The government support on renewable energy (RE) can be seen under the 8th Malaysia Plan with the introduction of 5-Fuel Policy (2001)—implying 5% of RE in energy mix but only achieved 1.8% under the 9th Malaysia Plan. Under the 10th Malaysia Plan, RE deployment was better facilitated with the release of RE policy and action plan (SEDA 2011).

The policy sets a target of achieving 2 GW RE by 2020, i. e. 10% or 2,065 MW of the national grid electricity. Of this, about half of the electricity will be attainable from oil palm biomass and biogas from palm oil mill effluent (POME). Thus, the main contributor for renewable energy is biomass — and biogas-based energy, and these can be potentially generated from the palm oil industry.

Assuming 100% of one form of oil palm biomass, i. e. empty fruit bunches (EFB) and POME, are utilised, the maximum potential RE derived from them is about 1,500 MW. To date, four palm-based biomass power plants and two biogas plants (Table 1.2) are connected to the national grid with total installed capacities of ~43 MW (Ministry of Energy, Green Technology and Water 2011).

Besides palm-based RE, other locally produced indigenous resources that can be exploited are forestry residue (wood waste), municipal solid waste (MSW), agricul­ture residues (rice husk, rice straw, rubber by-product, sugarcane bagasse, animal manure), energy crops (jatropha, algae) and other non-biomass-based RE such as hydro, solar, wind and geothermal.

Other policies that were aligned to support RE are:

1. Small Renewable Energy Power Programme (SREP) (May 2001)

2. National Biofuel Policy (March 2006)

3. Malaysian Biofuel Industry Act (July 2007)