologies (biomass, PV for rural perception of BIPV at many levels ofapplications, fuel cells), but not on society. Increased confidence in theBIPV.viability and benefits of PVapplications in buildings. Improvedcompetency level of the domestic PVindustry.Domestic Benefits:Increased technical skills andexperience of the technology forthe users, service providers,architects, end-users and manymore lead to properly operatingsystems, cost-reduction andhigher market penetration.Access to information on BIPVis widespread and easy.48

Components Cost Baseline Alternative IncrementalGlobal Benefits: Global Benefits:Global Benefits:None.Decision-makers will be equippedwith the knowledge necessary toadopt supportive regulatoryframeworks for BIPV into thesucceeding 5-year development plansin a sustainable manner to ensure thegrowth of the national PV market,with an impact on the internationalmarket. Improved competency of PVbusiness can be transferred to otherASEAN countries.Total FundsRequired:$ 2,698,265 $ 1,667,900 $ 2,698,265 $ 1,030,365Potential for replication of BIPVtraining and transfer of lessonslearned to other ASEANcountries.2. BIPV Market Enhancement and Infrastructure DevelopmentTotal BaselineFunds$11,446,980 Business-as-Usual Scenario: Proposed Situation: Additional Features:PV is used mainly for ruralapplication with subsidy from GoM.Standards to provide the neededguidance are available but notspecifically addressing BIPV. Agrid-connected solar PV program isimplemented, but without muchemphasis for sustainability beyondthe program. Spurious and uncoordinatedgrid-connected PVsystems will continue to beimplemented, but limited to as oneoffinstallations and as researchexercises.Appropriate guidelines are providingthe needed technical assistance forsolar PV (and BIPV) projectdevelopers and implementers.Demonstration of BIPV applicationsenhances understanding about theviability of the BIPV technology andits benefits.PV standards development andimplementation; BIPVshowcases and demonstrationprojects (500 kWp) areimplemented on targetedpremises. A national BIPVprogram (1 MWp) is initiated tointroduce the BIPV market.National PV Council accreditslocal service providers whocompleted and passed therequired training course. Theapproved one-stop serviceprovider improves the publicconfidence level and technicalcompetency.49

Components Cost Baseline Alternative IncrementalFunds $ 2,207,986 Domestic Benefits: Domestic Benefits:Domestic Benefits:Requestedfrom GEFLimited business opportunities forPV manufacturers/suppliers. Limitedinstalled capacity of grid-connectedsolar PV.Total FundsRequiredGlobal Benefits: Global Benefits:GHG emissions are reducedmarginally.Increased knowledge and competencyof PV service providers, engineers,and architects in the aspects ofdesign, implementation, operation,performance and maintenance.Increased awareness of the benefitsand the technology by the public andpolicy sector.Higher penetration of PV will offsetfossil fuel-fired power generation andreduce GHG emissions.$13,654,966 $ 11,446,980 $ 13,654,966 $ 2,207,986The local capabilities in BIPVtechnology design andimplementation are strengthenedand further sustainable nationalinitiatives are implemented,leading to a significant growthand cost-reduction of thetechnology.Global Benefits:Reduction of GHG emissions.3. BIPV Policies and Financing Mechanisms ProgramTotal BaselineFunds$ 1,145,400 Business-as-Usual Scenario: Proposed Situation: Additional Features:FundsRequestedfrom GEF$ 703,489General solar energy technologyapplication is addressed in thenational energy policy (5th fuelpolicy, 9th MP) and IRP (integratedresource planning)-study. GoM REfocus is on biomass. No supportingfinancial mechanism in place for PVapplications. The existing energytechnology environment ishampering the uptake of a localBIPV market.Appropriate policy and institutionalframeworks and financial mechanismare developed and formulated and atarget for BIPV market penetrationset in the 10th Malaysian plan (2010to 2015). Operational mechanism forthe development of the BIPV marketpost 2010 are in place.Domestic Benefits: Domestic Benefits:Biomass utilization for energyapplication is widely accepted. Solarenergy technology applications (e.g.,BIPV) remain as a research subject.With a target set in the GoM policies,the BIPV industry is ready to investin new jobs and expanding thebusiness to meet the set goal forBIPV applications.Several studies on targetedresearch support the formulationof a solid institutional and policyframework, supported withsuitable financial mechanism.The BIPV technology isintegrated in EE and other REinitiatives, providing synergiesand benefits.Domestic Benefits:Clear government policysupporting the growth of themarket and achieve economicsof scale.50

Components Cost Baseline Alternative IncrementalGlobal Benefits: Global Benefits:Global Benefits:GHG are reduced via Biomass andEE applications only.Total FundsRequiredThe government policies in place willenable the market to growsustainably. Improved BIPV servicesand products are exportedinternationally.$ 1,848,889 $ 1,145,400 $ 1,848,889 $ 703,489The successful approach will bereplicated in the other ASEANcountries.4. BIPV Industry Development and R&D Enhancement ProgramTotal BaselineFunds$ 5,999,460 Business-as-Usual Scenario: Proposed Situation: Additional Features:FundsRequestedfrom GEFTotal FundsRequired$ 757,580A national solar (PV & thermal)technology development road map isdeveloped, but efforts in the R&Dsector are uncoordinated. Due tonon-existence of a market, R&Dresults are not transferred and nolocal manufacturing is taking place.Testing facility on PV product safetywill be available, but will lackfacility to test on BIPV productquality and performance.R&D activities are enhanced andcoordinated. The PV industry isencouraged and supported to producelocal BIPV products. Cost reductionfor local products is accomplishedthrough technology transfer,international collaboration andeconomies of scale.Promising applications ininverter design and PVintegration in building are givenpriority in R&D. To ensure thesuccessful development of BIPVproducts, a testing facility isestablished. Internationalcollaboration and joint venturesupgrade the local industry to acompetitive level.Domestic Benefits: Domestic Benefits:Domestic Benefits:Limited increase of knowledge onPV technology applications, but onlyfor academics.Locally manufactured BIPV productsleads to cost reduction of systems andan enhancement of the BIPV market.New business opportunities andnew jobs. A cadre of expertise isdeveloped for R&D and also fortesting of inverter and modules.Global Benefits: Global Benefits: Global Benefits:NoneCheaper certified BIPV products in Centre of excellence for R&Dhigh quality suitable for export. and testing of BIPV products inthe ASEAN region.$ 6,757,040 $ 5,999,460 $ 6,757,040 $ 757,58051

TABLE A-2: FORECAST ECONOMIC ANALYSIS (PAYBACK PERIOD) OF BIPV SYSTEM IN MALAYSIAThe following table summarizes the preliminary economic analysis of the projected BIPV system initiatives in Malaysia as part of theMBIPV project, the Suria 1000 Program, and the anticipated BIPV replication projects.YearAnnualInstalledCapacityCumulativeInstalledCapacityEnergyYield perkWpForecast Cost Reductionper kWpSuria Program BIPVSystem Cost per kWp(Alternative Scenario)Feed-in Tariff perkWhSimple Payback Period(kWp) (kWp) (kWh/Year) BAU (US$)Alternative(US$)SuriaProgramDiscount(%)System PriceAfter Discount(US$)BAU(US$)Alternative(US$)BAU(Years)Alternative(Years)Alternativeand Added-Values (Yrs)pre 2005 450 450 1200 7,000 7,000 0% 7,000 0.06 0.06 > 352005 54 504 1200 6,800 6,700 0% 6,700 0.06 0.06 > 352006 206 710 1200 6,700 6,400 75% 1,600 0.06 0.07 >35 19.6 9.22007 300 1,010 1200 6,600 6,200 70% 1,860 0.06 0.07 >35 22.8 10.72008 340 1,350 1200 6,500 6,000 60% 2,400 0.06 0.07 >35 29.5 13.92009 300 1,650 1200 6,400 5,800 50% 2,900 0.06 0.07 >35 35.6 16.82010 300 1,950 1200 6,300 5,531 30% 3,872 0.06 0.18 > 35 17.5 8.22011 400 2,350 1200 6,200 5,234 25% 3,926 0.06 0.18 > 35 18.3 8.62012 520 2,870 1250 6,100 4,953 20% 3,963 0.06 0.17 > 35 18.3 8.82013 660 3,530 1250 6,000 4,688 15% 3,984 0.06 0.17 > 35 18.9 9.12014 900 4,430 1250 5,900 4,438 10% 3,994 0.06 0.16 > 35 19.6 9.42015 1,180 5,610 1300 5,800 4,203 5% 3,993 0.06 0.16 > 35 19.5 9.52016 1,560 7,170 1300 5,700 3,984 0% 3,984 0.06 0.16 > 35 19.4 9.52017 2,080 9,250 1300 5,600 3,781 0% 3,781 0.06 0.16 > 35 18.4 9.02018 2,720 11,970 1350 5,500 3,594 0% 3,594 0.06 0.16 > 35 16.9 8.42019 3,560 15,530 1350 5,400 3,422 0% 3,422 0.06 0.16 > 35 16.1 8.02020 4,670 20,200 1400 5,300 3,281 0% 3,281 0.06 0.16 > 35 14.8 7.652

3.1. Project OutputsComponent 1: BIPVInformation Services,Awareness and CapacityBuilding Programs1.1. Integrated informationand awareness buildingprogram on BIPV• Relevant GoM agencies processingapplications for BIPV projectimplementation by Yr3.• Local PV industry implementing at least3 BIPV projects each year starting Yr3.• Building owners and developers considerthe incorporation of BIPV systems intheir planned building projects startingYr2.• National PV Council established as anumbrella organization and leader of BIPVquality program by Yr1.• At least 3 BIPV projects implementedannually by trained PV service providers,engineers and BIPV designers by Yr3.Creation and operation of a BIPV cell in theinformation center at PTM by Q2 Yr1, wherea staff is able to become a BIPVspokesperson.BIPV website developed by Q3 Yr1 andoperational by Q4 Yr1, with average 120 hitsper annum.Mechanics for the information exchange andpromotion activities set-up by Q3 Yr1, whereBIPV information and facts are readilyavailable.Rollout of the national BIPV campaigntargeting the public starting Q3 Yr1. Fiveseminars or workshops, five conferences, oneroad show, two exhibitions conducted by endof project.1.2. National BIPV database Creation of a publicly accessible BIPVdatabase and link to website by Q3 Yr1, andfully operational by Q4 Yr1, with average 50users accessing the database annually.• Information center, website anddatabase• National PV Council• Reports on the training programs• Documentation of the quality controlprogram for the PV industry• Proposed building developmentproject plans• Proceedings of the InternationalBIPV event• Documentation of the ASEAN Planof Action• Impact assessment reportsDocumentation of the officialinauguration and program activities ofPTM.Link to website and number of users.Documentation on the informationservices and promotion campaign.Proceedings of seminar, conferences; roadshow materials.Numbers of registered users via electronictracking and manual sign-in.• Co-operation of CETREE andMoE• Sufficient human resource tooperate the informationservice, website and database• Local PV industry willing toparticipate in training courses• Industry acceptance of qualityprogram• Interest of policy makers toparticipate in capacitybuilding programsHuman resources available atPTM and Information Center goesas planned.Website is advertised widely.Input from other ongoingactivities available.Co-operation from CETREE andMoE.Sufficient human resources tooperate the database.55

1.3. BIPV training coursesIn-house training course for support staff(PTM) completed by Q2 Yr1 with at least 1staff member fully trained.Design and preparation of training materialscompleted by Q1 Yr2 and updated a monthbefore each training course.2 training courses on BIPV for serviceproviders, architects and engineeringconsultants in Yr2 and Yr3 each. More than80% of the local PV industry in the countrytrained on BIPV application by Q4 Yr5.1.4. National PV council Representation from NGOs, academia,government, industry, consumers, etc. meettwice a year starting from Q1 Yr1, with at1.5. Quality control programsfor local industry1.6. Capacity building andawareness programs forpolicy makers and financialsector1.7. International BIPV eventfor decision makersleast 10 representations for the first meeting.National PV Council implementing BIPVuser watchdog scheme by Q3 Yr2 with atleast 1 consultant appointed.National PV Council approves (in long-term –accredits) local service providers whocompleted and passed the required trainingcourse. Implementation of one-stop conceptfor BIPV service providers by Q4 Yr2. Fourapplications received by Q4 Yr2. At leasteight local PV industries (engineering firmsand service providers) are registered as onestopservice provider by end of the project.Annual award ceremony for BIPVinstallations starting from Yr3 with at leastone winner.Ten government officials and decision makersfrom the finance sector completed in total 5visits to local BIPV demonstration projectsand 2 study tours to countries withoutstanding BIPV installations by end of theproject.An international BIPV event is hosted inMalaysia every 2 years starting from Yr2 withat least 50 participants.Documentation of the training coursematerials as well as the individual trainingcourse evaluation reports (comments andrecommendations) submitted to NSC.Meeting minutes and statistics of groupmembershipNational PV Council meeting minutes anddocumentation of quality control schemefor BIPV watchdog.List of the approved one-stop serviceprovider from the National PV Council.Media reports covering the event and theaward winners.Reports on the results of the visits andstudy tours. Participant list.Documentation of event includingprogram booklet, registration, list ofparticipants and proceedings.Availability of reference materialsand participation of stakeholders(engineers, service providers,architects, manufacturers, etc).Continuance to champion theCouncil in long-term.Industry acceptance and watchdogservice is advertised widely.Acceptance and interest to applyof service providers.Candidates available.Willingness to participate fromhigh-level policy makers andfinance sector.Interest of high-level policymakers and CEO's to participate.56

1.8. Disseminate informationand lessons learn to regionalASEAN countries1.9. Impact assessment ofBIPV technologydevelopmentBIPV incorporated into ASEAN plan ofaction via NRE-SSN with Malaysia as thefocal country by Q3 Yr1. Malaysia reportsprogress during annual NRE-SSN meeting fordissemination of information starting Q1 Yr2.Initial survey conducted by Q4 Yr1 and finalsurvey by Q2 Yr5. Survey results identifyminimum 20% BIPV cost reduction andassess BIPV replicability beyond projectscope.Meeting minutes of working group.Document of the results from the initialsurvey and the impact assessmentsubmitted to NSC.Agreement of member countriesand continuance of meetings.Good response to the surveysfrom the public and policy side.Component 2: BIPV MarketEnhancement andInfrastructure DevelopmentProgram2.1. Standards and guidelinesdevelopment• Developed BIPV standards andguidelines enforced by Yr4.• Locally manufactured BIPV productscomply with standards by end Yr5• 4 BIPV showcases and 4 BIPVdemonstration projects implementedstarting Yr2.• BIPV demonstration projects operatedand monitored for performance startingYr2• About 20 prospective clients apply forBIPV projects (as part of the NationalBIPV program) each year starting Yr2.• Information on BIPV showcases anddemonstration projects disseminatedthrough seminars and the national BIPVcampaign starting from Yr3.Dept Standard Malaysia (DSM) publishes PVCode of practice by Q4 Yr1. Code of practiceis integrated in training courseware andwebsite, and utilized by service providers.Standard on building practice (MS 1525) isrevised by Q3 Yr5 and utilized by buildingdevelopers• Code of practice for BIPV systems• Revised building standard MS 1525integrating BIPV• Commission and inspection reports ofall BIPV showcase anddemonstration projects• Monitoring and evaluation reports ofBIPV showcases and demo projects• Documentation of BIPV technologyapplication promotion anddissemination programs• Documentation of the design of asustainable follow-up programDocumented national (MS) standardsfrom Dept Standard Malaysia (DSM).• Department of StandardMalaysia is supporting thestandards development• Availability of buildings forBIPV demonstration projects• Interest of housingdevelopers, architects andgovernment to apply PV innew building constructions• Public is willing to participatein the national BIPV programand co-finances 40%• PV industry supplies BIPVequipment at discount rates• Buy-back contract with utilityavailableDSM is supporting the activityand giving priority.57

3.8. Policy and financialframework implementation,monitoring and impactassessment3.9. Government liaison anddissemination of resultsAn annual assessment of the policyimplementation supported with an appropriatefinancing mechanism starting Yr5 until end of10 th Malaysian Plan.Annual policy impact assessment completedand reviewed by MECM for further action byYr5.A final seminar targeting the policy sectorwith all relevant stakeholders and the utilitypresenting the policy framework and thefinancial schemes by Q2 Yr4, with minimum50 participants.Documentation of policy reviews andrecommendations.Documentation of policy impact analysisand recommendations for policy revisionsor modifications.Proceedings of the seminar highlightingthe recommendations for the follow-upprogram and the adoption in the 10 thMalaysian Plan.Follow-up BIPV programendorsed.Full co-operation of relevantpolicy bodies.Interest to participate fromrelevant policy stakeholders(EPU, MECM, ST, etc).Component 4: BIPVIndustry Development andR&D EnhancementProgram4.1. R&D activitiesenhancement on costreduction of local BIPVproducts and systemoptimization for localcondition4.2. Internationalcollaboration and transfertechnology program• At least 2 business partnerships andtechnology transfer for harnessingenhanced R&D activities for two locallymanufactured BIPV products establishedand implemented by Yr5.• Developed business models for at least 5local BIPV entities successfullyimplemented by Yr5• Established BIPV testing facilityproviding quality control with possibleupgrade towards certification center byYr 5.2 research projects from universities andindustry on BIPV starting Q2 Yr1, with atleast 2 universities and 2 industries areinvolved.Three international collaborations and transfertechnology schemes established by Q4 Yr2.At least 2 collaborations between internationaland local partners materialized.• Documentation of BIPV R&Dprograms• Technology transfer programs• Documentation of businesspartnerships• Business plans of local BIPVmanufacturers• Documentation of localmanufacturing of BIPV products• Established BIPV testing facilityFunding approval by EC/MESITA anddocumentation of the research programs.Memorandum of agreements.• Know-how for R&D work inthe universities available• Industry is willing to upgradetheir capabilities• Availability of quality localindustry• International know-howtransfer availableLocal industry and universitiesexpresses interest, and financialsupports are available.International and local parties areinterested.61

ANNEX C: GEF OPERATIONAL FOCAL POINT ENDORSEMENT LETTER63

ANNEX D: STAP REVIEW & RESPONSE TO STAP REVIEWA Technical Review of GEF proposal“Malaysia: Building Integrated Photovoltaic (BIPV) Technology Application Project”(MBIPV)Overall Impression:This is a generally well structured proposal. However, it glosses over one point that it acknowledges,but then does not address. The main barrier to large scale PV installation (either building integratedor stand alone) is the currently higher price of PV technology compared to other conventional andeven some renewable energy technologies. The project authors acknowledge this point in some earlyparts of the text. However, ignoring this point in making estimates of long term impacts is not fair,nor will it help persuade the reader that the proposal deserves financial support.The proposal also does not state directly (or at least, in an easy to find way) how many tons of CO2will be avoided directly and indirectly for the project investment.Key Issues1. Scientific and Technical SoundnessThe scientific and technical basis of the project is sound. PV panels integrated into a building’sexterior (usually the roof in equatorial countries), reduce some components of the installation cost,and also improve the building’s integrity. They also provide high visibility, easy sales of excesselectricity back to the grid, and lower losses in transmission and distribution.So, the first technical comment is that these benefits should be quantified, in comparison with standalonePV installations. Otherwise, one is justified in asking why bother with building integration?Can’t the same goals as the current project be achieved by more traditional stand-alone PVinstallations?Relative to building integrated PV products (e.g., PV roof shingles by UniSolar of the USA), thereare many more – and more competitive – stand-alone PV products. So, the building-integrationaspect of the proposal needs to be strengthened.The second technical comment is about the barriers that this project will address. The major barriersfaced by large scale PV projects for Malaysia are correctly listed at several places in the proposal(e.g., on pages 9-111). The MBIPV project will address most of these barriers, but one major onemight remain – because it is outside the power of any agency to remove on a given schedule --- thisbarrier is the inherent high cost of current PV technology. There is no denying this fact, but theproposal does not address this fact head on. As a result, the text seems to circumvent thisinconvenient point, as if this point does not exist. This issue needs to tackled head on, and honestly.2. Identification of global environmental benefits and/or drawbacks of the projectThe project aims to accelerate adoption of building integrated PV power by removing variousinstitutional, informational, policy, technical and financial barriers. It should save several tons ofCO2 emissions per year. However, I could not find in the document clear and simple statement of64

how many tons of CO2 will be saved annually directly by the project implementation. Points 61 and62 on page 18 should have given these numbers, however, the text beats around the bush, by firstsaying how much the emissions will increase in the baseline scenario (point 61), and then bydiscussing the technical potential of whole of Malaysia and then the rest of the ASEAN region fullyexploiting building integrated PV (point 62). The simple question that must be simply answered is:at the end of this project, with an expenditure of US$ 4.7 million of GEF money, and a total of US$25.2 million of everyone’s money all together, how many tons of CO2 will you avoid directlyannually?There are no global environmental drawbacks of the proposal.3. How the project fits within the context of goals of GEF, its operational strategies,programme priorities, GEF Council guidance and relevant conventions.The project fits within the broad goals of GEF and its operational strategies and priorities. It aims toreduce barriers to large scale use of building integrated PV in Malaysia. The local expertisedeveloped in the course of this project will be useful if and when PV costs decrease and it becomeseconomically viable option. The activities identified in the proposal fit GEF programme prioritiesand meet the council guidance.4. Regional ContextIntroducing the institutional support for grid-connected PV power in Malaysia will assist in theintroduction of these skills and similar institutional support in the region.5. Replicability of the projectSeveral of the problems identified in Malaysia in this proposal are also seen, to various degrees, inother developing countries. The sections of the project dealing with removal of these barriers arereplicable in other countries. However, unless the core PV technology costs drop, as they well mightone day, the project is not replicable directly.6. Sustainability of the projectProject is designed to be sustainable beyond the horizon of GEF support, if and when core PV costsdrop.Secondary IssuesThe proposal has no significant linkages to other focal areas (e.g., biodiversity protection or coastalwaters).Other (non-stated) beneficial or damaging environmental effects are negligible.The degree of involvement of stakeholders in the project is planned to be adequate.The project will build significant capacity in Malaysia in the private and government sectors forbuilding-integrated grid connected solar PV installations.65

The project is innovative in terms of comprehensively addressing the removal of some of the barriersat the technical, institutional and financial level, and also in terms of private sector and governmentinstitutions, for long term capacity building for grid-connected solar PV power.Additional Comments1. Page 4, Para. 1, line 4. Insert word “become” after “increased and” for correct grammar.2. Page 5, top line. What is a “suiting environment for PV”?3. Page 6, Para. 11, lines 2-3. What is “planted up”?4. Page 7, Para. 14, line 5. Change “envisage” to “envisaged” for correct English.5. Page 7, Para. 16. Please double check the claim that the total solar (sunshine) input onMalaysia is only 16 times the human conventional energy consumption. This is veryunlikely to be true. Solar energy input should be much larger.6. Page 9, Para. 23. The PV prices are correctly quoted, but let’s face it, $7000 per kWp ishigh in comparison with other sources. So, one hopes that Malaysia does not pay at thishuge price to fulfill its technical potential for BIPV of 11 GWp! That number, US$ 77billion, is absurd and irrelevant to your proposal.7. Page 10, Para 26, line 3. What is “need to be firmed on”? And again in line 6, what is “needto be represented with views are considered”?8. Page 10, Para 29. Second sentence. Need to clean up the English. In the third sentence, doyou mean “of” when you write “on”?9. Page 11, Para 30. You write 6 MWp annual demand is needed to establish new factory, butthere is already 4.5 MWp idle factory capacity sitting around (see your Para 20 on page 8).10. Page 12, Para. 39, line 2. last word “in” should be deleted?11. Page 13, Para 44. Here you make the correct key point. BIPV does not take off because it istoo expensive. There is not much one can do about it for now. On the other hand, youshould make the point here, in a separate paragraph that Malaysia needs to build up localtechnical manpower and manufacturing capacity for the day when the PV costs will declineand PV will become competitive. Because without these local strengths, Malaysia will beunable to obtain the benefit from these lower PV costs when they come. The BIPV project,on the other hand, will help lower the balance-of-system costs slightly, but not significantlyenough to make a difference.12. Page 14, Para. 47. It is difficult to justify this project as sustainable. Without a drop on corePV prices, it is not financially viable. Without a drop in core technology price of PV, youcan not ignite the market for it. This is serious point, which should not be glossed over. Atthe same time, you should be able to say that you are building capacity in anticipation of adrop in cost of core PV technology.66

13. Page 14, Para 48. There seems to be a bit of wishful thinking here. What is the priceelasticityfor PV demand? How can you then write, without reference or withoutjustification, that an extra 10% drop in PV system prices, caused by the BIPV project, willbe large enough for a market take-off?14. Page 15, Figure 3. This is confusing. The baseline (gray bars) show higher installedcapacity annually than does the alternative (black bars). So, the baseline sales would havebeen higher than those with the project??15. Page 16, Para 49. Line 7. You assert that importing the technology and small market havecaused PV costs to be high in Malaysia. However, in other locations with larger marketsand local PV manufacture, PV costs are still high. Even in the US, one needs a subsidy tomake PV competitive with conventional electricity generation costs.16. Page 16, Para 52, line 1. Delete “of” from the line.17. Page 18, Paras 61-62. You should also give a straight answer to the question: how muchannual CO2 will the project save directly?18. Page 28, Para. 74-75. How about financial sustainability? The project will be poised to besustainable in terms of technical expertise and regulations, and financing and publiceducation, if and when the PV core technology costs drop. You need to address this point.19. Page 29, Para. 76. On what basis do you support graph in Figure 5, and the statement ofreducing the pay-back period to 15 years (from the current 60 years)? Unless PV pricesdrop (and they might drop owing to some technological breakthrough), these projections arewishful thinking.20. Page 38, Para. 8 (of Annex A). What you estimate here is normally called the technicalpotential. This is different from the economic potential, and still different from the marketpotential. Just because Malaysia expects a significant increase in peak demand does notmean that uneconomical technologies will get adopted to their full technical potential!!67

Responses to STAP Review of GEF Proposal“Malaysia: Building Integrated Photovoltaic (BIPV) Technology Application Project”(MBIPV)Comment Response ReferenceOverall Impression: The We fully agree that the main barrier to BIPV Page 16,proposal glosses over onepoint that it acknowledges,but then does not address.The project authorsacknowledged that the mainbarrier to large scale PVinstallation (either buildingintegrated or stand alone) isthe currently higher price ofPV technology compared toother conventional and evensome renewable energytechnologies. However,ignoring this point in makingestimates of long termimpacts is not fair, nor will ithelp persuade the reader thatthe proposal deservesfinancial support.application is the high price of the technology. Hence,the ultimate purpose of this project is to reduce thelong-term cost of the BIPV technology, in line withthe OP-7 objective, and the GEF strategic priority onglobal market aggregation and national innovation foremerging technologies (SP-5).Due to the present high initial price and lack of theenabling environment, the economics of the BIPVtechnology is unattractive. However, the technologyprice can only be reduced when there is a sustainableBIPV market. Unfortunately, a sustainable marketcannot be established for as long as the economics ofthe technology is unfavorable. Thus, it is a “chickenand egg” situation.Based on the 10-year assessment by IEA-PVPS(report is available from www.iea-pvps.org), the PVsystem cost can decrease by 15% to 20%, if there is adoubling of the market size. Therefore, the focus ofthis project is to create a growing and sustainableBIPV market with all supportive mechanisms to be inplace. The project is not targeting large capacityinstallations of BIPV, but instead will focus on thedemonstration of the BIPV technology applicationsand the creation of a sustainable BIPV market. Thesustainable BIPV market development and thesubsequent price reduction are to be achieved over along-term period (at least 10 years), i.e. beyond thecompletion of the project.Para 53Page 4, Para5Page 17,Para 58Although the approach of reducing the BIPV systemcost will be market and industry driven, the role of theGovernment is critical in setting-up the enablingenvironment for the sustainable BIPV market. In thisaspect, the Government of Malaysia is committed toimplement the MBIPV project under the 9 th MalaysiaPlan, in addition to the 5 th fuel policy and the SmallRenewable Energy Power (SREP) Program. Theresults of the MBIPV project will lead towardscontinuous development of the BIPV market underthe subsequent Malaysia Plans.Page 6-7,Para 13-1468

Comment Response ReferenceThrough the enhanced BIPV market, the project isexpected to achieve a 20% reduction of thetechnology cost within the project implementationperiod, and will continue to further reduce after theproject is completed. In addition, the continuous pricereduction will happen due to international marketpressure (mainly in Japan and Europe) to furtherreduce the technology cost. Hence, this MBIPVproject is also contributing to the global efforts toreduce the BIPV technology cost via the sustainableBIPV market development in Malaysia.Page 14,Para 48The proposal also does notstate directly (or at least, inan easy to find way) howmany tons of CO2 will beavoided directly andindirectly for the projectinvestment.The above response is incorporated into the projectproposal.As stated in Footnote 5, page 14, a 1MWh of PVelectricity is equivalent to 0.62 tons of CO 2 avoided.This is the same CO 2 emission factor used by theMalaysia Energy Centre (PTM) as a benchmark forcalculating CO 2 emission reduction for CDMpurposes. It is important to note that this CO 2emission factor is based on the power generation mixin Malaysia in the year 1999 (Table 1, page 6).As Malaysia plans to reduce the natural gas andincrease coal consumption in the years to come (referto Table 1, page 6), the emission factor is expected toincrease to more than 0.62 tons CO 2 .Directly, a BIPV installed capacity of 1 kWp inMalaysia will produce an average of 1.2 MWh ofelectricity annually, without any associated GHGemission. This annual electricity production isassumed to be available over a 25-year period, basedon the warranty given by the PV manufacturer andassuming the system is reliable.In addition, the following relationship between aninstalled BIPV capacity, the electricity production,and CO 2 emission factor, will be further investigatedand quantified during the MBIPV project.Nevertheless, the current assumptions are as follows:• The BIPV application can reduce as much as10% of a building air-conditioning load if theBIPV is appropriately used as shading devices.The assumption is that a 1 kWp BIPV can reducePage 14 and6, Footnote5 and Table169

Comment Response Reference5 MWh/year of air-conditioning load.• The reduced electricity losses by installing a 1kWp BIPV is assumed to be equivalent to 0.1MWh/yearBased on the total installed capacity of 1.5 MWp ofBIPV within the project period, the direct CO 2avoided will be:• Electricity production from BIPV: 1,500 × 1.2 ×0.62 = 1,116 tons CO 2 per annum• Reduced cooling load requirement: 30% of 1,500× 5 × 0.62 = 1,395 tons CO 2 per annum• Electricity losses reduction: 1,500 × 0.1 × 0.62 =93 tons CO 2 per annumThus, the total is 2,604 tons CO 2 avoided per annumthat translate to 65,100 tons CO 2 over the PV lifetimeperiod of 25 years.Indirectly, the MBIPV project will create technologyreplication of 20 MWp BIPV capacity in Malaysia bythe year 2020. This is equivalent to 34,720 tons CO 2avoided per annum that translate to 868,000 tons CO 2over the PV lifetime period of 25 years.Page 14,Para 48Page 18,Para 62The above response and correction is incorporatedinto the project proposal.1. Scientific and Technical SoundnessThe benefits of BIPV shouldbe quantified, in comparisonwith stand-alone PVinstallations. Otherwise, oneis justified in asking whybother with buildingintegration? Can’t the samegoals as the current projectbe achieved by moretraditional stand-alone PVinstallations?A PV system, either a stand-alone or a gridconnected,is classified as a BIPV system wheneverthe PV is aesthetically integrated into the buildingarchitecture and envelope. Most of the BIPVapplications are grid-connected systems that areapplied in urban areas. The stand-alone PV is asystem installation that requires battery to operate andmostly applied in remote areas.The facts are:• A stand-alone PV only produces electricity forthe intended use (e.g., household electricityconsumption, telecommunication systems, andnavigational systems).• A building integrated PV (BIPV) system will notonly produce electricity, but will also be anintegral part of the building envelope, with aspecific function (e.g., window shading device,Page 9, Para2270

Comment Response Referenceroof, decorative building façade). Hence, thesubstituted building materials will partially offsetthe BIPV technology cost. Also, land space forthe technology application will not be an issue.BIPV systems, in almost all cases, will alsoimprove the aesthetic exterior appearance of thebuilding.The most important benefits of BIPV, especially inurban areas, will be the opportunity to utilize PVtechnology without the need of land-use. As the costof land is significant in urban areas, BIPV will allowthe utilization of PV technology to generate electricitywithout incurring the additional cost of the land-use.Page 19,Para 64BIPV is a different technology approach compared toa stand-alone PV application. Therefore, one cannotsimply compare and justify both applications. Thebarriers for stand-alone application are very differentfrom those of BIPV.It is well accepted among the PV industry that BIPVoffers greater benefits in comparison to stand-alonePV application. There are many available literaturesto substantiate these facts (please refer to IEA-PVPSTask 7).A sustainable BIPV market means that theprospective users of the technology can afford andwill continue to apply the technology. Such customersare available in the urban areas. Thus, urban BIPVapplication will provide greater chances of success incomparison to stand-alone PV, which are mainlyapplied in remote locations.Failure rate of standalone PV system projectsworldwide (solar home system program) is in excessof 70% mainly due to the majority of the customerscannot afford to pay for the system if there is nosubsidy.Relative to buildingintegrated PV products (e.g.,PV roof shingles by UniSolarof the USA), there are manymore – and more competitive– stand-alone PV products.The response is as above.In addition, an IEA-PVPS report (IEA-PVPS T1-12:2003) stated that the system prices for stand-alonePV tend to be greater than those for grid-connectedBIPV, as BIPV does not require storage batteries and71

Comment Response ReferenceSo, the building-integrationaspect of the proposal needsto be strengthened.associated equipment. In general the stand-alone PVsystem prices are about twice the price of gridconnectedBIPV system.The MBIPV project willaddress most of thesebarriers, but one major onemight remain – because it isoutside the power of anyagency to remove on a givenschedule --- this barrier is theinherent high cost of currentPV technology. There is nodenying this fact, but theproposal does not addressthis fact head on. As a result,the text seems to circumventthis inconvenient point, as ifthis point does not exist. Thisissue needs to tackled (sic)head on, and honestly.Based on the fact that BIPV prices will go downwhen PV production increases, and PV productionincreases when BIPV demand increases, the MBIPVproject strategy to induce a cost reduction impact onthe technology relies in creating and sustaining amarket demand for BIPV (market driven strategies).It would be difficult to logically address costreduction of PV outside the market norms.International market (Japan and Europe) will continueto drive the technology price down due to higherdemand in respective countries. Since 1999, themajority of the world PV capacity has been gridconnectedBIPV, with a growth rate of about 30%(reference from IEA-PVPS T1-12:2003 report). Asmentioned earlier, for a doubling of a market size, thePV price will drop by 15% to 20%.Page 17,Para 562. Identification of global environmental benefits and/or drawbacks of the projectI could not find in the The response is as mentioned earlier.document clear and simplestatement of how many tons While the initial impact is minimal, the replicabilityof CO2 will be saved of the system will ensure a steady CO 2 avoidanceannually directly by the from BIPV of about 1.7 tons CO 2 per kWp perproject implementation. annum. Over the 25 years lifetime period of the PV,Points 61 and 62 on page 18 the total CO 2 avoided will be 42.5 tons per kWp.should have given thesenumbers, however, the textbeats around the bush, byfirst saying how much theemissions will increase in thebaseline scenario (point 61),and then by discussing thetechnical potential of wholeof Malaysia and then the restof the ASEAN region fullyexploiting building integratedPV (point 62). The simplequestion that must be simplyanswered is: at the end of thisproject, with an expenditureof US$ 4.7 million of GEFmoney, and a total of US$Page 14 and18, Para 48and 6272

Comment Response Reference25.2 million of everyone’smoney all together, howmany tons of CO2 will youavoid directly annually?There are no globalenvironmental drawbacks ofAgree.the proposal.3. How the project fits withinthe context of goals of GEF,its operational strategies,programme priorities, GEFCouncil guidance andrelevant conventions: Theproject fits within the broadgoals of GEF and itsoperational strategies andpriorities. It aims to reducebarriers to large scale use ofbuilding integrated PV inMalaysia. The local expertisedeveloped in the course ofthis project will be useful ifand when PV costs decreaseand it becomes economicallyviable option. The activitiesidentified in the proposal fitGEF programme prioritiesand meet the councilguidance.4. Regional Context:Introducing the institutionalsupport for grid-connectedPV power in Malaysia willassist in the introduction ofthese skills and similarinstitutional support in theregion.5. Replicability of the project:Several of the problemsidentified in Malaysia in thisproposal are also seen, tovarious degrees, in otherdeveloping countries. Thesections of the projectdealing with removal of thesebarriers are replicable inother countries. However,Agree. Page 16,Para 53Agree Page 17,Para 57This project (OP-7) mainly focuses on reducing thelong-term cost of the BIPV technology. The key wordis long-term where the final result will be realizedafter the completion of the project.As mentioned earlier, reduction of the cost of BIPVsystem can be achieved by inducing a sustainableBIPV market, not via a technological breakthrough.Hence, the overall strategy and approach of theproject focuses towards developing a sustainable andPage 17,Para 5873

Comment Response Referenceunless the core PVtechnology costs drop, asthey well might one day, theproject is not replicabledirectly.widespread market with the necessary supportmechanisms in place.The replicability of the project will depend on manyfactors including the price of PV. The risk that thecurrent strategy totally fails to achieve any long termcost reduction is between low to medium. Since themarket will respond to other enabling factors such asenergy policy and incentives, the absolute risk of theproject of not being directly replicable is thereforemuch less.Page 28,Table 26. Sustainability of theproject: Project is designed tobe sustainable beyond thehorizon of GEF support, ifand when core PV costs drop.Secondary IssuesThe proposal has nosignificant linkages to otherfocal areas (e.g., biodiversityprotection or coastal waters).Other (non-stated) beneficialor damaging environmentaleffects are negligible.The degree of involvement ofstakeholders in the project isThe market and capacity building activities arereplicable in the ASEAN region, and are there is aneed to introduce the technology first. The cost issuewill subsequently be addressed through improvedawareness and capacity level of the industry, thepublic, and policy sector in any country. Ultimately,the cost reduction of the system will be marketdriven, as mentioned previously.The response on the topic of PV cost reduction is asmentioned earlier.In addition, the important aspect of the projectsustainability is to ensure that there is a continuationactivity to grow and develop the BIPV market beyondthe project. Hence, the national BIPV program withinthe 10 th Malaysia Plan will be critical. Therefore, theproject strategy will ultimately lead towardsdevelopment and implementation of a sustainablefollow-up program. Significant examples fromcountries like Germany and Japan have demonstratedthe critical need of an improved environment forBIPV market that will ultimately lead towardssignificant cost reduction.Agree.Agree.Agree, via the National Steering Committee and theNational PV Council.Page 18,Para 62Page 29,Para 76Page 30,Para 7874

Comment Response Referenceplanned to be adequate.The project will buildsignificant capacity inMalaysia in the private andgovernment sectors forbuilding-integrated gridconnected solar PVinstallations.Agree. Page 20-21,Para 68The project is innovative interms of comprehensivelyaddressing the removal ofsome of the barriers at thetechnical, institutional andfinancial level, and also interms of private sector andgovernment institutions, forlong term capacity buildingfor grid-connected solar PVpower.Additional CommentsPage 4, Para. 1, line 4. Insertword “become” after“increased and” for correctgrammar.Page 5, top line. What is a“suiting environment forPV”?Agree. Page 20-27,Para 68-71Agree.“Suiting environment” means “enablingenvironment”, characterized by:• Public sector: Enhanced awareness about theBIPV technology and its benefits, improvedtechnology perception and confidence.• Industry sector: Improved awareness about theBIPV technology and its benefits, effectivequality control programs, established andeffectively enforced code of practice for BIPVsystem designs and applications.• Policy sector: Favorable feed-in tariffs and fiscalincentives, integration of the BIPV technology inthe national policy.• Finance sector: Attractive financing schemes forBIPV system projects and capital availability.The word “suiting” is replaced with “enabling” in theproject proposal.Page 4, Para1Page 5, Para6Page 6, Para. 11, lines 2-3.What is “planted up”?Page 7, Para. 14, line 5.Change “envisage” to“designed and installed”.Agree.Page 6, Para11Page 7, Para1475

Comment Response Reference“envisaged” for correctEnglish.Page 7, Para. 16. Pleasedouble check the claim thatthe total solar (sunshine)input on Malaysia is only 16times the human conventionalenergy consumption. This isvery unlikely to be true. Solarenergy input should be muchlarger.Agree.• The average Malaysia solar radiation is 4,500kWh/m 2 per day.• The total land area of Malaysia is 328,550 km 2 .• The Malaysian annual electricity demand in 2002was about 67,000 GWh.The correct value should state 8 million times of theMalaysian annual conventional electricityrequirement. However, this statement is notsignificant to the context of the project and thus, isdeleted.Page 7, Para16Page 9, Para. 23. The PVprices are correctly quoted,but let’s face it, $7000 perkWp is high in comparisonwith other sources. So, onehopes that Malaysia does notpay at this huge price tofulfill its technical potentialfor BIPV of 11 GWp! Thatnumber, US$ 77 billion, isabsurd and irrelevant to yourproposal.Page 10, Para 26, line 3.What is “need to be firmedon”? And again in line 6,what is “need to berepresented with views areconsidered”?Page 10, Para 29. Secondsentence. Need to clean upthe English. In the thirdsentence, do you mean “of”when you write “on”?Agree.The PV price is expected to go down from US$7,000/kWp to US$ 5,500 (20% reduction) by 2010,and to US$ 3,500 (>30% reduction) by 2020.In reality, the BIPV technical potential of 11 GWpmay never be fulfilled within the next 20 years.Assuming that there will be a 20 MWP of BIPVcapacity by year 2020, the associated BIPV marketpotential is about US$ 70 million. This amounttranslates into national benefits towards local industrydevelopment that will spur the national GDP.However, this statement is not significant to thecontext of the project and thus, is deleted.“need to be firmed on” is replaced with “needs to becommitted” in the project proposal.“need to be represented with views are considered” isreplaced with “consumer groups and industry playersneed to be represented with opportunity to highlightconcerns and to be adequately addressed” in theproject proposal.Agree.The second sentence is replaced with “State-of-the-artmaterials are available without inherent restriction tothe supply chain”.Page 9, Para23Page 10,Para 26Page 10,Para 2976

Comment Response ReferencePage 11, Para 30. You write6 MWp annual demand isneeded to establish newfactory, but there is already4.5 MWp idle factorycapacity sitting around (seeyour Para 20 on page 8).Approximately 6 MWp of annual market demand isrequired in order to establish and operate a PVmodule manufacturing factory economically(according to information from RWE-Schott, one ofthe major international PV manufacturers).This statement emphasizes the need to have asustainable and substantial market in order to justifythe investment for a PV module manufacturingfacility. This Para 30 has no link (and intended not tobe linked) to the statement of Para 20.Page 11,Para 30Page 12, Para. 39, line 2.Last word “in” should bedeleted?Page 13, Para 44. Here youmake the correct key point.BIPV does not take offbecause it is too expensive.There is not much one can doabout it for now. On the otherhand, you should make thepoint here, in a separateparagraph that Malaysianeeds to build up localtechnical manpower andmanufacturing capacity forthe day when the PV costswill decline and PV willbecome competitive. Becausewithout these local strengths,Malaysia will be unable toobtain the benefit from theselower PV costs when theycome. The BIPV project, onthe other hand, will helplower the balance-of-systemcosts slightly, but notsignificantly enough to makePara 20 merely states that there is a PV module plantwith a potential output capacity of 5 MWp availablein Malaysia. In reality, the plant only produces 500kWp of PV annually to cater for the rural PVapplication. As mentioned in earlier response, therural PV market is not sustainable and very muchdependent on Government subsidy.Page 8, Para20Agree. Page 12,Para 39Disagree that no one can do anything about the highBIPV cost.It is true that today the BIPV technology in Malaysiadoes not take off because it is still relativelyexpensive. Malaysia, as well as any other country, canchange the situation by developing the BIPV market.As mentioned earlier, the BIPV cost will go down dueto increase of market demand. This is a bottom upapproach (market and industry driven) rather than topdown (Government driven). Nevertheless, theGovernment has an important role to play inproviding a suitable institutional support to the marketand by creating a national program on BIPV toconsolidate all the efforts.The Government of Malaysia is committed toimplement the MBIPV project under the 9 th MalaysiaPlan, in addition to the 5 th fuel policy and the SmallRenewable Energy Power (SREP) Program. Theresults of the MBIPV project will lead towardscontinuous development of the BIPV market underthe subsequent Malaysia Plans.Page 14 and17, Para 48,56 and 58Page 6-7,Para 13-1477

Comment Response Referencea difference.The BIPV market can only grow if the technology isproven and understood by the prospective users.Therefore, improving the public awareness and thecapacity of the industry are also essential. In parallel,the major PV manufacturers are continuously tryingto reduce the cost of BIPV. In this aspect, theprospect of a significant BIPV cost reduction due toimproved technology is expected within the next 10years.Page 14, Para. 47. It isdifficult to justify this projectas sustainable. Without adrop on core PV prices, it isnot financially viable.Without a drop in coretechnology price of PV, youcan not ignite the market forit. This is serious point, whichshould not be glossed over.At the same time, you shouldbe able to say that you arebuilding capacity inanticipation of a drop in costof core PV technology.Page 14, Para 48. Thereseems to be a bit of wishfulAgree that Malaysia should build the technicalcompetency and manufacturing capability. Thesesubjects are fully addressed within theimplementation strategy of the project. Component 1and 2 of the project will direct and indirectly improvethe local technical competency. Component 4 of theproject will develop the local industry as well aspromote local manufacturing and product testing.The project objective is to develop a sustainablemarket that is supported by suitable policy and fiscalinfrastructures within the subsequent Malaysia Plans.Through the national BIPV program, the market willbecome sustainable that will directly lead towardscost reduction.In addition, this project does not simply wait oranticipate for PV price to reduce. The project willimplement interventions that would contribute and/orfacilitate the reduction of the BIPV price. It willestablish linkages and working mechanisms with theinternational PV industry to create a new ASEANmarket as well as supportive environment for theBIPV application. Through the four proposed projectcomponents, the project will create a market push anda market pull for BIPV technology. Please note thatthe European cost of a PV (excluding balance ofsystem) in 2004 is already less than US$ 3 per Wp.Thus, the project can spur the market through thesupport from GEF. The GEF support is significant inaddressing the associated incremental cost indemonstrating the BIPV technology and introducingthe BIPV market over the next five years.For now, there is no data available to quantify theprice-elasticity for PV demand in the MalaysianPage 20-23and 26-27,Para 68, 69and 71Page 14,Para 47Page 20-27,Para 68-71Page 26,Para 7078

Comment Response Referencethinking here. What is theprice-elasticity for PVdemand? How can you thenwrite, without reference orwithout justification, that anextra 10% drop in PV systemprices, caused by the BIPVproject, will be large enoughfor a market take-off?scenario. This factor will be determined through theresults of the MBIPV project.The main focus of the project is to develop a marketthat will lead towards BIPV cost reduction. At the endof the 5-year period, the cost is expected to reduce by20% from the baseline cost figure at the beginning ofthe project. The institutional supports to take-off andsustain the market needs to be continued well beyondthe MBIPV project period. Hence, the project strategywill lead towards the development of sustainablefollow-up programs within the subsequent MalaysiaPlans.(item 3.8)Page 15, Figure 3. This isconfusing. The baseline (graybars) show higher installedcapacity annually than doesthe alternative (black bars).So, the baseline sales wouldhave been higher than thosewith the project?Page 16, Para 49. Line 7.You assert that importing thetechnology and small markethave caused PV costs to behigh in Malaysia. However,in other locations with largermarkets and local PVCorrection to Figure 3, page 15. The legend“Alternative” is replaced with “Incremental” in theproject proposal.Starting from year 2005, when the MBIPV projectkicks-off, both the “baseline” (gray bars) and the“incremental” (black bars) will be the activities andresults of the MBIPV project.The “incremental” will be the activities and results ofthe GEF support. In this case, the GEF is onlyproviding support to address the incremental cost ofthe BIPV technology application. Incremental cost isthe first and foremost critical hurdle of the project thatmust be adequately tackled in order to allow marketpenetration for BIPV technology. As the marketdevelops, the incremental cost will also reduce.Starting from year 2005, the “baseline” will be theactivities and results of the contribution from thestakeholders in developing the BIPV market. Withoutthe “incremental” activity, the “baseline” activity maynot be effective. The successful “baseline” activitywill be critical in continuing the development of asustainable BIPV market.In comparison to other countries and markets, the costof BIPV in Malaysia is significantly higher per Wp.This is due to taxes, the small market, and theinexperienced consumers and service providers.The cost per Wp of BIPV system in Japan and Europe(especially in Germany) markets are less than inPage 15,Figure 3Page 16,Para 4979

Comment Response Referencemanufacture, PV costs arestill high. Even in the US, oneneeds a subsidy to make PVcompetitive with conventionalelectricity generation costs.Malaysia. This is because of the well-establishedmarkets, educated consumers, competent serviceproviders, and availability of local BIPV products.This is the same approach that MBIPV project isproposing but within a shorter timeframe.The subsidy requirement in the US is due to lack ofsupportive environment for RE technologies.Furthermore, the federal policy sector is notcommitted towards PV. Whereas in Malaysia, thefederal government is committed and thus supportive,but seeks guidance and support from GEF in order toaddress the initial barrier of the incremental cost.Page 16, Para 52, line 1.Delete “of” from the line.Page 18, Paras 61-62. Youshould also give a straightanswer to the question: howmuch annual CO2 will theproject save directly?Page 28, Para. 74-75. Howabout financialsustainability?The project will be poised tobe sustainable in terms oftechnical expertise andregulations, and financingand public education, if andwhen the PV core technologycosts drop. You need toaddress this point.Agree. Page 16,Para 52As mentioned earlier.Page 14 and18, Para 48and 62The MBIPV project activities are designed to makethe BIPV technology development sustainable. Theproject financial sustainability is strongly influencedby the outcomes of the project, e.g. new policies,financing mechanism, 10 th Malaysia Plan, etc, beyondthe completion of the project. Hence, financialsustainability will be good if the MBIPV project iswell implemented.The PV cost does not totally determine the projectsustainability, as mentioned in earlier responses. Theproject will be sustainable if the enablingenvironments are implemented in the 10 th MalaysiaPlan and the stakeholders continue to develop theBIPV market. The developed market will directlycontribute towards technology cost reduction. In thiscase, Malaysia will be contributing to global efforts toreduce BIPV cost through the developed local market.Page 29,Para 75 and76Page 29, Para. 76. On whatbasis do you support graph inFigure 5, and the statementof reducing the pay-backperiod to 15 years (from thecurrent 60 years)? UnlessPV prices drop (and theyThe payback period of 15 years by the year 2020 willbe achieved when the long-term targets of the projectare met as follows:• BIPV system cost is reduced to US$ 3,300/Wpdue to market forces (today is US$ 7,000/Wp);• The BIPV energy yield improves to 1,400kWh/kWp/year due to improvement inPage 29,Para 7680

Comment Response Referencemight drop owing to sometechnological breakthrough),these projections are wishfulperformance, quality, and reliability (presentaverage BIPV performance is 1,200kWh/kWp/year);thinking.• The feed-in tariff for BIPV is US$ 0.16/kWh,which is supported by enabling regulatoryframeworks and provision of incentives(presently, the feed-in tariff is US$ 0.06).It is important to fully understand that the BIPV costwill go down not only because of some technologicalbreakthrough, but also due to market forces, asmentioned earlier. Furthermore, this economicperformance does not yet consider the indirect valueaddedand savings generated from BIPV, such as:• Reduced air-conditioning load,• Improved energy efficiency and losses reduction,• Enhanced building aesthetic and image withoutadditional maintenance cost.Page 38, Para. 8 (of AnnexA). What you estimate here isnormally called the technicalpotential. This is differentfrom the economic potential,and still different from themarket potential. Justbecause Malaysia expects asignificant increase in peakdemand does not mean thatuneconomical technologieswill get adopted to their fulltechnical potential!!Agree.With the existence of a sustainable market andsupported by a well-developed enabling environment,the “uneconomical technologies” can become“economical” in the long-term, as in the case of BIPVsystem application in Germany.It is true that the 11 GWp of BIPV technical potentialmay not be realized Malaysia. The economic potentialmay only be realized once detailed assessments areconducted as planned within the MBIPV projectscope. The market potential is very much dependentto the project success and replicability of thetechnology. The Malaysian Government is fullyaware of the GHG effect from the power generationsector. Hence, Malaysia is committed to developrenewable energy as the 5 th fuel and realize its marketpotentials.The word “technical” is added into the statement.Page 39,Para 8(Annex A)81

MBIPV Project: Responses to GEFSEC CommentsExpected at Work Program InclusionComment Response ReferenceCountry DrivennessThe third paragraph inthe country drivennesssection (Exec sum) isnot an indication ofhigh country-drivennessbut rather a barrier forrapid and governmentsupportedmarketdeployment. Pleaseclarify.Agree. The third paragraph indicated the current challengesfaced by the BIPV industry and the perspective of theGovernment on PV. Under the 8 th Malaysia Plan (2001-2005), focus is given to solar, biomass, biogas, municipalwaste and mini-hydro as part of the announcement of RE asthe 5 th fuel strategy. As a result of the UNDP/GEF BiomassPower Generation and Co-generation project, first prioritywas given to biomass as a resource of immediate potential.Hence, the following italic statement is included in theproject executive summary to manifest the country’scommitment to implement a national BIPV project toovercome those challenges.ExecutiveSummary:Page 3, 3 rdPara of2(b)As part of the RE development under the 5 th fuel strategy, theMinistry of Energy, Communications and MultimediaMalaysia (MECM) recognizes the long-term potential ofsolar energy, especially for PV in buildings, which willrequire different institutional supports in comparison to theBiomass application. Therefore, the Government via theMinistry (MECM) is committed to implement the MBIPVproject with the support and assistance from the GEF inorder to realize this long-term solar energy potential inMalaysia.The exec sum says 5 %in 2005, table 1 in theproject brief 3 % in2006 (probably a BAUscenario), pleaseclarify.The projected renewable energy (RE) contribution to theelectricity mix in Table 1 (3% in 2006, 5% in 2010) is basedon a study conducted by the Malaysia Energy Center (PTM)for the Government. This figure is a business-as-usual (BAU)scenario and also is not publicly available.The 5% in 2005 was a figure quoted from a policy speech bythe Minister of Energy (MECM) and is publicly known.Thus, the 5% figure is mainly referred to by the public,industry and the Government as an RE for electricity targetunder a scenario where RE will be promoted. In this case, theGovernment is providing various RE supports under the 8 thMalaysia Plan framework, such as the SREP program, budgetand fiscal incentives.ProjectBrief:Page 6,Table 1ProjectBrief:Page 6,Para 1382

Project DesignThe baselineinstallations in fig. 3seem pretty sizablealready. Please explainthis in more detail inthe text and change theterminology ifnecessary (I even don'tquite understand it afterhaving read yourresponse to the STAPreview. Is incrementalthe same as "direct",and baseline"indirect"?)1. Cost-sharing on thehardware in component2 : is 20 % the cap?2. Identify GEFcontributions tosubcomponents tocomponent 4 in moredetail, how are theycofinanced?The following revisions were made to the project brief inorder to clarify Figure 3 and the GEFSEC comment in orderto avoid future confusion:• Inclusion of Figure 2-1: Cumulative BIPV installedcapacity, representing the BIPV status in Malaysiabetween the year 1998 to 2003.• Revision to Figure 3: Forecast cumulative BIPV installedcapacity, showing the alternative and business-as-usualscenarios of forecast cumulative BIPV installed capacitybetween the year 2004 to 2010.• Revision to Figure 4: Projected BIPV system costreduction, showing the alternative and business-as-usualscenarios of BIPV system cost reduction possibilitiesbetween the year 2004 to 2010.• Inclusion of Figure 4-1: Forecast cumulative CO 2emission avoidance, showing the possible cumulativeCO 2 emission avoidance between the year 2004 to 2010during the MBIPV project implementation.Note: The alternative scenario is when the MBIPV project isimplemented with successful outcomes.The incremental cost calculation for cost-sharing from theGEF for the BIPV demonstration project is approximately20%.The component 4 activities are divided into four as follows:1) R&D on cost reduction of local BIPV products andsystem optimization for local conditionsGEF support, in the form of consultants (MBIPV personnel),is required for the technical assistance to upgrade thetechnical capacity of local universities in producingcommercially viable BIPV products. The co-financing will beprovided by the universities (personnel and laboratoryfacilities as in-kind), the Energy Commission and MESITAas cash of about US$ 1.3 million.2) International collaboration and technology transferprogram.GEF support, in the form of consultants (MBIPV personnel)and business meetings, is required for the technical assistanceto establish the international collaboration between theinternational institutions and industries with the localuniversities and industries. The collaboration is towardsdeveloping local BIPV products and industry. The cofinancingwill be provided by the local universities,ProjectBrief:Page 9,Figure 2-1;Page 16,Figure 3;Page 16,Figure 4;Page 17,Figure 4-1;ProjectBrief:Annex A1ProjectBrief:Page 28-29, Para71;Page 39-40, Table7;Page 46,annex A83

I would actually see ahigh risk of thegovernment losinginterest once they areaware of the costs ofsustaining the follow-upto this project bythemselves. Pleasecomment on the levelsof support that might berequired, per kWh aswell as in total and whyyou are so confidentthat the governmentwill agree to such ascheme.industries, and the international partners such as FraunhoferISE, Sputnik, and AES Ltd (as in-kind and cash).3) Upgrading local BIPV industry capabilitiesGEF support, in the form of consultants (MBIPV personnel)and workshops, is required for the technical assistance toupgrade the local BIPV industry and to develop suitablebusiness models and business plans for a sustainable BIPVindustry. The co-financing will be provided by the localindustries and the BIPV service providers (as in-kind).4) Establishment of BIPV testing facilityGEF support, in the form of consultants (MBIPV personnel),is required for the technical assistance in setting up the BIPVproduct testing facility. The co-financing will be provided bySIRIM Berhad (a national testing center) and the MESITA, asin-kind and cash (cash of almost US$ 2 million).The approach of the MBIPV project is a bottom-up approach(industry driven) rather than a top-down (Governmentdriven). Nevertheless, the role of the Government is criticalto motivate and catalyze the BIPV industry by creating theenabling environment for BIPV application, and by providinga common motivation for the industry in the form of anational BIPV program.Thus, the sustainability of the BIPV technology will dependmainly on the industry and market mobilization that issupported by a strong institutional framework provided by theGovernment.In this aspect, the cost to the Government to continue toprovide the enabling environment between the year 2010 to2015 under the 10 th Malaysia Plan period will not be tooexpensive. The expected enabling environment will be in theform of a higher feed-in law for BIPV (average ofUS$0.10/kWh from the Government totaling to US$ 0.5million), reducing price discounts for the BIPV installationunder the subsequent Suria program (approximately US$ 2.6million), and tax exemption on imported BIPV equipment(approximately US$ 3.2 million). Nevertheless, the detailcosts will be evaluated during the MBIPV projectimplementation under project component 3. With theexpected outputs from the MBIPV project and the improvedunderstanding of BIPV benefits, it is highly expected that theGovernment will agree to such a scheme as the possiblemacro economic benefits of a developed local BIPV industrywill out-weight the expected Government contribution.ProjectBrief:Page 25-27, Para70;And page53, annexA384

Could you actuallydemonstrate the costreductions in Japan andGermany, and concludeon the situation inMalaysia?Please also note that the higher feed-in law and the taxexemption is expected to continue between year 2015 and2020, while the price discounts for BIPV installation mightno longer be offered under the subsequent Suria program.The information on the cost reductions of PV systems inJapan and Germany are available from IEA-PVPS (www.ieapvps.org),and also from New Energy Foundation (for Japanonly). In both countries, the PV cost has reduced due to theincreased market demand as a result of the implementation ofnational PV programs (Roof-top program for Germany andSunshine program for Japan). However, the key approaches(enabling environments) in implementing the programs areslightly different between the two countries, where Germanyintroduced the RE feed-in law and Japan focuses onGovernment subsidy.The strategy to develop the BIPV enabling environment inMalaysia benefited from the lessons learned as well as havinggood networks with key organization from both countries, inaddition to the network with IEA-PVPS and its participatingcountries. Thus, it is highly possible for BIPV cost inMalaysia to reduce when the appropriate enablingenvironment that is suitable to Malaysian condition isimplemented during the MBIPV project.ProjectBrief:Page 25-27, Para70Sustainability (including financial sustainability)1. What would the The economics of BIPV system will become unattractive,sustainability look like where the payback will be more than 35 years. However,if the price guarantee is within the MBIPV project implementation period, the netmeteringwill be acceptable due to other enablingonly as high as theprice for end-user environment factors (BIPV affordability will be a morepower?attractive factor instead of the economics viability), as specialdiscounts will be given to the public under the Suria 1,000program.ProjectBrief:Page 25-27, Para70;And page52, annexA2However, the subsequent national BIPV program (postMBIPV project) will require a higher purchase price by theutility that will reduce annually (depending on the rate ofBIPV technology cost reduction but will not be less that thestandard electricity price). This will ensure the sustainabilityof the BIPV market in addition to the technology costreduction. This higher price will be thoroughly calculated andrecommended as a Renewable Portfolio Standard (RPS)during the MBIPV project implementation period under theproject component 3.85

2. Can any indicationbe given for thewillingness of the utilityto actually implementsuch a price guaranteeof 16 Cts per kWh?Industry andgovernment have aninterest to promote PVas there are alreadyproduction facilities inplace, which arecurrently underutilized.ReplicabilityLower costs, increasedskills and awareness,demonstratedfeasibility, and policyframeworks are likelyto lead to replication.However, an activereplication strategy forMalaysia and for othercountries in the region,Several discussions were organized with the utilityrepresentatives during the PDF-B project activity. As a start,the utility has agreed to purchase the electricity from BIPVon a net-metering basis under the MBIPV project (the letterindicating the agreement is available). This price is muchhigher than any other RE purchased price agreed by theutility (US$0.04/kWh for Biomass, US$0.06/kWh for BIPV).It was decided during the follow-up discussion that it was stilltoo early for the utility to purchase BIPV electricity at ahigher price. This is because the enabling environment tosupport the utility as well as the appropriate feed-in law arestill not available and will only be developed during theMBIPV project under component 3. Furthermore, the utilityunderstanding on BIPV will need to be improved to quantifythe BIPV added-values to the utility. With the improvedunderstanding and the implemented enabling environment,the utility can be expected (or obligated) under a RenewablePortfolio Standard (RPS) to purchase BIPV electricity atperhaps US$0.18/kWh in the year 2010 that will annuallyreduce to US$0.16/kWh or possibly to US$0.13 by the year2020, depending on the rate of the BIPV technology costreduction.Certainly the MBIPV project will generate a BIPV marketthat could improve the utilization of a PV manufacturingfacility (BP Solar) already available in Malaysia.Nevertheless, this facility will require some upgrade in orderto be fully utilized as its current operation is to meet the PVsystems demand for rural application and the facility isunderstaffed with manual operation. Nevertheless, the PVindustry in Malaysia has been waiting for a BIPV marketcatalyst that the MBIPV project will bring. Even during thePDF-B project activities, the industry has expressedoverwhelming interests and commitments to be part of theMBIPV project activities (letters of supports or commitmentsare available).This subject is addressed in the MBIPV project activitiesunder component 1 (activity 1.8).ProjectBrief:Page 25-27, Para70;Page 32-34, Para76;And page52, annexA2ProjectBrief:Page 39,Table 7ProjectBrief:Page 23,Para 6886

including specificproject activitiesdesigned to fosterreplication, would bedesirable for the projectbrief. (At pipelineentry)Apart from thewidespread replicationwithin Malaysia,diffusion of thetechnology into othermarkets in the region ispossible.Please ensure that allfactors that lead to thesuccessful modelprograms in Japan andGermany are factoredin the policy discussion.For example for theroof-top program inGermany, subsidizedloans, tax breaks, aswell as full feed in of allpower produced (ratherthan net metering) wereabsolutely crucial forthe mass take off.Financing Plan4.7 mUSD GEF, 1mUSD MECM, 4.3mUSD ST in cash (whatis ST?), 3.7 mUSD inkind(please correcttable 6 in the projectbrief), 2.7 mUSD GoM,3.9 mUSD privatesector in cash, 3.9mUSD private sectorin-kind, 900 kUSDMESITATotal: 17.4 mUSD cash(4.7 GEF), 7.6 in kind.This is more thanincluded at pipelineentry, but theAgree, and this is to be expected from the long-term impactof the MBIPV project that will be monitored and evaluatedafter the MBIPV project is completed (activity 3.8 of projectcomponent 3).Agree. Malaysia currently has good networking with NewEnergy Foundation of Japan, IEA-PVPS, Fraunhofer ISE ofGermany, and other European PV stakeholders. This willensure that the successful factors from those respectiveorganizations and countries will be thoroughly consideredand evaluated.In addition, PV stakeholders from Germany, Australia,Holland, Switzerland, Japan, Denmark, and Singapore werefully involved during the LFA workshops and stakeholdersseminar within the PDF-B activity. Most importantly,component 3 of the MBIPV project will also evaluate thesuccess factors and models in further detail in order todevelop the suitable BIPV enabling environment forMalaysia, including a suitable feed-in law.ST is the Energy Commission (EC), the electricity regulatorin Malaysia, and is also known as Suruhanjaya Tenaga (ST).Table 6 in the project brief is corrected accordingly.The total of US$24,959,160 (70% cash and 30% in-kind) isrequired in order to implement the MBIPV projectsuccessfully over the 5 years period. This is to ensure that allissues related to the initial BIPV market penetration, thedevelopment of enabling environments, and future marketProjectBrief:Page 27,Para 70(3.8)ProjectBrief:Page 22,Para 68(1.6)Page 26,Para 70(3.1)ProjectBrief:Page 39,Table 6ProjectBrief:Page 39,Table 687

cofinancing (12.7mUSD in cash) is alsomuch higher.sustainability are well addressed, resulting in the long-termBIPV technology cost reduction and widespread replicability.From the total amount of US$17,399,030 in cash,US$4,699,420 is expected from the GEF that will be utilizedfor personnel and mission cost (54%), training and capacitybuilding (16%), hardware and equipment (26%), and subcontractors(4%). The personnel and mission cost as well asthe sub-contractors budget allocation have been fullyoptimized and are very critical to allow the MBIPV project toprogress smoothly. This was planned based on the lessonslearned from the on-going GEF supported projects inMalaysia (MIEEIP and Biogen). The allocated hardware andequipment, as well as the training and capacity building arethe minimum incremental cost associated with MBIPVproject. The budget and financing plan were thoroughlydiscussed at the National Steering Committee meetings, theMinistry of Energy (MECM), and the UNDP, where it wasfinally agreed by all parties that the amount is the minimumbudget requirement in order to successfully implement theMBIPV project. It was also acknowledged that the finalcontribution from the Government of Malaysia and other cofinanciersmight well exceed the initially stated amount.Page 38,Table 5Consultation, Coordination, Collaboration between IAs, and IAs and EAs, if appropriateStrategies forThis subject is addressed in the MBIPV project activitiesincorporating lessons under component 1 (activity 1.6 and 1.7) and component 3and policy experience (activity 3.1).from buildingintegrated PV in othercountries would beexpected to be part ofthe project work planpresented in the projectbrief. (At pipelineentry)The project will makeuse of potentialsynergies with the otherGEF projects underimplementation(Industrial energyefficiency, biomassenergy).Agree. Potential synergies will be promoted with selectedactivities of the MIEEIP and Biogen projects.In addition, the MBIPV project will also complement otherrelated Government projects such as the demand sidemanagement (DSM) project being implemented by theEnergy Commission, the integrated resource planning andenergy efficient building projects that are implemented by theEconomic Planning Unit.ProjectBrief:Page 22-23, Para68 (1.6,1.7)Page 26,Para 70(3.1)ProjectBrief:Page 14,Para 43Page 12,Para 3488

Review by Expert from STAP RosterSome of the responsesto the STAP review,particularly the ones onthe specifics of BIPV (p.20) as opposed tostand-along PV shouldbe included in theproject executivesummary.I also concur with theSTAP reviewer that theeconomic analysis ofthe BIPV technologyshould be included inthe project brief: whatare the currentgeneration costs, whatis the cost projection,how large are theincremental cost, and isthe Malaysiangovernment aware ofthis cost increment?The detailed discussionin the STAP review ofthe assumptionsunderlying the graph infigure 5 is veryinteresting and shouldbe included in the maintext. (is it 16 Cts for thewhole time or does thefeed-in tariff alreadyreduce over time?)The relevant response is incorporated into the projectexecutive summary.The economic analysis of BIPV technology is included asfollows:• Annex A2 of the Project Brief, showing the economics ofthe projected BIPV market development between the year2006 to 2020 under various enabling environments.• Revision to Figure 5: Forecast cumulative BIPV installedcapacity and system cost reduction under the alternativescenario;• Inclusion of Figure 5-1: Projected BIPV system paybackperiod with direct relationship to the enablingenvironments under the alternative scenario.The relevant discussion is incorporated into the project brief.The feed-in tariff of US$0.18/kWh is anticipated to beintroduced in the year 2010, that will annually reduce toUS$0.16/kWh or possibly to US$0.13 by the year 2020,depending on the rate of the BIPV technology cost reduction.GENERAL COMMENTS (for records purpose only, not pre-conditions)My two main concernsare: (1) That the riskthat the policy mightnot be implementedmight be higher thandescribed; and, (2)That the cost reductionmight be overestimated.Please include a morethorough discussion ofthese risks.MBIPV project component 3 will specifically focus oncreating a suitable policy (Renewable Portfolio Standard,RPS) and financing mechanism towards BIPV marketsustainability beyond the completion of the project. This willalso be achieved with the support and results of the otherMBIPV project components, especially the projectcomponent 1. The MBIPV project strategy also gives priorityin engaging a very strong and highly competent project teamin order to obtain high success in implementing the projectactivities. The project team will also maintain close networkand rapport with respective key Government agency such asthe Economic Planning Unit (EPU), the Ministry of EnergyExecutiveSummary:Page 3-4,Para 3(a)ProjectBrief:Page 52,AnnexA2;Page 33,Figure 5;Page 33,Figure 5-1ProjectBrief:Page 32,Para 76ProjectBrief:Page 29,Table 2;Page 37,Figure 6;Page 36,Para 82;Page 34Table 389

(MECM), and the Energy Commission (EC), as well ashaving the Malaysia Energy Center (PTM) as the projectbase.The National Steering Committee will also comprise of keyrepresentatives and decision makers from various importantstakeholders to further ensure the project success. In addition,the soon to be established National PV Council will providestrong advocacy to the Government to ensure that the variousrecommended policy and enabling environments for BIPVare implemented. These strategies will ensure that the risk forthe policy of not being implemented is moderate.The BIPV technology cost reduction in Malaysia of 20%between 2005 to 2010, and a further 30% between 2010 to2020 are moderately estimated. In comparison, the costreductions in the IEA-PVPS participating countries haveshown to be between 15% to 20% (or 10% to 17% for alarger market) in about every two years recently(international survey reports are available from www.ieaprpv.org).The renewed commitment by Japan and someEuropean countries, in addition to the recently announcedThai PV program will continue to generate market pressuretowards PV cost reduction. Furthermore, the competency andstatus of the local BIPV industry is still very weak,contributing to a higher BIPV system price in Malaysia. Theexpected improved competency level of the local BIPVindustry will significantly contribute to the overall costreduction of BIPV in Malaysia.Page 31,Table 2Expected at CEO EndorsementComment Response ReferenceReplicabilityFull integration oflessons learned fromsimilar programs inOECD countriesshould be integratedinto projectcomponents whereverpossible.Agree. This is already included in MBIPV project component 3(activity 3.1) and component 1 (activity 1.6 and 1.7).In addition, during the BIPV stakeholders seminar organized inJanuary 2004 where the Chairman of IEA-PVPS was present,discussion between the project team and the CEO of MalaysiaEnergy Center (PTM) with the IEA-PVPS Chairman hasindicated a strong possibility for Malaysia to be involved insome of the IEA-PVPS activities, in conjunction of the MBIPVproject. This will allow for a better integration of lessonslearned from the IEA-PVPS participating countries (OECDcountries) in promoting the BIPV technology application.ProjectBrief:Page 22-23, Para68 (1.6,1.7)Page 26,Para 70(3.1)90

ANNEX E: PROJECT SCHEDULE OF ACTIVITIES2004 2005 2006 2007 2008 2009MBIPV Project Components and Planned Activities Year 0 Year 1 Year 2 Year 3 Year 4 Year 5Interim activitiesSTAP ReviewApproval UNDPEstablishment of the National Project StructureEstablishment of a National Project Steering CommitteeCTA appointed and program managers identifiedMobilize Project Team and complete inception reportComponent 1: BIPV information services, awareness and capacity building programs1.1. Integrated information and awareness building program on BIPV1.2. National BIPV database1.3. BIPV training courses1.4. National PV council1.5. Quality control program for local industry1.6. Capacity building and awareness program for policy makers and financial sector1.7. International BIPV event for decision makers (policy and finance sector)1.8. Disseminate information and lessons learn to regional ASEAN countries1.9. Impact assessment of the BIPV technology to public and policy sectorComponent 2: BIPV market enhancement and infrastructure development2.1. Standards and guidelines development2.2. Review and final design of the planned BIPV showcases2.3. Hardware installation and operation of the BIPV showcases2.4. Evaluation of demonstration sites2.5. Design and evaluation of technical and commercial viability for demo projects2.6. BIPV demo implementation and operation on government and private buildings2.7. Review and promotion of national PV program "Suria 1000"2.8. Implementation and operation of "Suria 1000"2.9. Monitoring and evaluation of all projects2.10. Dissemination and promotion of demonstration program results2.11. Sustainable follow-up program designComponent 3: BIPV policies and financing mechanisms program3.1. Techno-economic analysis for grid-connected BIPV3.2. Design & implement government incentives to utility & manufacturing industry3.3. Analysis on existing and new financial mechanism and fiscal incentives3.4. Implement fiscal and financial framework for a sustainable follow-up program3.5. Study on past experience and impact on international regulatory schemes3.6. Review and integration of BIPV in existing regulatory schemes3.7. Implement institutional & policy framework for a sustainable follow-up program3.8. Policy & financial framework implementation, monitoring & impact assessment3.9. Government liaison and dissemination of resultsComponent 4: Industry and R&D enhancement program4.1. R&D to reduce local BIPV product cost & optimize system for local condition4.2. International collaboration and transfer technology program4.3. Upgrading local industry capabilities4.4. Testing facility, with potential to upgrade as certification institute91