IMPLEMENTATION OF MOTOR ENERGY EFFICIENCY PROGRAM IN MALAYSIA

1. IMPLEMENTATION OF MOTOR ENERGY EFFICIENCY PROGRAM IN MALAYSIA UNIDO Experts Group Meeting March 21, 2007

2. ENERGY RATING PROGRAM The Energy Rating program was one of the components of the Malaysian Industrial Energy Efficiency Project (MIEEIP) to implement energy rating for industrial equipment.

3. 2002 STUDY Under this component, the Malaysia Energy Centre (PTM) conducted a study in 2002 on the development of the national rating program for industrial equipment.

4. STANDARDS AND LABELING The study revealed that minimum energy efficiency standards and the implementation of the standards and labeling program for industrial equipment and machinery can be used as a cost-effective option to improve overall energy efficiency and shall be promoted aggressively.

5. WORKING GROUP The first equipment identified for the labeling program was the electric motors and a public/private partnership committee called the Sub-working group on Motors was set-up in the Energy Commission which is the electrical regulatory body in Malaysia.

6. The Working Group agreed to adopt the similar scheme implemented by the European Committee of Manufacturers of EU Electrical Machinery and Power Electronics (CEMEP).

7. MOTOR CLASSIFICATION According to CEMEP motors are classified as: • EFF 1 – High-Efficiency Motor • EFF 2 – Improved-Efficiency Motor • EFF 3 – Standard Motor.

8. HEEMA In order to obtain the commitment of the manufacturers, dealers and suppliers of motors a voluntary agreement titled “ High Efficiency Electric Motor Agreement (HEEMA)” was signed in December 2003. Eight companies were signatories to the HEEMA.

9. AGREEMENT

10. COMMITTMENT “We the signatories of the High Efficiency Motor Agreement hereby affirm our industry support to increase the market share of the high efficiency motors so as to contribute towards the national energy efficiency goals of saving energy, reducing pollution and improving the environment”

11. PHASE OUT OF MOTORS The signatories agreed to phase out motors EFF 2 and below by the year 2008.

12. OFFICIAL LAUNCH On May 2005,the official launch for the HEEMA campaign was held in Kuala Lumpur attended by more than 200 participants comprising industry leaders and users, consultants and engineers, motor suppliers as well as users from the public sector

13. SEMINARS • Immediately after the launch, the first of the User and Consultant seminars were conducted. • The User seminar focused on the practical situations and financial benefits of HEMs in relation to industrial users. • The Consultant seminar was more technical in order to assist them in presenting the viability of HEMs.

14. Over the 6 month period of the campaign, seminars were held in various cities of the country. This campaign was conducted with close cooperation of the HEEMA signatories and the support of DANIDA

15. The seminars were planned to address the lack of awareness of HEMs and were conducted in the major industrial areas of the country. The seminars were tailored specifically for two different segments of the industries: the industrial users or motor purchasers and the consultants or engineers who help with motor specifications, designing and installation.

16. Different approaches were taken as industrial users require more general information whilst the professionals need technical data; but both approaches serve to assist in identifying ideal scenarios for using HEMs, and present the economic benefits, government incentives as well as global and regional trends of HEMs.

17. Supported by timely press releases and publications in the local mass media, the campaign achieved its objective to drive up awareness and interest in HEMs.

18. ACTIVITIES TO PROMOTE HEM IN 2005

19. LOCATION OF HEM SEMINARS • Registered: 1,388 • Attended: 1,083 *Originally planned 6 user seminars but increased to 7 due to good response

20. Assessment of the 2005 HEM Campaign 9th February 2006

21. PARTICIPANTS’ AWARENESS OF HEM PRIOR TO THE SEMINARS Only a minority of the participants were aware of HEM prior to attending the seminars From seminar survey forms

22. PARTICIPANTS’ RESPONSE TOWARDS THE SEMINAR Positive Response • Overall positive towards the seminars • Seminars were informative and well presented • Suggested more seminars to create greater impact From seminar survey forms

23. CONVINCED ABOUT BENEFITS OF HEM AFTER THE SEMINARS • Most of the participants were convinced about HEM • Most of the participants from the industries mentioned would consider future purchase of HEM Convinced From seminar survey forms

24. HEEMA MEMBERS’ TOTAL SALES VERSUS MARKET SIZE 116 110 107 • Total sales of motors increased from 3% in 2004 to 5% in 2005. • HEEMA members’ share of the total motor market increased from 34% in 2003 to 37% in 2005. Source: HEEMA members and other suppliers

25. ENQUIRIES FOR HEM FROM POTENTIAL CUSTOMERS • HEEMA member mentioned experiencing an increase in enquiries for HEM during the campaign. • Some HEEMA members mentioned enquiries increased by as much as 25-30% in 2005. • However, many members mentioned enquiries declined after the campaign. DuringCampaign BeforeCampaign Note: Based on general perception from HEEMA members

26. HEEMA MEMBERS’ TOTAL MOTOR SALES DuringCampaign BeforeCampaign • Sales of HEM among HEEMA members increased by 4-folds in 2005. • Many HEEMA members took advantage of the campaign to promote their range of HEM motors. • Major buyers for HEM and EFF2 motors are medium to large size companies while EFF3 motors remain popular among smaller industries. Source: HEEMA members

27. PROPORTION OF MOTOR SALES AMONG HEEMA MEMBERS • Proportion of HEM sold among HEEMA members increased from 1.3% in 2004 to 5.1% in 2005. • Proportion of EEF2 sales gradually replaced EFF3 motors from 2003 to 2005. • Some HEEMA members mentioned they have either discontinued or emphasising less on EEF3 motors. Source: HEEMA members

28. TOTAL SALES OF MOTORS (HEEMA AND OTHERS) From combined sales of HEEMA members and other suppliers • Total sales of HEM in Malaysia increased 1,400 units in 2004 to 2,800 units in 2005. • HEEMA members share of the HEM market increased from 36% in 2004 to 79% in 2005. Source: HEEMA members and other suppliers

29. PROPORTION OF TOTAL MOTOR SALES (HEEMA AND OTHERS) From combined sales of HEEMA members and other suppliers • Proportion of HEM sold increased 2-fold from 2004 to 2005 but mainly from HEEMA members. • There was a significant shift from EEF3 to EEF2 motors from 2004 to 2005. Source: HEEMA members and other suppliers

30. GOVERNMENT INCENTIVES • Exemption on import duty and sales tax • Investment Tax Allowance on investment in energy efficient equipment. • Loan facilities for capital investments in energy efficiency projects through the Small and Medium Industries Development Corporation.

31. HEM PROMOTION IN 2006 In 2006 a series of seminars on “Implementing Energy Efficiency Initiatives” were carried out by the Malaysia Energy Centre (PTM) at 5 different locations in Malaysia. A paper on “High Efficiency Technology” was included in the program.

32. HEM SEMINAR 2007 A seminar on HEM was held on January 25, 2007, in collaboration with the Copper Development Centre, where speakers from India and China were present to share their country’s experience in implementing HEM programs.

33. Thank You Pusat Tenaga Malaysia Level 8, SAPURA@MINES No. 7, Jalan Tasik The Mines Resort City 43300 Seri Kembangan Selangor Website: www.ptm.org.my E-mail: info@ptm.org.my