Impact of carbon financing on the development of small scale run of river hydropower plants in Malaysia during the period 2008–2012

This paper analyses the pipeline of Small Renewable Energy Producers in Malaysia during the period of 2008-2012 and investigates the effect of carbon financing in the development of small scale hydropower projects. The most common forms of carbon financing available in the CDM market during the period 2008-12 are also discussed. CDM projects must demonstrate that they are `additional´ to the business as-usual scenario and this paper examines the additionality arguments of each project. Possible barriers cited in CDM include technological barriers, barriers due to prevailing practice and investment barriers. In the Malaysian CDM small-scale run of river hydropower project pipeline, all projects cited the investment barrier as their biggest hurdle. For small-scale hydropower developers, the low project returns, difficulty in accessing finance and the scale of these electricity generation projects in comparison to a combined cycle gas turbine (CCGT) or coal fired plants, present a difficult development platform. For all projects examined, CDM had a significant impact on internal rate of return.