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Energy Policy 36 (2008) 2130–2142

www.elsevier.com/locate/enpol

Economical, environmental and technical analysis of buildingintegrated photovoltaic systems in Malaysia

Lim Yun Senga,�, G. Lalchandb, Gladys Mak Sow Linb,1

aDepartment of Physical Science, Electrical and Electronic Engineering, Tunku Abdul Rahman University, 53300 Setapak, Kuala Lumpur, MalaysiabMalaysia Energy Centre, Building Integrated Photovoltaic Project, Malaysia

Received 13 December 2007; accepted 18 February 2008

Available online 9 April 2008

Abstract

Malaysia has identified photovoltaic systems as one of the most promising renewable sources. A great deal of efforts has been

undertaken to promote the wide applications of PV systems. With the recent launch of a PV market induction programme known as

SURIA 1000 in conjunction with other relevant activities undertaken under the national project of Malaysia Building Integrated

Photovoltaic (MBIPV), the market of PV systems begins to be stimulated in the country. As a result, a wide range of technical,

environmental and economic issues with regard to the connection of PV systems to local distribution networks becomes apparent.

Numerous studies were therefore carried out in collaboration with Malaysian Energy Centre to address a number of those important

issues. The findings of the studies are presented in the paper and can be served as supplementary information to parties who are directly

and indirectly involved in the PV sector in Malaysia.

r 2008 Elsevier Ltd. All rights reserved.

Keywords: Financial viability of PV systems; Reduction in greenhouse gas emissions; Technical issues caused by PV systems

1. Introduction

Greenhouse gas emissions from combustion of fossilfuels for electricity generation have grown extensively overthe past two decades. Such a rapid growth of emissions hascaused the world to suffer, increasingly, the adverse effectsof climate changes. In the past few years, Malaysia hasexperienced a number of such effects. For example, thefloods in Johore on Peninsular Malaysia from December2006 to January 2007 were the worst in 100 years. Thesefloods caused 90,000 people to leave their homes and killed17 people. This natural event resulted in the country tosuffer financial losses of about RM 6 billion ( ¼ US$1.38billion; BBC News, 2007).

The demand for electricity will continue to growworldwide over the next two decades. In Malaysia, the

e front matter r 2008 Elsevier Ltd. All rights reserved.

pol.2008.02.016

ing author. Tel.: +6034109802 or +60123459598;

79803.

esses: yslim@mail.utar.edu.my (L.Y. Seng),

org.my (G. Lalchand), gladys@ptm.org.my

).

9434300 or +60133910540.

energy demand is predicted to increase from 11,050MW in2001 to 20,087MW in 2010 (Ninth Malaysia Plan, 2006).Therefore, the emission of greenhouse gases is predicted toincrease from 43 million tones in 2005 to 110 million tonesin 2020 (Mahlia, 2002). In addition, the global price ofcrude oil increased enormously from USD 23.17/barrel inJanuary 2000 to USD 86.02/barrel in November 2007(Energy Information Administration, 2007). The averageincreased rate of the oil price is about 34%/year. As aresult, Malaysia will increasingly face a wide range of socialand economic issues caused by climate changes as well asthe increased prices of fossil fuels. The government hastherefore put in a great deal of efforts to explore andincrease the utilization of renewable energy sources inorder to reduce the use of fossil fuels and so the emission ofgreenhouse gases (Abdul and Lee, 2005).In 2000, the government reviewed its energy policy and

implemented the Five Fuel Diversification Policy, makingrenewable energy as the fifth source of energy in thecountry. It was estimated that if the use of renewablesource can be increased to 5% of the total electricitygeneration, then the country could save RM 5 billion

ARTICLE IN PRESSL.Y. Seng et al. / Energy Policy 36 (2008) 2130–2142 2131

(US$1.32 billion) over a period of 5 years (Abdul and Lee,2005). Since then, a wide range of programmes have beenundertaken to promote and increase the installation ofrenewable power plants. One of the programmes is theimplementation of Small Renewable Energy Power (SREP)Programme in May 2001 (Ministry of Energy, Water andCommunications, 2007). Under this programme, the own-ers of any SREP plants can apply for a license to sell theirrenewable electricity to the main utility company, TenagaNational Berhad (TNB), for a period of 21 years. Up todate, 59 applicants have been approved under the SREPwith total energy generation capacity of 352MW. Many ofthe approved renewable power plants use biomass, woodwaste and rice husk as a source of energy.

Malaysia is a tropical country where solar energy isavailable throughout the year with solar radiation in therange of 1419 to 1622 kWh/m2/year (Solar Radiation,2008). Under such a climatic condition, photovoltaicsystems become another favourable renewable energysource. However, at present, the prices of PV modulesand related components are extremely high. The currentmarket value of PV system is about RM 28.00/Wp (US$8.40). The reason for such a high price is that, at present,Malaysia does not have any local PV manufacturer. All thePV modules and inverters are imported from foreigncountries, such as Germany and Japan, hence causingthe cost of PV systems to be very high. As a result,photovoltaic systems are not an attractive option to thepublic. Therefore, PV business becomes unsustainable andis often regarded by PV suppliers and service providers astheir side income stream.

In order to reduce the cost of PV system, MalaysiaEnergy Centre has carried out a project named MalaysiaBuilding Integrated Photovoltaic (MBIPV). This project isfunded by the government, United Nations DevelopmentProgramme (UNDP/GEF) and various private sectors.The main idea of the MBIPV project is to incorporate PVgrid-connected systems aesthetically into the buildingarchitecture and envelope. Activities undertaken in thisproject are aimed at creating the necessary conditions thatwill, in turn, lead to sustainable and widespread applica-tion of BIPV starting from 2006 onwards. The MBIPVproject is expected to induce the growth of BIPVinstallations by 330% from the current status of 470 toabout 2000 kW, with a unit cost reduction of about 20% bythe year 2010.

Since the commencement of the MBIPV project, a widerange of activities have been undertaken. For example, aPV market induction programme, known as SURIA 1000,was started from September 2006, although it was officiallylaunched on 22nd June 2007. Under this programme,electricity customers can bid for price rebates on PVsystems under the MBIPV project (Southeast Asia Renew-able Energy Newsletter, 2007). The first round of biddingyielded 14 successful bids from 39 applicants. The success-ful applicants received the discount of, on average, 53% oftheir PV systems. This programme will operate every year

until 2010. In addition, a US-based PV manufacturingcompany, namely First Solar, is currently setting up amanufacturing branch in Kulim Hi Tech Park located inKedah. It is expected to complete the construction of thefirst phase of its factory by the end of 2007. Its firstproduction is expected to begin by the end of 2008. FirstSolar will continue to expand its manufacturing plant inthe future.With such increased activities associated with the PV

sector, it becomes essential to address issues with regard tothe connection of PV systems to local distribution net-works. Therefore, collaboration was established betweenTunku Abdul Rahman University and Malaysia EnergyCentre to carry out studies on several critical issues.Among all these issues, the economic viability, environ-mental benefits and technical impacts of installing PVsystems are discussed in this paper. The paper can serve assupplementary information to any parties who are directlyand indirectly involved in the PV sectors. Economicviability of installing PV systems is evaluated under severalconsidered regulatory and commercial frameworks as dis-cussed in Section 2. Reduction in the emissions of green-house gases as a result of PV penetration is determined aspresented in Section 3. Simulation studies are carried out toinvestigate the effects of PV systems on distributionnetwork voltage level, energy losses and maximum demandcharge as discussed in Section 4. Conclusions are given inSection 5.

2. Economic viability of installing PV systems

2.1. Net present value (NPV)

The NPV is a standard method for financial appraisal oflong-term projects. The higher the NPV, the greater thefinancial benefits will be (Bernal-Agustin and Dufo-Lopez,2006). It is used to evaluate the economical viability ofinstalling a 1 kWp PV system. The following shows thederivation of the equation for calculating NPV.The initial cost of the grid-connected PV system is

expressed as follows:

S ¼ Cgen þ Cinv þ Cinst � Csub

where S is the cost of the PV system, Cgen the cost of thesolar cells, Cinv the cost of the inverter, Cinst the cost ofinstallation and Csub the amount of financial subsidy underSURIA 1000.The net cash flow Qj for year j is the profit made in a

particular year j as a result of the investment and can becalculated by using the following equation. It is thedifference between the savings achieved in electricity billand expenses incurred as a result of the investment:

Qj ¼ ppvEgen � ðCO&M þ CInsÞ (2)

where Qj is the profit made in year j, ppv the PV electricitytariff, Egen the annual amount of PV generation, CO&M the

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Table 1

Parameters used to calculate NPV

Total cost of the installation RM 28/Wp

Annual yield of PV (Egen) 1100 kWh/kWp

PV electricity tariff (ppv) RM 0.28/kWh

Lifespan of PV (N) 30 years

Annual maintenance and insurance cost

(CO&M+CIns)

RM 140/kWp

Subsidy (Csub) Varying from 40% to

70%

Inflation (g) 3%

Nominal interest rate (i) 3%

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–21422132

cost of operation and maintenance and CIns the cost ofinsurance.

Under the current regulatory framework, PV generationis traded on a net metring basis, where the PV owners onlypay for the net amount between on-site consumption andPV generation. TNB will not make any payment to the PVowners if the PV generation is higher than the on-siteconsumption. Any excess of PV generation in a particularmonth will be carried forward to the transaction of thefollowing month.

It is known that expenses vary from year to year becauseof inflation. For PV systems, the cost of maintenance andinsurance should increase due to inflation. Taking intoaccount the cost variation gives

Qj ¼ ppvEgen � ðCO&M þ CInsÞð1þ gÞj (3)

where g is the inflation rate.The NPV can then be calculated by using the following

formula:

NPV ¼ � S þQ1

ð1þ iÞþ

Q2

ð1þ iÞ2þ � � � þ

QN

ð1þ iÞN

¼ � S þXN

j¼1

Qj

ð1þ iÞj(4)

where i is the nominal interest rate and N the lifespan of PV(years).

Nominal interest rate is the monetary price or theinterest rate that allows different economic quantities to bereferred to each other, transferred periodically over time, tothe initial year of investment.

2.2. Case study 1: calculation of NPV under the existing

regulatory and commercial frameworks in Malaysia

The calculation of NPV is carried out for 1 kWp inMalaysia with the following data collected from MalaysianEnergy Centre and Energy Commission Malaysia booklet(Energy Commission Malaysia, 2004). Under SURIA 1000programme, successful applicants can receive subsidyranging from 75% to 40% of their PV systems. Therefore,in this case study, NPV is calculated for the 1 kWp PVsystem with the subsidy varying from 40% to 70%. The PVelectricity tariff is RM 0.28/kWh. This calculation does notcater for the cost of replacement for the inverter in the mid-life of the PV system. Table 1 shows the parametersnecessary for the calculation of NPV.

At the subsidy rate of 40%, the NPV is �15,000. Thevalue reduces to �6500 at a subsidy rate of 70%. Theowners of PV systems may not be able to receive anyfinancial return from their investment in PV systems. Thisis because the cost of the PV systems is excessively high andalso the selling price of PV electricity is very low. Atpresent, Malaysia does not have any local PV manufac-turer. All the PV modules and inverters are imported fromforeign countries, such as Germany and Japan. Therefore,the cost of PV systems is very high.

Under the current commercial arrangement, the tariff ofPV electricity is made to be the same as that of fossil-fuelled electricity. The price of PV electricity is very lowbecause the price of fossil fuels is heavily subsidized by thegovernment. The high cost of PV systems and low tariff ofPV electricity result in the negative value of NPV.To investigate how PV electricity tariff will affect

the NPV, Fig. 1 is derived to show the correlation be-tween NPV and PV electricity tariff under varioussubsidies. This graph indicates that if a PV system isgiven a financial subsidy of 50%, which will cost RM14,000 to the government, then the owner would be able tomake a financial return if the PV electricity tariff isabove RM 0.82 per kWh. The owner would be able tomake financial return if the PV tariffs are greater than RM0.70/kWh and RM 0.58/kWh under the subsidy of 60%and 70% respectively. The subsidy of 60% and 70% willcost RM 16,800 and RM 19,600, respectively, to thegovernment.

2.3. Case study 2: calculation of PV electricity tariff as a

function of profitability

In this case study, PV electricity tariff is calculated withrespect to the profitability of PV system. This calculationwas carried out with the assumption that the cost of the PVsystem is given a subsidy of 40% which costs thegovernment RM 11,200. The results show that the PVowners will be able to achieve 40% profit if the PVelectricity tariff is RM 1.495/kWh as shown in Table 2.The utility companies may be able to increase the PV

tariff to RM 1.495/kWh for the PV owners if a sufficientfund is available. This fund can be secured if the utilitycompanies could impose a certain amount of levy on theelectricity bills of domestic customers. A study was carriedout to identify the amount of levy that should be imposedon the electricity bills. It is known that the number ofdomestic customers in Malaysia is 6.0 million. Total energyconsumption of those customers per year is 15,000GWh.Electricity tariff is RM 0.28/kWh and total electricity billof the domestic customers is RM 4.2 billions (EnergyCommission Malaysia, 2004). It is assumed that the totalinstalled capacity of PV is 1MWp and the total yield of PVis 1.1GWh/year.

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-15000

-10000

-5000

0

5000

10000

15000

0.234

Selling Price (RM/kWh)

NPV

Subsidy=50%Subsidy=60%Subsidy=70%

10.90.80.70.60.50.40.3

Fig. 1. NPV as a function of PV tariff under various subsidies.

Table 2

PV electricity price with respect to the profitability

ProfitabilityProfit

Capital� 100 (%)

0 5 10 20 30 40

Selling price of PV electricity (RM/kWh) 0.974 1.015 1.061 1.17 1.309 1.495

Years of return Never 28 25 21 18 15

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–2142 2133

The total burden for the domestic customers and thecorresponding levy are calculated as shown in Table 3. It isshown that the amount of levy is only marginal. Even if thetotal installed capacity of PV is increased to 2MWp, whichis the targeted amount for 2010, the amount of levy is stillmarginal. Therefore, it may be feasible for the utilitycompanies to tap on this resource to give a better PVelectricity tariff to the PV owners. However, the customersmay refuse to accept the levy if the installed capacity of PVbecomes substantially high. For example, if the totalinstalled capacity of PV is increased to 360MWp, whichis about 2% of 16,000MW, which is total power demandof Malaysia, the amount of levy is increased by a factor of360. Each domestic customer has to pay an averageamount of RM 758 instead of RM 700 for his/herelectricity consumption. Customers will refuse to acceptsuch a high levy.

3. Environmental analysis

3.1. Types of fossil fuels to be replaced by PV system

The utility sector of Malaysia is composed of two mainsub-sectors, namely hydroelectric and thermal powerplants (Saidur et al., 2006). Electricity is supplied by threemain utility companies, namely TNB in PeninsularMalaysia, Sabah Electricity Supply Berhad (SESB) andSarawak Energy Berhad. In year 2003, the total electricity

generated in the country was 83,300GWh. Table 4 showsthe types of sources accounted for the total amount ofgeneration.Fig. 2 shows the daily load profile in Malaysia and

the composition of power plants involved throughoutthe day (Ahmad, 2002). It is shown that open-cycle gasturbines are always the final resource to be used in map-ping the power demand. This indicates that open-cyclegas turbines that operate during peak seasons can possiblybe substituted by the PV systems available on the net-works. Therefore, the type of fossil fuels to be reducedas a result of the penetration of PV systems could benatural gas.The following is the equation to determine the amount of

primary energy to be replaced by PV if the efficiency of theopen-cycle gas turbine power plant is known:

Eprim ¼EPV

Z(5)

where Eprim is the amount of primary energy to bereplaced by 1 kWh of PV generation (kWh), EPV the 1 kWhof PV generation and Z the average efficiency of theconventional thermal power plant.It is known that gas-fired power plants have an efficiency

of approximately 30% (Kannan et al., 2004, 2005). Byusing Eq. (5), it is estimated that 1 kWh of electricity fromPV can replace natural gas of 3.3 kWh, which is equivalentto 11.88MJ.

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Table 3

Levy to be imposed on electricity bills

Selling price of PV electricity (RM/kWh) 0.974 1.015 1.061 1.17 1.309 1.495

Increase in PV electricity price as compared to electricity tariff (RM/kWh) 0.694 0.735 0.781 0.89 1.029 1.215

Increase in burden for domestic customers (RM-millions) 0.76 0.81 0.86 0.98 1.13 1.34

Levy on electricity bills for domestic customers (%) 0.018 0.019 0.020 0.023 0.027 0.032

Table 4

Percentage of electricity generation by different types of sources in 2003

Types of fuels Percentage Amount of electricity (GWh)

Gas 72.8 60,642

Coal 16.3 13,577

Hydro 6.2 5164

Oil 4.0 3332

Biomass and others 0.7 583

Fig. 2. Daily load profile for the utility in Malaysia.

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–21422134

It is known that the annual yield of 1 kWp PV systemvaries at different areas (Jensen, 2006). The amount ofprimary energy to be replaced by 1 kWp PV system atvarious areas will be different as shown in Fig. 3. Theaverage amount of primary energy to be replaced by 1 kWpPV system per year is about 15,191.55MJ.

This data is valuable to the government and the utilitycompany because they can use this figure to determine thesaving of natural gas. Assume that the average cost ofnatural gas is about RM 13.15/mmBtu or RM 0.62/kg(GasMalaysia, 2008). The energy content of naturalgas is about 55MJ/kg. If the lifespan of 1 kWp PV is 30years, then the government or the utility company can saveabout RM 5.13 thousand of natural gas over the lifespan ofthe PV system. If the government achieves the totalinstalled PV capacity of 2MWp in 2010, then the countrycan save about RM 10.26 million of natural gas over 30years.

3.2. Amount of emissions to be avoided by PV

Fig. 4 shows that the life cycle of PV systems consists ofthree phases: (1) manufacturing and construction phase, (2)operational phase and (3) decommissioning phase. In themanufacturing and construction phase, electricity isrequired and imported from the national grids which arepowered by various power plants, where 93% of the energysources are fossil fuels. As a result, greenhouse gases wouldbe emitted during the manufacturing and construction ofPV systems. Studies have been carried out to estimate theenergy requirement for this phase and so the associatedemissions of greenhouse gases in Europe and Singapore(Reinhard, 2006; Kannan et al., 2006; Alsema andNieuwlaar, 2000; Bernal-Agustin and Dufo-Lopez, 2006).However, such studies using Malaysia’s context have yet tobe undertaken. As a result, it is necessary to perform thesestudies based on the relevant data.As for the operational phase, PV systems generate clean

electricity to reduce the use of natural gas and henceemissions of greenhouse gases caused by combustion ofnatural gas. Calculation will be carried out to estimate theamount of emissions of greenhouse gases to be reduced byPV system in Malaysia.For the decommissioning phase, electricity is required

for recycling all the materials, such as recycling ofaluminium supporting structures and module frames. Theelectricity could be from the national grid. However, due tothe lack of strategy for recycling PV systems in Malaysia, itis proposed to ignore the calculation of greenhouse gasemissions associated with this phase in this document.

3.2.1. Amount of emissions during the manufacturing and

construction of PV

The total amount of greenhouse gases emissions for year2003 is calculated as tabulated in Table 5. The primaryenergy required to manufacture PV components is given inTable 6 (Bernal-Agustin and Dufo-Lopez, 2006). This datais used to derive the primary energy and electricityrequirements for manufacturing the ground and roof topPV systems as shown in Table 7. Finally, the total amountof emissions of greenhouse gases for the ground androoftop PV systems is determined as shown in Table 8.

3.2.2. Net amount of emissions to be avoided throughout the

lifespan of PV

As mentioned previously, natural gas is the most likelyfossil fuel to be replaced by PV systems. Knowing theemission factors for a gas-fired power plant, the amount of

ARTICLE IN PRESS

0

200

400

600

800

1000

1200

1400

1600

1800

KotaKinabalu

PenangBahru

KuchingBahru

KuantanLumpur

Ann

ual e

nerg

y ou

tput

of P

V (k

Wh/

kWp)

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Am

ount

of r

epla

ced

prim

ary

ener

gy (M

J)

KWh/kWp MJ

Kota Johor KualaMelaka

Fig. 3. Annual energy output of 1 kWp PV and the amount of primary energy to be avoided by 1 kWp PV system at various areas in Malaysia.

Fig. 4. Energy flow for the three phases of PV system.

Table 5

Greenhouse gases generated by conventional thermal plants in year 2003 in Malaysia

Greenhouse

gases

Emission factors of fossil fuels (kg/kWh) Total emissions of conventional

thermal plants in year 2003 (tonne)

Emissions per total amount of

electricity generated (83,300GWh)

in year 2003 (g/kWh)

Coal Petrol Gas

CO2 1.18 0.85 0.53 50,994,594 612.18

SO2 0.014 0.0164 0.0005 273,698.81 3.2857

NOx 0.005 0.0025 0.0005 133,513.24 1.6028

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–2142 2135

ARTICLE IN PRESSL.Y. Seng et al. / Energy Policy 36 (2008) 2130–21422136

CO2, SO2 and NOx to be reduced by PV systems over 30years is determined as shown in Table 9. Finally, the netreductions in emissions of CO2, SO2 and NOx over the

Table 6

Primary energy requirements for the production of various system

components

Components Primary energy

requirements

Monocrystalline silicon PV module with

aluminium frames

47MJ/Wp

Polycyrstalline silicon PV module with

aluminium frames

35MJ/Wp

Amorphous silicon PV module with aluminium

frames

23MJ/Wp

Array support for a ground PV system 1700MJ/m2

Array support for a roof top PV system 500MJ/m2

Invertors and cabling 1MJ/W

Table 7

Total primary energy and electricity requirements for the production and inst

Types of PV modules For the ground PV system

Primary energy requirements

(MJ/W)

Electricity re

(kWh/kWp)

Monocrystalline silicon 61.07 5941.33

Polycyrstalline silicon 49.07 4774.01

Amorphous silicon 48.28 4697.05

Table 8

Total amount of greenhouse gas emissions and the average emission for prod

Greenhouse gases For the ground PV system (tonne/kWp) For the

Mono-Si Poly-Si Am-Si Mono-S

CO2 3.637 2.922 2.875 3.087

SO2 0.019 0.016 0.015 0.017

NOx 0.009 0.008 0.008 0.008

Table 9

Amount of greenhouse gases to be avoided over 30 years at various locations

Locations Annual yield (kWh/kWp) Yield over 30 years (kWh/kWp

Kota Kinabalu 1600 48,000

Penang 1350 40,500

Kota Bahru 1250 37,500

Kuching 1240 37,200

Johor Bahru 1220 36,600

Kuantan 1200 36,000

Melaka 1190 35,700

Kuala Lumpur 1180 35,400

Average emission (tonne/kWp)

lifespan of 1 kWp PV system are 17.573, 0.004 and 0.028tonnes, respectively. If the country achieves the totalinstalled PV capacity of 2MWp, then we can avoid a totalgreenhouse emission of 35,210 tones over 30 years.This data is not only valuable to the government but also

PV owners because they can use the data to register theirPV projects as a Clean Development Mechanism (CDM)project (Clean Development Mechanism Malaysia, 2008).Then, they are entitled to sell ‘‘certified emission reduction(CERs)’’ to developed countries, hence creating additionalincome streams to the PV owners.

3.3. Energy pay-back time (EPBT)

EPBT is the number of years required to recuperate theenergy used to manufacture a PV system and dispose it atthe end of its lifespan (Alsema et al., 1998). It is one of theparameters used to indicate the amount of benefits that PVsystem can bring to the environment. EPBT is expressed in

allation of ground and rooftop PV systems

For the rooftop PV system

quirement Primary energy requirement

(MJ/W)

Electricity requirement

(kWh/kWp)

51.84 5043.40

36.38 3539.35

31.14 3029.46

uction of PV modules in Malaysia

rooftop PV system (tonne/kWp) Average emissions (tones/kWp)

i Poly-Si Am-Si

2.167 1.854 2.757

0.011 0.009 0.015

0.006 0.005 0.007

) Amount of greenhouse to be avoided over 30 years (tonne/kWp)

CO2 SO2 NOx

25.44 0.024 0.043

21.46 0.020 0.036

19.87 0.018 0.033

19.72 0.018 0.033

19.39 0.018 0.033

19.08 0.018 0.032

18.92 0.017 0.032

18.76 0.018 0.032

20.33 0.019 0.035

ARTICLE IN PRESSL.Y. Seng et al. / Energy Policy 36 (2008) 2130–2142 2137

years and can be calculated as follows:

EPBT ¼Einvested

EPV(6)

where Einvested is the amount of energy required tomanufacture the PV system and dispose it at the of itslifespan and EPV the amount of energy generated by the PVsystem per year.

The primary energy requirements are used in conjunctionwith the yearly yields to calculate EPBT for various locationsthroughout the country. Fig. 5 shows the values of EPBT ofvarious technologies at different locations. It is shown thatEPBT of thin film rooftop systems is in the range of 1.89–2.6years, which is the lowest as opposed to that of monocrystal-line and polycrystalline rooftop systems. Therefore, it isrecommended to use thin films in Malaysia.

4. Technical analysis

Integration of PV systems with distribution networkscould bring forth a number of benefits as well as technicalissues. The benefits could be the reduction in maximumdemand charge and energy losses. However, it createsvoltage rise issues. Numerous studies have been carried outto investigate the impacts of PV penetration on maximumdemand charges, energy losses and voltage rise issues (IEA,2002; Jenkins et al., 2000; Chalmers et al., 1985; Aly et al.,1999). However, such studies may need to be carried out inMalaysia’s context. Therefore, efforts have been under-taken to collect the topology of a local distributionnetwork as well as the associated network parametersfrom the main utility company, TNB.

The distribution network used for this study is on thecommercial premise, called Aman Jaya, in Petaling Jaya in

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

KotaKinabalu

Penang

EPB

T (Y

ears

)

Mono roofPoly roofThin film roof

KuchingKota Bahru

Fig. 5. EPBT of rooftop PV system

Selangor. The single-line diagram of this network is shownin Fig. 6. This network consists of 14 loads and 18 distri-bution lines. The parameters of the cable and transformersare given in Table 10. The daily load was measured asshown in Fig. 7. The maximum power demand is 120 kWfrom 11 am to 6 pm. The minimum power demand is 20 kWfrom 1 am to 8 am. This network was modelled in Matlabwith the assumption that it is a balanced three-phasesystem. The simulation model was used to determine theenergy losses and voltage rise on the network with variouscapacities of PV penetration as discussed in the followingsections.

4.1. Power losses on distribution network

Installation of PV systems on the distribution networkchanges the load profile of customers and hence energylosses on the networks. To identify exactly how the loadprofile can be affected by PV systems of various sizes, theactual output profiles of a 5.25 kW PV system on abungalow house were used as given in Fig. 8. The averagevalue of the output profiles was taken and then scaled up toreflect a bigger capacity of PV before it was superimposedwith the actual load profile of the network to derive severalload profiles as shown in Fig. 9. The figure illustrates howthe load profile is affected by varying the size of the PVsystem. These load profiles were used to calculate theenergy losses on the distribution network. The procedureof calculating the energy losses is described in Lakervi andHolmes (1998). Table 11 shows the percentage of energylosses on the distribution network with respect to thecapacity of PV systems.It is shown that monthly energy losses on the distribu-

tion network reduces from 80.7 to 40.8 kWh as the size of

BahruKuantan

LumpurJohor KualaMelaka

s at different cities in Malaysia.

ARTICLE IN PRESS

Fig. 6. Distribution network on Aman Jaya’s commercial area.

Table 10

Parameters of transformer and cables

Type of equipment or cable Resistance (at 50Hz at

90 1C)

Reactance (at

50Hz)

11 kV/415V Transformer

(750 kVA)

0.00385O 0.00807O

300MMP 4C XLPE Al 0.13O/km 0.072O/km70MMP 4C XLPE Al 0.568O/km 0.075O/km

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–21422138

the PV system increases from 0 to 5 kWp. The reduction ofenergy losses is about 50.5%. If the energy losses on thenetwork can be reduced, any premature defect of networkequipment caused by thermal heating could be minimized.Hence, utility companies may avoid or defer the needs ofupgrading their networks. This can help the utility

companies to minimize the cost of maintenance for theirnetworks.

4.2. Voltage rise issues on the distribution network

integrated with PV systems

The same network model was used to investigate theimpacts of PV systems on the voltage level on thedistribution network. A number of case studies werecarried out with various sizes of PV. In each case study,the voltage level at every busbar was taken and thenplotted as shown in Fig. 10. The statutory tolerance for lowvoltage distribution network is +5% and �10% of thenominal value which is range of 216–252V (Ministry ofEnergy, Water and Communications, 2007). It is shownthat the voltage excursion is within the statutory toler-ances. These results indicate that the voltage rise issues

ARTICLE IN PRESS

0

20

40

60

80

100

120

140

160

0:00Day hours

Pow

er d

eman

d (k

W)

23:1121:3720:0318:2916:5515:2113:4712:1310:589:247:506:164:423:081:34

Fig. 7. Total power demand of all the customers.

0

500

1000

1500

2000

2500

3000

3500

4000

7:00Day hours

Pow

er O

utpu

t of P

V (W

)

AprilOctSeptJune

19:0018:0017:0016:0015:0014:0013:0012:0011:0010:009:007:59

Fig. 8. Daily output profile of 5.25 kWp PV system in Semenyih.

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–2142 2139

caused by the penetration of PV systems may not be anissue of major concern to the utility companies.

4.3. Reduction in maximum demand charge

The tariff for the maximum demand charge is RM 25.70/kW/month for commercial sectors with voltage level of11 kV (Energy Commission Malaysia, 2004). Table 12shows the maximum demand charges with respect to thecapacity of the PV system. It is shown that as the capacityof PV increases from 0 to 5 kWp, the maximum demand

charges faced by the commercial customers decrease fromRM 220.30 to RM 117.48. The reduction of the maximumdemand charge is about 53%, which is a substantial benefitto the customers.

5. Conclusion

Under the current regulatory and commercial frame-works, the owners of PV systems are not able to make anyfinancial return on their investment of the PV systems evenafter the government has provided a subsidy of up to 70%

ARTICLE IN PRESS

-40

-20

0

20

40

60

80

100

120

140

160

0:00

Day hours

Pow

er d

eman

d (k

W)

Without PV system

With 1 kW PV system

With 3 kW PV system

With 5 kW PV system

22:5221:0519:1817:3115:4413:5712:1010:428:557:085:213:341:47

Fig. 9. Power demand of all the customers with different levels of PV penetration.

Table 11

Monthly energy loss with respect to the capacity of a PV system

Capacity of PV on

each premise (kWp)

Power loss on the

network (W)

Daily energy loss

(kWh)

Monthly energy

losses kWh

Reduction in power

losses over loss

without PV (%)

Power losses over

power consumption

(%)

0 364.98 2.69 80.7 0.0 0.169

1 325.52 2.35 70.5 12.6 0.159

2 288.62 1.93 57.9 28.3 0.141

3 288.62 1.77 53.1 34.2 0.142

4 271.09 1.52 45.6 43.5 0.135

5 271.09 1.36 40.8 49.4 0.133

238.8

239.3

239.8

240.3

240.8

241.3

241.8

1Busbar number

Volta

ge m

agni

tude

(V)

Without PVWith 1 kWp PVWith 2 kWp PVWith 3 kWp PVWith 4 kWp PVWith 5 kWp PV

1918171615141312111098765432

Fig. 10. Voltage magnitude on the network with various levels of PV penetration.

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–21422140

ARTICLE IN PRESS

Table 12

Maximum power demands and charges with respect to the capacity of PV

Capacity of PV on each

premise (kWp)

Total power output of the

PV systems on 14

premises, assuming that

the efficiency of each PV

system is 80%

Maximum demand of all

commercial customers

(kW)

Maximum demand

charge (RM)

Maximum demand

charge per customer

(RM)

0 0 120 3084.00 220.30

1 11.2 108.8 2796.16 199.72

2 22.4 97.6 2508.32 179.16

3 33.6 86.4 2220.48 158.60

4 44.8 75.2 1932.64 138.04

5 56 64 1644.80 117.48

L.Y. Seng et al. / Energy Policy 36 (2008) 2130–2142 2141

of the PV capital. Therefore, the current size of PV marketis very small; only about 470 kW is owned by a smallnumber of domestic customers. The potential size of PVmarket in the country is huge since the utility companieshave domestic customers of about 6 million, whilecommercial and industrial customers of 1.2 million.Therefore, it may be necessary for the government andthe utility companies to consider offering a higher tariff ofPV electricity to the PV owners in order to promote PVinstallations.

Numerous data presented in this paper are indications ofthe benefits that PV systems can bring to the government,utility companies and PV owners. For example, thegovernment or utility company can save RM 10.26 millionof natural gas and avoid a total greenhouse emission of35,140 tonnes over the lifespan of 2MWp PV systems. ThePV owners can create additional income streams by sellingCERs to developed countries in addition to the reductionof their maximum demand charges every month. Theutility companies can avoid or defer the needs of upgradingtheir networks with minimum concern for the voltage riseissues. The values of EPBT are relevant to PV manufac-turers because the values indicate that thin film is therecommended type of PV technologies for Malaysia.

One of the possible challenges faced by the PV sectors isthat the price of PV modules may still be high even afterFirst Solar has been established. This is because Malaysiacould face a serious shortage of silicon, which is one of theraw materials for PV cells. A large amount of silicon needsto be imported from foreign countries before an appro-priate alternative material can be found locally. Anotherchallenge is that the yearly yield (kWh) of existing PVsystems is diminishing every year. One of the possiblereasons could be the growth of air pollutants in theatmosphere of major cities that reduces the intensity of thesolar radiation on the ground. As a result, customers’incomes from selling PV electricity may reduce every year.The government therefore may need to put in more effortsin research and development on solar energy in order toovercome the barriers to the advancement of PV market inMalaysia.

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