@ green | January-February , 2021

NETT ENERGY METERING 3.0

Operators may want to ensure system stability in light of potential intermittencies with solar

By A SPECIAL CORRESPONDENT

scheme 3.0 ( NEM3.0 ) which announced a solar PV allocation of 500MW by the Minister of Energy and Natural Resources Datuk Dr Shamsul Anuar Nasarah on Dec 29 , 2020 , was a muchneeded boost for the national renewable energy programme and sustainable agenda .

This also bodes well for energy transition agenda which shall manifest in the national energy landscape .

Background

The first NEM scheme , or NEM1.0 , was introduced in 2016 ( with a 500MW allocation ) as an incentive for greater solar adoption . This was mainly on rooftops and reduced dependence on fossil resources in our electricity generation mix , thus reducing greenhouse gas ( GHG ) emissions , which has saddled us in our compliance with the UNFCC Paris Agreement .

Clearly , this NEM strategy value adds the whole exercise . However , the initial programme missed the target with only meagre buy-in . The government improved the offering with NEM2.0 in January 2019 which had seen the programme really taking off . NEM2.0 , with a quota of 500MW up until December 2020 , allowed excess solar PV generated energy from consumer ’ s premise to be exported back to the grid on a “ one-on-one ” offset basis , instead of the displaced cost in the previous scheme . The new offset ratio would shorten solar investment - or heavy expense - recovery period .

This has spurred some renewed interest among residential and business owners resulting in the full quota being snapped up by November 2020 .

NEM3.0 mechanism

With the rollout of the NEM3.0 , the government has reinvigorated the offerings by further making them attractive and applicable to all applicants , even existing NEM consumers .

The new scheme , in boosting for more solar and reduction in energy price , will be in effect from 2021 to 2023 and has three new programmes - NEM Rakyat ( targeting domestic consumers for electricity bill reduction with a quota of 100MW beginning Feb 1 , 2021 ), NEM GoMEn ( targeting government buildings with an allocation of 100MW also beginning Feb 1 , 2021 ) and Nett Offset Virtual Aggregation ( NOVA ) ( targeting pandemic-challenged industrial and commercial sectors with a quota of 300MW beginning Apr 1 , 2021 ).

The departure from the previous version is that it allows an offset rate of 1:1 with a 12-month rollover for 10 years for both NEM Rakyat and NEM GoMEn at current tariff pricing .

If one unit of energy was generated in

NEM3.0 will inspire industrial and commercial owners to plan their energy consumption pattern up to three accounts , perhaps paving the way for future lobbying for more significant quantum and locations .”

excess for the current month , the user would be charged for less one unit of energy the following month . The industrial and commercial customers ( novA ) will gain more as they are allowed to use system marginal pricing ( SMP ). The energy sold will be converted as an energy credit in the following month ’ s electricity bill and , after 10 years ’ contract , enjoy self-consumption onward , thus reducing business costs .

In all situations , NEM2.0 users can even join the new scheme once they complete their current 10-year NEM2.0 period but at SMP scheme for the next 10 years and self-consumption for subsequent years .

Another innovation is the virtual NEM where owners could re-distribute their excess energy to their own buildings in separate locations for up to three accounts .

Winners

Everybody wins in term of electricity bill savings and the fact that excess energy can be sold to a utility to earn credits to offset future electricity bills . From an economic point of view , NEM3.0 encourages growth in renewable energy and incentivises businesses in solar and job-creation .

The rakyat-targeting in term of solar allocation means that the government is serious in ensuring more equitable outcome in any effective programme . However , the biggest winners are the industry and commercial players and operators of worship places as they could vie for the 300MW quota and sell excess power at SMP and enjoy self-consumption with a one-month rollover after the 10-year period ends .

All users are protected even when they subscribed to the previous NEM2.0 scheme as they would not lose their 1:1 offset benefits as they migrate to the NEM3.0 . This is sometimes termed as grandfather clause in some countries as government honours previous agreements and entertain new rules for future cases .

NEM3.0 will inspire industrial and commercial owners to plan their energy consumption pattern up to three accounts , perhaps paving the way for future lobbying for more significant quantum and locations .

The new scheme also permits Malaysia-based foreign entities or MNCs to participate in the novA option as long as they have the national power utility , Tenaga Nasional Berhad ( TNB ), billing accounts .

The scheme will also allow more significant product differentiation and service offerings where vendors could suggest packages and create a new installation , servicing , and maintenance opportunities .

Upon logging to one ’ s notebook or smartphone , he or she may see even e-commerce platforms such as Lazada and Shopee are already catering for solar PV installation . With greater competition , the price for such installation service might go down favourably in the future .

Lingering issues

The flip side advocates that conventional power plants might see their portions of the future generation mix being challenged and even substituted by the NEM 3.0 participants .

These renewable energy portfolios will grow larger and larger while grid-wise , the operators might want to ensure system stability in light of potential intermittencies with solar . That also brings up why the grand initiatives have always pegged down to solar – grid-connected solar sources to be exact - and not others like biogas , biomass and small hydro .

Also , critics of the 3.0 scheme will point out that the system ’ s visible drawback is that it is tied up to the national power grid owner , viz , TNB as all interested players to the scheme must have TNB billing accounts .

Another conspicuous fact is that electricity users and players in Sabah and Sarawak could only envy the opportunities made available in the Peninsula .

Way forward and other perspectives

For future editions or releases , the energy fraternity and rakyat would surely welcome improvement and variation to the product and service offerings at no less favourable deals with built-in grandfather clauses – as usual - in the schemes .

The formula in coming up with the sizes needs to be seen in a wholesome manner , and not incremental . This is for grid system optimisation and stability . There are various technical considerations to be addressed , such as maximum allowable grid penetration by solar - as the grid was designed for conventional power plants - and state of the reserve margin in a generation .

To be fair , the needs of the grid owners and operators should also be factored in . In this regard , the role of energy or battery storages to commensurate solar sizes should be addressed as intermittency issues are real and require engineering / technical system studies .

Would the government be ready to allow future NEM subscribers to install first and apply later – backdated preferably- once a new scheme is put on the board for those missing the boat for the existing schemes ?

Lastly , would the government provide some avenues in the future for our friends in Sabah and Sarawak to enjoy such a NEM scheme ? — @ green