mbipv reviews n responses

8/7/2019 mbipv reviews n responses

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R EVIEW BY EXPERT FROM STAP R OSTER

A 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 early parts 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 CO2

will be avoided directly and indirectly for the project investment.

Key Issues

1. Scientific and Technical Soundness

The 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 stand-alone PV 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 one

might remain – because it is outside the power of any agency to remove on a given schedule --- this barrier is the inherent high cost of current PV technology. There is no denying this fact, but the proposal 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 project

The project aims to accelerate adoption of building integrated PV power by removing various



institutional, informational, policy, technical and financial barriers. It should save several tons of CO2 emissions per year. However, I could not find in the document clear and simple statement of 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: atthe 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 to

reduce 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 Context

Introducing 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 project

Several 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 project

Project is designed to be sustainable beyond the horizon of GEF support, if and when core PV costsdrop.

Secondary Issues

The 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 for building-integrated grid connected solar PV installations.

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 Comments

1. 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, $7000 per kWp is highin comparison with other sources. So, one hopes that Malaysia does not pay at this huge price to fulfill its technical potential for BIPV of 11 GWp! That number, US$ 77 billion, isabsurd 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, you shouldmake the point here, in a separate paragraph that Malaysia needs to build up local technical

manpower and manufacturing capacity for the day when the PV costs will decline and PVwill become competitive. Because without these local strengths, Malaysia will be unable toobtain the benefit from these lower PV costs when they come. The BIPV project, on theother hand, will help lower the balance-of-system costs slightly, but not significantly enoughto 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, you



can 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.

13. Page 14, Para 48. There seems to be a bit of wishful thinking here. What is the price-elasticity for PV demand? How can you then write, without reference or without justification, that an extra 10% drop in PV system prices, caused by the BIPV project, will be large enough for a market take-off?

14. Page 15, Figure 3. This is confusing. The baseline (gray bars) show higher installed capacityannually than does the alternative (black bars). So, the baseline sales would have beenhigher 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 markets andlocal PV manufacture, PV costs are still high. Even in the US, one needs a subsidy to makePV 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 of reducing 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 technical potential. This is different from the economic potential, and still different from the market potential. Just because Malaysia expects a significant increase in peak demand does notmean that uneconomical technologies will get adopted to their full technical potential!!



Responses to STAP Review

Comment Response Reference

Overall Impression: The

proposal glosses over one

point that it acknowledges,but then does not address.The project authors

acknowledged that the mainbarrier to large scale PV

installation (either building integrated or stand alone) is

the currently higher price of PV technology compared to

other conventional and even some renewable energy

technologies. However,

ignoring this point in making estimates of long termimpacts is not fair, nor will it help persuade the reader that

the proposal deserves financial support.

We fully agree that the main barrier to BIPVapplication 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 for emerging technologies (SP-5).

Due to the present high initial price and lack of theenabling environment, the economics of the BIPVtechnology is unattractive. However, the technology price can only be reduced when there is a sustainableBIPV market. Unfortunately, a sustainable marketcannot be established for as long as the economics of

the 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 of this project is to create a growing and sustainableBIPV market with all supportive mechanisms to be in place. The project is not targeting large capacityinstallations of BIPV, but instead will focus on the

demonstration 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.

Although 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 to

implement the MBIPV project under the 9th MalaysiaPlan, in addition to the 5th fuel policy and the SmallRenewable Energy Power (SREP) Program. Theresults of the MBIPV project will lead towardscontinuous development of the BIPV market under the subsequent Malaysia Plans.

Through the enhanced BIPV market, the project is

Page 16, para 53

Page 4, para5

Page 17, para 58

Page 6-7, para 13-14

Page 14,




expected to achieve a 20% reduction of thetechnology cost within the project implementation period, and will continue to further reduce after the project is completed. In addition, the continuous pricereduction will happen due to international market pressure (mainly in Japan and Europe) to further reduce the technology cost. Hence, this MBIPV project is also contributing to the global efforts toreduce the BIPV technology cost via the sustainableBIPV market development in Malaysia.

The above response is incorporated into the project proposal.

para 48

The proposal also does not

state directly (or at least, in

an easy to find way) howmany tons of CO2 will beavoided directly and

indirectly for the project investment.

As stated in Footnote 5, page 14, a 1MWh of PVelectricity is equivalent to 0.62 tons of CO2 avoided.

This is the same CO2 emission factor used by theMalaysia Energy Centre (PTM) as a benchmark for calculating CO2 emission reduction for CDM purposes. It is important to note that this CO2 emission 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 (refer to Table 1, page 6), the emission factor is expected toincrease to more than 0.62 tons CO2.

Directly, a BIPV installed capacity of 1 kWp inMalaysia will produce an average of 1.2 MWh of electricity 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 CO2 emission factor, will be further investigated

and quantified during the MBIPV project. Nevertheless, the current assumptions are as follows: The BIPV application can reduce as much as

10% of a building air-conditioning load if theBIPV is appropriately used as shading devices.The assumption is that a 1 kWp BIPV can reduce5 MWh/year of air-conditioning load.

The reduced electricity losses by installing a 1

Page 14 and6, Footnote

5 and Table1




kWp BIPV is assumed to be equivalent to 0.1MWh/year

Based on the total installed capacity of 1.5 MWp of BIPV within the project period, the direct CO

2

avoided will be:

Electricity production from BIPV: 1,500 × 1.2 × 0.62 = 1,116 tons CO2 per annum

Reduced cooling load requirement: 30% of 1,500

× 5 × 0.62 = 1,395 tons CO2 per annum

Electricity losses reduction: 1,500 × 0.1 × 0.62 =93 tons CO2 per annum

Thus, the total is 2,604 tons CO2 avoided per annumthat translate to 65,100 tons CO2 over the PV lifetime period 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 CO2 avoided per annum that translate to 868,000 tons CO2 over the PV lifetime period of 25 years.

The above response and correction is incorporatedinto the project proposal.

Page 14,Para 48

Page 18, para 62

1. Scientific and Technical Soundness

The benefits of BIPV should be quantified, in comparison

with stand-alone PV installations. Otherwise, oneis justified in asking why

bother with building integration? Can’t the same

goals as the current project be achieved by more

traditional stand-alone PV installations?

A PV system, either a stand-alone or a grid-connected, is classified as a BIPV system whenever the 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 for

the intended use (e.g., household electricity

consumption, 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,roof, decorative building façade). Hence, thesubstituted building materials will partially offset

Page 9, para22




the BIPV technology cost. Also, land space for the technology application will not be an issue.BIPV systems, in almost all cases, will alsoimprove the aesthetic exterior appearance of the building.

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.

BIPV is a different technology approach compared toa stand-alone PV application. Therefore, one cannotsimply compare and justify both applications. The

barriers 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 the prospective 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.

Page 19, para 64

Relative to building integrated PV products (e.g.,

PV roof shingles by UniSolar of the USA), there are manymore – and more competitive

– stand-alone PV products.So, the building-integration

aspect of the proposal needs

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 andassociated equipment. In general the stand-alone PVsystem prices are about twice the price of grid-




to be strengthened. connected BIPV system.

The MBIPV project will

address most of these

barriers, but one major onemight remain – because it is

outside the power of anyagency to remove on a given

schedule --- this barrier is theinherent high cost of current PV technology. There is no

denying this fact, but the proposal does not address

this fact head on. As a result,the text seems to circumvent

this inconvenient point, as if

this 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 production

increases when BIPV demand increases, the MBIPV project 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 higher demand in respective countries. Since 1999, themajority of the world PV capacity has been grid-connected BIPV, 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 56

2. Identification of global environmental benefits and/or drawbacks of the project

I could not find in thedocument clear and simple statement of how many tons

of CO2 will be saved annually directly by the

project implementation.

Points 61 and 62 on page 18 should have given these

numbers, however, the text beats around the bush, by

first saying how much theemissions will increase in the

baseline scenario (point 61),and then by discussing the

technical potential of wholeof Malaysia and then the rest

of the ASEAN region fullyexploiting building integrated

PV (point 62). The simplequestion that must be simply

answered is: at the end of this project, with an expenditureof US$ 4.7 million of GEF

money, and a total of US$25.2 million of everyone’s

money all together, how

The response is as mentioned earlier.

While the initial impact is minimal, the replicabilityof the system will ensure a steady CO2 avoidancefrom BIPV of about 1.7 tons CO2 per kWp per annum. Over the 25 years lifetime period of the PV,

the total CO2 avoided will be 42.5 tons per kWp.

Page 14 and18, Para 48and 62




many tons of CO2 will youavoid directly annually?

There are no global

environmental drawbacks of

the proposal.

Agree.

3. How the project fits withinthe context of goals of GEF,its operational strategies, programme priorities, GEFCouncil guidance andrelevant conventions: The

project fits within the broad

goals of GEF and itsoperational strategies and

priorities. It aims to reducebarriers to large-scale use of

building integrated PV inMalaysia. The local expertise

developed in the course of this project will be useful if

and when PV costs decreaseand it becomes economically

viable option. The activitiesidentified in the proposal fit GEF programme priorities

and meet the council guidance.

Agree. Page 16, para 53

4. Regional Context: Introducing the institutional support for grid-connected PV power in Malaysia will

assist in the introduction of these skills and similar

institutional support in theregion.

Agree Page 17, para 57

5. Replicability of the project:Several of the problemsidentified in Malaysia in this

proposal are also seen, to

various degrees, in other developing countries. The sections of the project

dealing with removal of thesebarriers are replicable inother countries. However,

unless the core PV technology costs drop, as

This 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 the project focuses towards developing a sustainable andwidespread market with the necessary supportmechanisms in place.

Page 17, para 58




they well might one day, the project is not replicable

directly. 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 the project of not being directly replicable is thereforemuch less.

The 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, the public, and policy sector in any country. Ultimately,

the cost reduction of the system will be marketdriven, as mentioned previously.

Page 28,Table 2

Page 18, para 62

6. Sustainability of the project: Project is designed to

be sustainable beyond thehorizon of GEF support, if and when core PV costs drop.

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 10th Malaysia Plan will be critical. Therefore, the project 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 for BIPV market that will ultimately lead towardssignificant cost reduction.

Page 29, para 76

Secondary Issues

The proposal has no

significant linkages to other focal areas (e.g., biodiversity

protection or coastal waters).

Agree.

Other (non-stated) beneficial or damaging environmental effects are negligible.

Agree.

The degree of involvement of

stakeholders in the project is planned to be adequate.

Agree, via the National Steering Committee and the National PV Council.

Page 30, para 78

The project will build Agree. Page 20-21,




significant capacity inMalaysia in the private and

government sectors for building-integrated grid connected solar PV

installations.

para 68

The project is innovative interms of comprehensively

addressing the removal of some of the barriers at thetechnical, institutional and

financial level, and also interms of private sector and

government institutions, for long term capacity building

for grid-connected solar PV

power.

Agree. Page 20-27, para 68-71

Additional Comments

Page 4, Para. 1, line 4. Insert

word “become” after “increased and” for correct

grammar.

Agree. Page 4, para1

Page 5, top line. What is a“suiting environment for PV”?

“Suiting environment” means “enablingenvironment”, characterized by: Public sector: Enhanced awareness about the

BIPV 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 for BIPV system projects and capital availability.

The word “suiting” is replaced with “enabling” in the

project proposal.

Page 5, para6

Page 6, Para. 11, lines 2-3.What is “planted up”?

“Designed and installed”. Page 6, para11

Page 7, Para. 14, line 5.Change “envisage” to

“envisaged” for correct English.

Agree. Page 7, para14




Page 7, Para. 16. Pleasedouble check the claim that

the total solar (sunshine)input on Malaysia is only 16 times the human conventional

energy consumption. This isvery unlikely to be true. Solar

energy input should be muchlarger.

Agree.

The average Malaysia solar radiation is 4,500kWh/m2 per day.

The total land area of Malaysia is 328,550 km2. The Malaysian annual electricity demand in 2002

was 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, para16

Page 9, Para. 23. The PV

prices are correctly quoted,

but let’s face it, $7000 per kWp is high in comparisonwith other sources. So, one

hopes that Malaysia does not pay at this huge price to

fulfill its technical potential for BIPV of 11 GWp! That number, US$ 77 billion, is

absurd and irrelevant to your proposal.

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 market potential 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.

Page 9, para23

Page 10, Para 26, line 3.

What is “need to be firmed on”? And again in line 6,

what is “need to berepresented with views are

considered”?

“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 the project proposal.

Page 10, para 26

Page 10, Para 29. Second

sentence. Need to clean upthe English. In the third sentence, do you mean “of”

when you write “on”?

Agree.

The second sentence is replaced with “State-of-the-artmaterials are available without inherent restriction tothe supply chain”.

Page 10, para 29

Page 11, Para 30. You write6 MWp annual demand is

Approximately 6 MWp of annual market demand isrequired in order to establish and operate a PV

Page 11, para 30




needed to establish new factory, but there is already

4.5 MWp idle factorycapacity sitting around (see your Para 20 on page 8).

module manufacturing factory economically(according to information from RWE-Schott, one of the 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 to be linked) to the statement of para 20.

Para 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 much

dependent on Government subsidy.

Page 8, para20

Page 12, Para. 39, line 2. Last word “in” should be

deleted?


Page 13, Para 44. Here youmake the correct key point.

BIPV does not take off because it is too expensive.There is not much one can do

about it for now. On the other hand, you should make the

point here, in a separate paragraph that Malaysianeeds to build up local

technical manpower and manufacturing capacity for

the day when the PV costswill decline and PV will

become competitive. Becausewithout these local strengths,

Malaysia will be unable toobtain the benefit from these

lower PV costs when they

come. The BIPV project, onthe other hand, will helplower the balance-of-system

costs slightly, but not significantly enough to makea difference.

Disagree 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 in providing 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 9th MalaysiaPlan, in addition to the 5th fuel policy and the Small

Renewable Energy Power (SREP) Program. Theresults of the MBIPV project will lead towardscontinuous development of the BIPV market under the subsequent Malaysia Plans.

The BIPV market can only grow if the technology is proven and understood by the prospective users.Therefore, improving the public awareness and the

and17, para 48,56 and 58

Page 6-7, para 13-14




capacity of the industry are also essential. In parallel,the major PV manufacturers are continuously tryingto reduce the cost of BIPV. In this aspect, the prospect of a significant BIPV cost reduction due toimproved technology is expected within the next 10years.

Agree 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 the project will develop the local industry as well as promote local manufacturing and product testing.

Page 20-23and 26-27, para 68, 69and 71

Page 14, Para. 47. It isdifficult to justify this project as sustainable. Without a

drop on core PV prices, it isnot financially viable.

Without a drop in coretechnology price of PV, you

can not ignite the market for it. This is serious point, which should not be glossed over.

At the same time, you should be able to say that you are

building capacity inanticipation of a drop in cost of core PV technology.

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 will become sustainable that will directly lead towardscost reduction.

In addition, this project does not simply wait or anticipate for PV price to reduce. The project willimplement interventions that would contribute and/or facilitate 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 of system) 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 in

demonstrating the BIPV technology and introducingthe BIPV market over the next five years.

Page 14, para 47

Page 20-27, para 68-71

Page 14, Para 48. There

seems to be a bit of wishful thinking here. What is the

price-elasticity for PV demand? How can you then

For now, there is no data available to quantify the price-elasticity for PV demand in the Malaysianscenario. This factor will be determined through theresults of the MBIPV project.

Page 26, para 70(item 3.8)




write, without reference or without justification, that an

extra 10% drop in PV system prices, caused by the BIPV project, will be large enough

for a market take-off?

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 of the 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.

Page 15, Figure 3. This isconfusing. The baseline (gray

bars) show higher installed capacity annually than does

the alternative (black bars).

So, the baseline sales would have been higher than thosewith the project?

Correction to Figure 3, page 15. The legend“Alternative” is replaced with “Incremental” in the project proposal.

Starting from year 2005, when the MBIPV project

kicks-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 of the GEF support. In this case, the GEF is only providing support to address the incremental cost of the BIPV technology application. Incremental cost isthe first and foremost critical hurdle of the project thatmust be adequately tackled in order to allow market penetration 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.

Page 15,Figure 3

, Para 49. Line 7.

You assert that importing the

technology and small market have caused PV costs to behigh in Malaysia. However,in other locations with larger

markets and local PV manufacture, PV costs are

still high. Even in the US, oneneeds a subsidy to make PV

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 inMalaysia. This is because of the well-establishedmarkets, educated consumers, competent service providers, and availability of local BIPV products.

Page 16, para 49




competitive with conventional electricity generation costs.

This is the same approach that MBIPV project is proposing but within a shorter timeframe.

The subsidy requirement in the US is due to lack of supportive 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. You

should also give a straight answer to the question: how

much annual CO2 will the project save directly?

As mentioned earlier. Page 14 and18, para 48and 62

Page 28, Para. 74-75. How

about financial sustainability?

The project will be poised tobe sustainable in terms of technical expertise and

regulations, and financing and public education, if and

when the PV core technology

costs drop. You need toaddress this point.

The MBIPV project activities are designed to makethe BIPV technology development sustainable. The project financial sustainability is strongly influenced by the outcomes of the project, e.g. new policies,financing mechanism, 10th 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. The project will be sustainable if the enablingenvironments are implemented in the 10th 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 and76

Page 29, Para. 76. On what

basis do you support graph in

Figure 5, and the statement of reducing the pay-back period to 15 years (from the

current 60 years)? Unless PV prices drop (and theymight drop owing to some

technological breakthrough),these projections are wishful

The payback period of 15 years by the year 2020 will be achieved when the long-term targets of the project

are met as follows: BIPV system cost is reduced to US$ 3,300/Wp

due to market forces (today is US$ 7,000/Wp); The BIPV energy yield improves to 1,400

kWh/kWp/year due to improvement in performance, quality, and reliability (presentaverage BIPV performance is 1,200kWh/kWp/year);

Page 29, para 76




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 technological breakthrough, but also due to market forces, asmentioned earlier. Furthermore, this economic performance does not yet consider the indirect value-added and savings generated from BIPV, such as: Reduced air-conditioning load, Improved energy efficiency and losses reduction, Enhanced building aesthetic and image without

additional maintenance cost.

Page 38, Para. 8 (of Annex A). What you estimate here isnormally called the technical

potential. This is different from the economic potential,

and still different from themarket potential. Just because Malaysia expects a

significant increase in peak demand does not mean that

uneconomical technologieswill get adopted to their full technical 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 5th fuel and realize its market potentials.

The word “technical” is added into the statement.

Page 39, para 8(Annex A)



R ESPONSE TO CONVENTION SECRETARIAT R EVIEW

Expected at Work Program Inclusion


Country DrivennessThe third paragraph in

the country drivenness section (Exec sum) is

not an indication of high country-drivenness

but rather a barrier for rapid and government-

supported market deployment. Please

clarify.

Agree. The third paragraph indicated the current challengesfaced by the BIPV industry and the perspective of theGovernment of Malaysia (GOM) on solar PV. Under the 8th Malaysia Plan (2001-2005), focus is given to solar, biomass, biogas, municipal waste and mini-hydro as part of theannouncement of the 5th Fuel Strategy, whereby renewableenergy (RE) is referred to as the country’s 5th fuel. As a resultof the UNDP/GEF Biomass Power Generation andCogeneration (BioGen) project, first priority was given to biomass as a resource of immediate potential.

The paragraph has been revised to emphasize the country’scommitment to implement a national BIPV project toovercome the previously cited challenges. It now reads:

As part of the RE development under the 5th Fuel Policy, the

Ministry of Energy, Communications and Multimedia(MECM) recognizes the long-term potential of solar energy,especially for PV in buildings, which will require different

institutional supports in comparison to the Biomassapplication. The GOM, through the MECM is committed to

implement the MBIPV project with the support and assistance

from the GEF in order to realize this long-term solar energy potential in Malaysia.

ExecutiveSummary:Page 3, 3rd Para of 2(b)

The exec sum says 5 %in 2005, table 1 in the

project brief 3 % in2006 (probably a BAU

scenario), pleaseclarify.

The projected RE contribution to the country’s power generation mix shown in Table 1 (3% in 2006, 5% in 2010) is based on a study conducted by the Malaysia Energy Center (PTM) for the Government. The 3% share figure represents a business-as-usual (BAU) scenario and also is not publiclyavailable.

The 5% RE share in 2005 is a figure quoted from a policyspeech by the Energy Minister (MECM) and is publiclyknown. This figure is mainly referred to by the public, the

industry sector and the GOM as the target share of RE in the power generation mix, under a scenario where RE is highly promoted, supported and widely used. To meet this target, theGOM is providing support programs for RE development andutilization under the 8th Malaysia, such as the SmallRenewable Energy Program (SREP), and the provision of fiscal incentives for RE-based power generation projects.

ProjectBrief:Page 6,Table 1

ProjectBrief:Page 6,

Para 13




Project Design

The baselineinstallations in fig. 3

seem pretty sizable

already. Please explainthis in more detail in

the text and change theterminology if

necessary (I even don't quite understand it after having read your

response to the STAP review. Is incremental

the same as "direct",and baseline

"indirect"?)

Figure 3 shows annual BIPV installed capacity. Thefollowing revisions were made in the Project Brief in order toclarify Figure 3 in order to avoid confusion:

Inclusion of Figure 2-1: Cumulative BIPV installedcapacity, representing the BIPV status in Malaysia duringthe period 1998-2003.

Revision of Figure 3: Forecast cumulative BIPV installedcapacity, for both alternative and baseline (BAU)scenarios during the period 2004-2010.

Inclusion of Figure 3-1: Forecast cumulative CO2 emission avoidance, showing the possible cumulativeCO2 emission avoidance during the period 2004-2010.

Revision of Figure 4: Projected BIPV system costreduction, for both alternative and BAU scenarios during

the period 2004-2010.

The terms direct and indirect were quoted in the STAPReview comments.

ProjectBrief:

Page 9,Fig. 2-1;

Page 15,Fig. 3;

Page 16,Fig. 3.1;

Page 17,Fig. 4;

1. Cost-sharing on thehardware in component

2, is 20 % the cap?

The 20% value is not intended as the cap for GEF’s costsharing on the investment cost of the BIPV demonstration projects. The incremental cost calculation resulted in a costfigure that is approximately 20% of the required cost for theBIPV demonstration projects that will be implemented under the MBIPV.

ProjectBrief:Para 72 -Item 2.4;AnnexA1-Para 12

2. Identify GEF contributions to

subcomponents tocomponent 4 in more

detail, how are theycofinanced?

There are 4 major activities in Component 4, and the requiredGEF assistance is described at then end of the description of each activity (Note: This is also true for each major activityof each component of the MBIPV project. The GEF and baseline contributions are as follows:

1) R&D on cost reduction of local BIPV products andsystem optimization for local conditions: GEF support(mainly consultants) is required for the technicalassistance to upgrade the technical capacity of localuniversities in producing commercially viable BIPV products. Pertinent universities will provide in-kind

(personnel and laboratory facilities) assistance. TheEnergy Commission (ST) and MESITA will collectively provide cash of about US$ 1.3 million.

2) International collaboration and technology transfer program: GEF support (mainly consultants) is requiredfor the technical assistance in establishing theinternational collaboration between the international

ProjectBrief:Page 28-29, Para74; Items4.1 to 4.4Page 38,Table 5;Annex A -Para 17-18




institutions and industries with the local universities andindustries. The collaboration is towards developing localBIPV products and industry. The local universities, andindustries will provide in-kind co-financing. International partners such as Fraunhofer ISE, Sputnik, and AES Ltdwill be providing in-kind and cash contributions.

3) Upgrading local BIPV industry capabilities: GEF support(consultants) is required for the technical assistance inupgrading the local BIPV industry and to developsuitable business models and business plans for asustainable BIPV industry. The local industries and theBIPV service providers will provide in-kind co-financing.

4) Establishment of BIPV testing facility: GEF support, inthe form of consultants (MBIPV personnel), is required

for the technical assistance in setting up the BIPV producttesting facility. SIRIM Berhad (a national standards andtesting center) and the MESITA will collectively providein-kind and cash (almost US$ 2.0 million) co-financing.

I would actually see a

high risk of the government losing interest once they are

aware of the costs of sustaining the follow-up

to this project bythemselves. Pleasecomment on the levels

of support that might berequired, per kWh as

well as in total and why you are so confident

that the government will agree to such a

scheme.

The MBIPV project will apply a bottom-up approach (PVindustry driven) rather than top-down (GOM driven). Nevertheless, the role of the GOM is critical in motivatingand catalyzing the BIPV industry by creating the enablingenvironment for BIPV application, and by providing acommon motivation for the industry in the form of a nationalBIPV program.

Thus, the sustainability of the BIPV technology will dependmainly on the PV industry and market mobilization that issupported by a strong institutional framework provided by theGOM. In this regard, the cost to the GOM in sustaining the program during the period 2010-2015 under the 10th MalaysiaPlan will not be too expensive. The expected enablingenvironment will be in the form of: (1) A higher feed-in lawfor BIPV (average of US$0.10/kWh from the GOM totalingto US$ 0.5 million); (b0 Reduction of price discounts for theBIPV installation under the subsequent Suria 1000 program(approximately US$ 2.6 million); and, (3), Tax exemption on

imported BIPV equipment (approximately US$ 3.2 million).The detailed costs will be evaluated during the MBIPV project implementation under Component 3. The GOM ishighly confident about the realization of the expected outputsfrom the MBIPV project. With the improved understandingof BIPV benefits, the GOM thinks that the macro economic benefits of a developed local BIPV industry will outweigh itsantici pated GOM contribution to sustain such industry after

ProjectBrief:Page 29-31, Para75;Annex A-Table A-3




the end of the GEF-assisted MBIPV project.

Please also note that the higher feed-in law and the taxexemption are expected to continue during the period 2015-2020, while the price discounts for BIPV installation mightno longer be offered under the subsequent Suria 1000 program.

Could you actually

demonstrate the cost reductions in Japan and Germany, and conclude

on the situation inMalaysia?

The strategy to develop the BIPV enabling environment inMalaysia will be based on the experience learned from theBIPV technology applications in countries like Japan andGermany, as well as in other OECD countries. The main ideais to learn from the modalities that were applied in the BIPVinitiatives in these countries, learn from the impacts achieved,gain knowledge of the problems and any best practice fromthese BIPV applications in these countries and translate theseinto the Malaysian context. Whatever are found to be

appropriate in the Malaysian context for achieving reductionin the BIPV technology cost (e.g., RE electricity feed-in lawapplied in Germany) will be considered. Moreover, learningfrom the experiences from these countries will also beachieve through adequate networking with key organizationfrom both countries, in addition to contacts with the IEA-PVPS and its participating countries.

The information on the cost reductions of PV systems inJapan (Sunshine Program) and Germany (Roof-top Program)are available from IEA-PVPS (www.iea-pvps.org), and alsofrom New Energy Foundation (Japan). Lessons learnedregarding approaches used in these 2 countries (and fromother OECD countries) would help facilitate thedemonstration of BIPV cost reduction in Malaysia when theappropriate enabling environment that is suitable toMalaysian condition is implemented during the MBIPV project.

ProjectBrief:Page 25-27, Para73, 74

Sustainability (including financial sustainability)

1. What would the sustainability look like

if the price guarantee isonly as high as the

price for end-user power?

In that case, the economics of a BIPV system will becomeunattractive, where the payback period will be more than 35years. For purposes of demonstration, and as a compromisewith the national utility, net-metering will be applied during

the MBIPV project implementation period. The projectstakeholders agree that this is acceptable during the MBIPV period since the main trust is the creation of the enablingenvironment (e.g., BIPV affordability). Later, prospectiveconsumers can avail of the special discounts under thesubsequent national BIPV (Suria 1,000) program.

However , the Suria 1000 program (post MBIPV project) will

ProjectBrief:Page 25-27, Para

73;Annex A – TableA2

http://www.iea-pvps.org/

http://www.iea-pvps.org/




require a higher unit purchase price from the utility, whichwill reduce annually (depending on the rate of BIPVtechnology 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 evaluated andrecommended as a Renewable Portfolio Standard (RPS)during the MBIPV project implementation period under Component 3 of the project.

2. Can any indicationbe given for the

willingness of the utilityto actually implement

such a price guaranteeof 16 Cts per kWh?

The quoted 16 cts/kWh is actually 16 sen/kWh, which is US$0.04/kWh.

Several discussions were conducted with the national utilityrepresentatives during the PDF-B exercise. As a start, theutility has agreed to purchase the electricity from BIPVsystems on a net-metering basis under the MBIPV project

(Note: Letter from TNB indicating the agreement isavailable). The agreed net-metering price of US$ 0.06/kWh ismuch higher than any other RE-electricity purchased priceagreed with the utility (US$0.04/kWh for Biomass).

It was decided during the follow-up discussion that it is stilltoo early for the utility to purchase BIPV-based electricity ata higher 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 (Component 3). Furthermore, the utility’sunderstanding on BIPV will need to be improved to quantifythe BIPV added-values to the utility. With the anticipatedimproved understanding and the implemented enablingenvironment, the utility is expected (or obligated) under aRenewable Portfolio Standard (RPS) to purchase BIPV-basedelectricity at about US$0.18/kWh in the year 2010. This willannually reduce to US$0.16/kWh or possibly to US$0.13 bythe year 2020, depending on the rate of the BIPV technologycost reduction.

ProjectBrief:Page 25-27, Para73;Page 31-33, Paras

79-82;Annex A – TableA-2

Industry and government have an

interest to promote PV,

as there are already production facilities in place, which arecurrently underutilized.

Certainly the MBIPV project will generate a BIPV marketthat could improve the utilization of the PV manufacturingfacility (BP Solar) that is already available in Malaysia.

Nevertheless, this facility will require some upgrade in order to be fully utilized. Its current operation is to meet the stand-alone PV systems demand for rural application. Note thatMalaysia is already about 99% electrified. Hence the demandfor such systems for rural electrification is now very limited.The PV industry in Malaysia has been waiting for a BIPVmarket catalyst that the MBIPV project will bring. Evenduring the PDF-B exercise, the industry has actively


Table 7




cooperated in the project development activities and hasshown overwhelming interests and commitments to be part of the MBIPV project activities (letters of supports or commitments are available).

Replicability Lower costs, increased skills and awareness,

demonstrated feasibility, and policy frameworks are likely

to lead to replication. However, an active

replication strategy for Malaysia and for other

countries in the region,including specific

project activitiesdesigned to foster

replication, would bedesirable for the project

brief. (At pipelineentry)

This issue is thoroughly addressed in Component 1 of theMBIPV project (Activity 1.8).

ProjectBrief:Page 21-23, Para71

Apart from the

widespread replicationwithin Malaysia,diffusion of the

technology into other

markets in the region is possible.

Agree, 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 (Component 3;Activity 3.8).

ProjectBrief:Page 27,Para 73(3.8)

Please ensure that all

factors that lead to the successful model

programs in Japan and Germany are factored

in the policy discussion. For example for the

roof-top program inGermany, subsidized

loans, tax breaks, as

well as full feed in of all power produced (rather than net metering) were

absolutely crucial for the mass take off.

Component 3 of the MBIPV project will evaluate the model programs and success factors detail in order to develop thesuitable enabling environment (e.g., policies, implementingrules and regulations, etc.) for Malaysia, including a suitablefeed-in law. Malaysia currently has good networking with New Energy Foundation of Japan, IEA-PVPS, Fraunhofer ISE of Germany, and other European PV stakeholders. Inaddition, PV stakeholders from Germany, Australia, Holland,Switzerland, Japan, Denmark, and Singapore were fullyinvolved during the LFA workshops and stakeholders

seminar during the PDF-B phase of the MBIPV project. Withsuch networking, pertinent information on successful model programs from Japan, Germany and other OECD countrieswould be available for use in the policy studies andevaluations for developing BIPV-related policies for Malaysia.

ProjectBrief:Page 22,Para 71(1.6)

Page 25,Para 73(3.1)




Financing Plan

4.7 mUSD GEF, 1mUSD MECM, 4.3

mUSD ST in cash (what

is ST?), 3.7 mUSD in-kind (please correct

table 6 in the project brief), 2.7 mUSD GoM,

3.9 mUSD private sector in cash, 3.9mUSD private sector

in-kind, 900 kUSDMESITA

ST is the Energy Commission (EC), the electricity regulator in Malaysia, and is also known as Suruhanjaya Tenaga (ST).

Table 6 in the Project Brief has been corrected accordingly.


Table 6

Total: 17.4 mUSD cash

(4.7 GEF), 7.6 in kind.This is more than

included at pipelineentry, but the

cofinancing (12.7 mUSD in cash) is also

much higher.

During the concept development stage of the MBIPV, it wasestimated that the envisioned activities would require GEFfunding assistance of about US$ 3.5 million. However,

during the stakeholder consultations and the log frameanalysis workshops that were carried out during the PDF-B phase of the MBIPV, a clearer picture of the necessaryinterventions that have to be implemented in creating thesuitable enabling environment for the BIPV industry inMalaysia became apparent.

The budget and financing plan for the implementation of theidentified and agreed activities of the MBIPV werethoroughly discussed with the UNDP, the designatedexecuting agency (MECM), and with the stakeholders duringthe National Steering Committee meetings. The total projectcost of US$24,959,160 (excluding PDF-B cost) was agreed by all parties as the minimum budget requirement tosuccessfully implement the MBIPV project over the 5 years period. This is to ensure that all issues related to the initialBIPV market penetration, the development of enablingenvironments, and future market sustainability are welladdressed, resulting in the long-term BIPV technology costreduction and widespread replications.

The US$ 4,7 million GEF funding will be utilized for personnel and mission cost (54%), training and capacity

building (16%), hardware and equipment (26%), and sub-contractors (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 to progress 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 are


Table 6

Page 38,Table 5

Page 38,Para 92




the minimum incremental cost associated with MBIPV project.

Some leveraged funding is expected during the course of theMBIPV project implementation. Hence, the final contributionfrom the GOM and other co-financiers might well exceed theinitially stated amount.

Consultation, Coordination, Collaboration between IAs, and IAs and EAs, if appropriate

Strategies for incorporating lessons

and policy experience from building

integrated PV in other countries would be

expected to be part of the project work plan

presented in the project brief. (At pipeline

entry)

This issue has been addressed in the relevant MBIPV projectactivities (Component 1 - Activities 1.6 and 1.7; and,Component 3 - Activity 3.1).

ProjectBrief:Page 22,Para 71(1.6, 1.7)Page 25,Para 73(3.1)

The project will makeuse of potential

synergies with the other GEF projects under implementation

(Industrial energyefficiency, biomass

energy).

The MBIPV project will take advantage of the potentialsynergies with selected activities of the MIEEIP and Biogen projects (e.g., policy development, assistance to localindustrial equipment manufacturing, etc.).

In addition, the MBIPV project will also complement other related GOM projects such as the demand side management project being implemented by the Energy Commission, the

integrated resource planning and energy efficient building projects that are implemented by the Economic PlanningUnit.

ProjectBrief:Page 14,Para 43

Page 12,Para 34

Review by Expert from STAP Roster

Some of the responses

to the STAP review, particularly the ones onthe specifics of BIPV (p.

20) as opposed to stand-along PV should

be included in the project executive

summary.

The relevant response has been incorporated into the projectexecutive summary.

ExecutiveSummary:Page 3-4,Para 3(a)

I also concur with theSTAP reviewer that theeconomic analysis of

the BIPV technology should be included in

the project brief: what are the current

The economic analysis of the BIPV technology has beenfurther elaborated in the project brief, with the followinginclusions:

Table A-2 in Annex 1, showing the economics of the projected BIPV market development during the period2006-2020 under various enabling environments.

ProjectBrief:Page 52,Annex A -Table A-2;Page 33,




generation costs, what is the cost projection,

how large are theincremental cost, and isthe Malaysian

government aware of this cost increment?

Figure 5: Forecast cumulative BIPV installed capacityand system cost reduction under the alternative scenario;Inclusion of Figure 5-1: Projected BIPV system payback period with direct relationship to the enablingenvironments under the alternative scenario.

Figs. 5and 5-1

The detailed discussion

in the STAP review of the assumptionsunderlying the graph in

figure 5 is veryinteresting and should

be included in the maintext. (is it 16 Cts for the

whole time or does the

feed-in tariff alreadyreduce over time?)

The relevant discussion has been incorporated in the project brief.

The feed-in tariff of US$0.18/kWh is anticipated for introduction in the year 2010. It is expected to annuallyreduce to US$0.16/kWh or possibly to US$0.13 by the year 2020, depending on the rate of the BIPV technology costreduction.

ProjectBrief:Page 31-33, Paras79-82

GENERAL COMMENTS (for records purpose only, not pre-conditions)

My two main concernsare: (1) That the risk

that the policy might not be implemented might be higher than

described; and, (2)That the cost reduction

might be overestimated.

Please include a morethorough discussion of

these risks.

Component 3 of the MBIPV Project will specifically focus oncreating a suitable policy (Renewable Portfolio Standard),and financing mechanism towards BIPV market sustainability beyond the completion of the project. This will also beachieved with the support and results of the other MBIPV project components, particularly Component 1. The MBIPV project strategy also gives priority in engaging a very strongand highly competent project team in order to obtain high

success in implementing the project activities. The MBIPVProject Team will also maintain its established closecooperation and rapport with respective key GOM agenciessuch as the Economic Planning Unit (EPU), the Ministry of Energy (MECM), and the Energy Commission (EC), as wellas the Malaysia Energy Center (PTM), which is expected to be the project base.

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 provide

strong advocacy to the Government to ensure that the variousrecommended policy and enabling environments for BIPVare implemented. These strategies will ensure that the risk for the policy of not being implemented is moderate.

The BIPV technology cost reduction in Malaysia of 20%during the period 2005-2010, and a further 30% during the period 2010-2020 are moderate estimates. In comparison, the

ProjectBrief:Page 29,Table 2;

Page 37,Figure 6;

Page 35,Para 86;Page 34Table 3

Page 30,Table 2(Market




cost reductions in the IEA-PVPS participating countries have been shown to range from 15% to 20% (or 10% to 17% for alarger market) in about every two years. This is from a recentreport on an international survey available from www.iea- prpv.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.

Risk)

Expected at CEO Endorsement

Comment Response ReferenceReplicability

Full integration of lessons learned from

similar programs inOECD countries

should be integrated into project components wherever

possible.

Agree. This will be covered in the MBIPV project Component3 (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 MBIPV

project. 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;Para 71(1.6, 1.7)Page 25,Para 73(3.1)

http://www.iea-prpv.org/






Responses to GEF Council Comments

Comments and Responses Reference

FRANCE

Comment:

As for similar project, the technical choice is also questionable: the production of solar-based electricity is expensive, technically difficult to implement and the resultsare in general poor.

Response:The Government of Malaysia (GoM) has decided to support building integrated photovoltaic (BIPV) technology in view of BIPV’s technical potential and long-termviability for widespread application in Malaysia, and in other tropical countries(ASEAN countries). This refers to BIPV applications for grid-connected power systems in urban areas. An initial pilot study on grid-connected PV application thatwas conducted during the period 1998-2002 established that the technology istechnically viable and would produce higher electricity output in comparison to

similar systems installed in temperate climate countries. Nevertheless, the relativehigh initial costs, as well as the lack of enabling environment have prevented BIPVfrom penetrating the local market. Further assessment conducted during the PDF-B phase of the MBIPV project verified the technical potential and the market status of BIPV technology in Malaysia.

In many countries, the cost of PV electricity is still in the range of 3 to 5 times higher than the standard electricity tariff for residential consumer. However, already in some places, PV electricity can be fed into the grid at tariff rates that are almost the same asthe residential consumer tariff. Such cases can be found in the US (Hawaii, NewMexico and Florida) where grid-connected PV is a viable option for electricity supply.

These US states have a residential tariff in the range of 25 to 30 US cents/kWh,resulting in an economically viable PV electricity option due to the local high solar irradiance and therefore, high energy yield. In addition, grid-connected PV actually provides peak electricity where the energy value is economically competitivecompared to the conventional peak electricity supply tariff. In some Europeancountries, the peak electricity tariff rates vary between 40 to 60 US cents/kWh,depending on the energy source and the power generation process. Nevertheless, evenwith a positive trend towards better economics, PV cannot easily gain a higher market penetration. Several known obstacles are:

Most power utilities are based on traditional and conventional power generation, preferring oil, gas, and coal (even nuclear) as power generation source;

Electricity markets are controlled by the power utilities, whereas liberalizedmarkets are necessary for RE and PV developments;Further BIPV technology cost reduction is dependent on the worldwide market.The existing PV markets are mainly in the developed world. The Asian PVmarket, particularly BIPV could well start in Malaysia. However, the enablingenvironments need to be established first in order to sustain a PV market.

These issues will be strategically addressed by the MBIPV project activities.

ProjectBrief: Para17, 23, 40,52, 59, 61,67



BIPV technology application involves various engineering and architectural issues. Itcan be applied without much difficulty once the necessary knowledge is built. The PVtechnology is well proven for over 20 years and hundreds of MWp of capacityinstalled worldwide. The implementation of the MBIPV project would help create therequired enabling environment that would address the policy, institutional, technical,and information needs to support a sustainable BIPV market. Obviously, such program would require the full cooperation and commitment of the stakeholders to besuccessful. The MBIPV project was developed with the full cooperation of keystakeholders and the GoM to ensure smooth implementation and success.

The off-grid market works significantly different than the grid-connected PV market.The sustainability of an off-grid market also relies heavily on continuous subsidiesfrom the government. The MBIPV project will focus on grid-connected PV in urban buildings and will create several synergies to generate added values and better economics for BIPV systems. With the developed enabling environment and improvedawareness, the BIPV market in Malaysia can grow significantly faster than the off-grid market. This is the case similar to those in Germany and Japan. The innovative

application of PV in buildings, as well as making such application commerciallydriven will also provide greater success potential.

Comment:Alternatives energy choice in supporting energy efficiency both on the production side(included transportation of electricity) and demand side (residential energy efficiencyactivities have shown in the past good results) could lead to at least equivalent benefitsin terms of environment and development at much better cost effectiveness.

Response:Currently, Malaysia is actively promoting energy efficiency (EE) and renewableenergy (RE), the latter as the fifth fuel resource. Demand-side-management (DSM) programs are actively pursued by the Energy Commission (EC) in parallel with on-going UNDP/GEF supported projects, i.e. Malaysia Industrial Energy EfficiencyImprovement Project (MIEEIP) and Biomass-Based Power Generation andCogeneration Project (Biogen). The MBIPV project will complement and createsynergy with these initiatives. Analysis conducted during PDF-B exercise for this project indicated viable long-term cost reduction of BIPV technology. The proposed project will fulfill the objectives of GEF Operational Program 7 and Climate ChangeStrategic Priority No. 5 (S5).

The cost effectiveness of BIPV in comparison to DSM may be lower at the moment. Nevertheless, the technical and economic potentials of BIPV applications in Malaysiaand in the ASEAN region are high (compared to those countries in the temperate

zone), and this project will pave the way to facilitate these applications. However, theeffort has to start now in order to arrive to this situation sooner. At the end of theMBIPV project, adequate information and facts will be available to determine thevalue and cost effectiveness of BIPV technology.

ProjectBrief: Para32, 43, 56,22

Comment:We suggest that such alternatives should be analyzed before taking into considerationupgrading the local industry towards local manufacturing.



Response:Efforts to improve the efficiency of generating, distributing and utilizing electricityhave been initiated and pursued in Malaysia since the 80s. Improvements on thesupply side require the utility’s (mainly the Tenaga Nasional Berhad or TNB)commitment. TNB has always been exerting its efforts to improve the electricitygeneration and supply. On the demand side, the ongoing projects such as the UNDP-GEF supported MIEEIP (Malaysia Industrial Energy Efficiency Improvement Project)and the Energy Commission’s (ST) Demand Side Management (DSM) Project are themain initiatives that addresses energy efficiency in the industrial, commercial andresidential sectors. In addition, the use of biomass for power generation is being promoted in the country’s palm oil industry through another UNDP-GEF funded project (Biomass-based Power Generation & Cogeneration Project). This project is inline with the country’s objective to have renewable energy (RE) as the fifth fuelresource. Analysis made during the PDF-B phase of the MBIPV project has identifiedthe technical and long-term commercial potential, as well as the expected benefits to be gained from BIPV technology application. The BIPV benefits are expected tocomplement the on-going efforts to promote EE and RE in the country. Furthermore,

the availability and reliability of the solar energy potential, which is 1.3 times higher than Central European countries and is relatively constant throughout the year, make ithighly relevant to develop BIPV in Malaysia. Apart from producing electricity, BIPVis expected to contribute to the reduction of electricity distribution losses, reduce therequirement for conventional peak energy supply, and enhance DSM initiatives. It isgenerally viewed as something that would immensely complement the country’songoing EE and RE efforts.

The local PV industry is one of the important drivers behind BIPV technologyapplication. Hence, it has to be educated and its capacity upgraded on all relevantaspects of BIPV technology applications in order to support and sustain BIPV marketdevelopments. The local BIPV market will take-off when there is widespread interestand support from the local PV industry. The MBIPV project will catalyze the localBIPV industry to enable it to provide quality services and manufacture different BIPV products to meet the demand and expectation of the local market.

ProjectBrief: Para7, 12, 32

ProjectBrief: Para24-26,74(4.1-4.3)

SWITZERLAND

Comment:Grid connected PV is less expensive than stand-alone off grid PV. But the reasons for a market todevelop are quite different for both options:

1. Stand-alone off-grid PV has a niche market where no other options are available. Ithelps in giving access to pre-electrification (only lighting) to generally backwardareas. The market potential does not come from the comparison against other

electricity sources. Many of the PV sales could not have been initiated without thesupport of specific programs.

Response:The stand-alone off-grid PV for rural electrification purpose is heavily dependent onGovernment financial assistance (subsidy). In Malaysia, the majority end-users arethose that are not able to afford and pay for the system. As such, the PV applicationwill not be sustainable without continuous Government support. BIPV on the other

ProjectBrief: Para19, 37, 46,47



hand is targeted for urban application where the targeted end-users have the financialmeans to pay and own the PV system. Nevertheless, a specific program will berequired in order to create the public awareness, educate the end-users, and developthe industry, the market and the enabling environments. With an external support fromGEF, the Government can create the catalyst for local BIPV market through thenational BIPV program. In the years to come, the specially introduced financialassistances and incentives can be gradually removed as the market develops. Hence,BIPV technology has a better potential to be self-sustainable and be commerciallydriven.

2. BIPV has the advantage and disadvantage to be grid-connected: 1st) its efficiency ishigher as there is no storage losses, any solar energy available in excess can be fed back to the grid, 2nd) as it is grid connected, the energy price that it produces can bedirectly compared to the other cheaper sources of electrical energy. At present PVenergy costs, the motivation to go for BIPV cannot be based on a purely financialanalysis (about 5-6 Euro/Watt Peak). A potential BIPV buyer must have other motivation to go for it. This motivation can be either image based, or any other reason.

Incentives such as tax exemption and feed-in higher tariffs are not sufficient to make itfinancially attractive.

Response:Agree. Financial incentive alone, though it is a significant factor in the ASEANregion, cannot guarantee the interest to install BIPV. Therefore, the MBIPV projectaddresses other critical issues such as public education and awareness creation, promotion of BIPV technology, improving the PV industry quality, creating goodBIPV showcases and demonstration projects, and others. The aim is to improve publicconfidence on, and image of, BIPV technology, as well as portraying BIPV as anexclusive must-have item so as to create aspiration to own BIPV among the people, as part of their lifestyle. The concern regarding conservation of the natural environmentwill also be the key motivation for end-users to install BIPV. The attractive financialincentives including a higher feed-in tariff will immediately capture public’s attentionand will create the initial impetus for BIPV market development.

ProjectBrief: Para59, 79, 82

Comment:Malaysia alone may not be a sufficient market to be one of the leaders in costreduction. The impact in terms of CO2 reduction remains marginal.

Response:Agree. Malaysian market alone will not be sufficient to achieve significant long-termcost reduction for a sustainable BIPV market. Therefore, the MBIPV project isexpected to generate a spillover effect to neighboring ASEAN markets. The

experiences and lessons learned from the MBIPV project will be significant increating widespread BIPV market in the ASEAN region. One of the objectives of theMBIPV project is to strengthen the local BIPV capacity. The improved local capacitywould be of great value to countries (e.g., Thailand and China) that have stronginterest to develop their local PV industry. Additionally, the ASEAN New andRenewable Sources of Energy – Sub-Sector Network (NRSE-SSN) framework willfoster the sharing of information among the ASEAN countries, and is expected tocreate o pportunity for regional cooperation that could lead to a widespread regional

ProjectBrief: Para71(1.7-1.8),

65



BIPV market. Thus, in the long-term, the MBIPV project is expected to createwidespread impact to other ASEAN countries that will lead to substantial CO2reduction.

Comment:Synergies with other programs (GEF projects on energy efficiency and biomass) aregiven as an advantage, but no specific activities are mentioned.

Response:During PDF-B activities, stakeholder discussions have addressed the possible synergy between the MBIPV project and the other on-going EE and RE initiatives in thecountry. In principle, the MBIPV project is expected to complement the national DSM program (on promotion activity), to maximize the resources with Biogen project onRE policy and SREP activities, as well as to complement the infrastructure framework developed by the MIEEIP project. Depending on the status and success of therespective on-gong programs/projects, the MBIPV project will be optimally integratedonce the MBIPV project is confirmed, where further detailed stakeholder discussionswill be conducted. As such, more specific activities for the synergy can be described

during the MBIPV project inception stage.

ProjectBrief: Para43

Comment:The incentives mentioned are risky in the sense that one does not know how long theyare going to be in place.

Response:One of the main targets of the MBIPV project is to create a sustainable follow-upBIPV program. The fundamental idea is to ensure that a national BIPV program isincluded in the 10th and subsequent Malaysia Plans. As a start, the MBIPV project will be implemented during the 9th Malaysia Plan (2006-2010) and will become the benchmark for the formulation of the sustainable follow-up BIPV programs. Theanticipated cost to the GoM to sustain future national BIPV programs is reasonableand would not be a stumbling block. Once the national BIPV program is included inthe subsequent Malaysia Plans, it is almost definite that the respective incentivesdeveloped for those specific programs will be in place.

ProjectBrief: Para78-79,Annex A3

Comment:BIPV is looked at as an independent system to be marketed irrespective of the building performance. Very large differences in energy requirement come from thedesign process. It seems important that first energy efficient designs (adaptedarchitecture, high performance ventilation and cooling systems, high performancelighting) are implemented. The energy saving potential in this process is usually muchhigher than what can be produced by a BIPV. BIPV should only be supported byincentives when a building design has shown to be of high-energy performance. This

process could then become a marketing incentive (provide support for energy efficientdesign, show the financial savings achieved in this process, and keep this savings tofinance the BIPV component.). In fact, it has to be remembered that 2 MWp (target of BIPV by 2010) does not represent more than the power required by a cooling plant of one large administrative building or commercial center.

Response:An energy efficient building will be designed with due consideration of the cost-

Project



effective measures. At this moment, BIPV is less cost-effective compared to EEequipment or passive solar building design. Normally, BIPV will be considered if the building is planned to be super energy efficient, where the annual energy consumptionwould be extremely low (offset by energy from BIPV). BIPV systems would typicallyserve as an integral component of the building envelope (e.g., as a shading device,roof, etc.). The building industry should also realize that BIPV could provide anopportunity for the building to have a unique feature, that of being able to generateenough electricity to meet its power requirements, and sell excess electricity to thegrid. This concept together with some basic EE features may result in a higher marketvalue for the building space and rental, as demonstrated in Europe. Integrating BIPVconcept in the early design process will result in much better cost effectiveness, asBIPV design can be optimized to suit the need and the BIPV system can also offsetsome of the building material costs. Another key point is that by using BIPV, the building roof or wall can generate income in comparison to the conventional roof andwall that do not.

Today, many experts from the PV and building industries have adopted this holistic

design approach. In addition, various international working groups, such as the IEA-PVPS Task 7, have set up guidelines to support this approach. The MBIPV projectactivities will also address these issues among the local industry, based on theinternational experiences.

In the case of existing buildings, we agree with the comment that it would be more practical to implement first energy conservation and energy efficiency measures, andfrom the savings realized from these, building owners can opt to consider other retrofitmeasures such as BIPV technology to further improve the buildings energy performance.

Brief: Para41, 52, 66-67, 69

Comment:Unless a systemic approach, supporting energy efficient design of buildings is set up,this project may not succeed in triggering the market of such a high cost technology.

Response:The MBIPV project, among others, will target the architects and the building industry.The Malaysia Association of Architect (PAM), the Public Works Department (JKR),and the Construction Industry Development Board (CIDB) will be extensivelyinvolved in developing an integrated design system that will address EE and RE(including BIPV) right from the early design stage. Within the MBIPV projectduration, the national guideline and standard on building design will be improved toincorporate BIPV. In addition, there are other factors that will be required to trigger the BIPV market development. In this case, the MBIPV project components have been

designed to systematically address all these factors at various levels.

ProjectBrief: Para72, 84

USA

Comment:The scientific and technical basis of the project is sound and, overall, project is wellconceived. It remains and open question, however, if everything will come together togenerate the hoped-for reduction in price of BIPV technology and resulting marketexpansion of this environmentally friendly technology. Project addresses key issue – price, purchaser interest in product, policy environment, financing, industry



development and sustainability beyond project termination – and is supported at this point by a range of players, especially the government. M&E plans seem satisfactory.Risk is moderate.

US position: Support, but request that prior to CEO Endorsement, Secretariat reviewthis project specifically for the issue of sustainability, cost effectiveness andreplicability and ensure adequate measures are in place.

Response:Sustainability: In summary, to ensure the long-term BIPV technology sustainability,the MBIPV project will catalyze the local market, develop the enabling environments,enhance the local capacity, create and operationalize regional informationdissemination networks, and incorporate national BIPV programs in subsequentMalaysia Plans. The specific measures are described in the MBIPV project componentactivities. The impact and the results of the MBIPV project will also be monitored andimproved for better sustainability in the subsequent Malaysia Plan (10th MalaysiaPlan).

Cost effectiveness: The GEF contribution will be utilized to address the associatedincremental cost in implementing the MBIPV project. Priority is given to cover the personnel and capacity development cost instead of targeting a large capacity of BIPVsystem installations. This specific measure will ensure that BIPV market can continueto grow beyond the MBIPV project as the necessary capacity, industry andframeworks would have been established. Thus, BIPV sustainability will not bedependent to continuous external funding from GEF or other international agency.

Replicability: In summary, BIPV technology replicability is addressed by enhancingthe local capacity to design, install, monitor, and maintain BIPV system. Theestablished enabling environments will ensure technically and commercially viableconditions for continuous growth of BIPV application. The dissemination of information via the ASEAN NRSE-SSN will promote BIPV replication inneighboring countries. The specific measures to create BIPV replication are describedin the MBIPV project component activities.

ProjectBrief: Para77-83,73(3.8)



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