securing a sustainable energy future for … is a net energy exporter, ... small renewable energy...

SECURING A SUSTAINABLE ENERGY FUTURE FOR MALAYSIA

By

Tan Sri Dr. Ahmad Tajuddin AliChairman

Energy Commission, Malaysia


The Energy Demand Situation

Over the last decade, the economy grew at an average rate of 4.9 % p.a.

Malaysia is a net energy exporter, with 13.7 percent of export earnings in 2009 derived from crude oil, liquefied natural gas (LNG) and petroleum products.

During the period from 2000 – 2008, energy consumption per capita increased at an average rate of 3.14 % p.a.


The Energy Demand Situation (Contd)

In 2008, final use of commercial energy was 44.9 Mtoe, comprising of 54.5 % petroleum products, 23.9 % natural gas, 17.8 % electricity and 3.8 % coal and coke.

The transport sector consumed 36.5 %, industrial sector at 42.6 % and the residential & commercial sector at 13.8 %.

Final energy demand is projected to grow at 3.4 % p.a. reaching 92.9 Mtoe in 2030, more than twice the 2008 level.

Electricity consumption per capita now is about 3,412 kWh per year, significantly higher than most developing countries, but still below the average in developed countries.

This is projected to more than double to reach 7,571 kWh/person in 2030


The Energy Supply Situation

In 2008, our total primary energy supply stood at 75.5 Mtoe, contributed by crude oil and petroleum products (38.2 %), natural gas (43.4 %), coal and coke (15.3 %), and hydro (3.1 %).


The Energy Supply Situation (Contd)

We currently imports about 20 million tonnes of coal annually, mostly from Indonesia, Australia and South Africa.

Malaysia also imports about 110 mmscfd of natural gas from Indonesia and 290 mmsfd from the Malaysia-Thailand Joint Development Area via cross-border pipelines to meet the domestic demand for gas


The Energy Supply Situation (Contd)

In 2009, the total installed generation capacity of the three main utilities and IPPs was 24,006 MW, comprising of 21,817 MW in the Peninsula and 2,189 MW in East Malaysia.

About 57.6% of our electricity generation comes from natural gas, 38.8% coal, 3.3% hydro, and 0.3% from oil and renewables


The National Energy Policy

The Supply Objective:

To ensure the provision of adequate, secure and cost-effective energy supply through developing indigenous energy resources, both non-renewable and renewable energy sources using least-cost options, and diversification of supply sources both from within and outside the economy



The Utilisation Objective:

To promote the efficient utilisation of energy and the elimination of wasteful and non-productive patterns of energy consumption



The Environment Objective:

To minimise the negative impacts of energy production, transportation, conversion, utilisation and consumption on the environment.


Challenges: Fuel Supply Constraints

The era the availability of cheap natural gas will come to an end. Pricing mechanism will have to be found to encourage investments in “new” supply alternatives.

LNG for the Peninsula?


Challenges: Renewables

RMK-8: The Five-Fuel Strategy recognises renewable energy resources as the fifth fuel after oil, coal, natural gas

Small Renewable Energy Power Programme (SREP) was launched in 2000, with RE projects targeted to contribute 5 % of generation capacity by 2005.

However, only 12 MW capacity was achieved. Subsequently, under the Ninth Malaysia Plan, the target was revised to 350 MW in year 2010.


Challenges: Renewables (cont.)

Unfortunately, as of end 2009, from a total of 17 RE projects approved with total capacity of 116.4 MW, only 8 projects were commissioned with total capacity of 58.1 MW.

In 2008, the tariff for SREP projects was increased from 17 sen to 21 sen per kWh.

The Renewable Energy Act, which among others, will establish attractive feed-in tariffs for the RE sector, together with a new regulatory framework will be tabled in Parliament by the end of this year.


Challenges: Energy Efficiency

EE is acknowledged as the most cost-effective way to moderate energy demand and thus reduce expensive investments in new generation capacity.

Many studies and programmes have been carried out over the years have shown EE to be technologically feasible and economically efficient, however the penetration of energy-saving measures is slow.


Challenges: Transportation Sector

The transportation sector is a major energy consumer, accounting for nearly 40 % of final energy consumption. It is also the largest consumer of petroleum products, principally gasoline and diesel.

Encouraging a shift to more efficient modes of transport, by developing alternative infrastructure such as mass transit systems and providing the necessary incentives to the use public transportation systems.


Challenges: Energy Forecasting

In securing a sustainable energy future for Malaysia, the monitoring and updating of energy demand projection is a key prerequisite for developing an active and responsive energy policy.

Forecasting, scenario-building and planning must be regular and permanent activities within the Malaysian institutional framework.


Challenges: Liberalisation of the Electricity Industry

Over the last two decades, Malaysia’s electricity supply industry structure has evolved from a monopolistic, vertically-integrated industry managed by government utilities, to an industry comprising government-owned utilities as well as private sector players.



Today, there are three main utilities in the country, namely Tenaga Nasional Berhad (TNB), Sabah Electricity Sdn. Bhd. (SESB) and Sarawak Electricity Supply Corporation (SESCO).

There are now 24 IPPs in operation in Malaysia, 17 of which are in the Peninsula.



In 1998, in keeping abreast with worldwide trends in the liberalisation of the electricity sector, the government began to look at restructuring of the electricity supply industry. The aim was to improve efficiency, provide greater transparency and promote competition.

Unfortunately, prompted by the California debacle in 2001, the reform plan was put on hold.


Managed Market Model

Unbundling of value chain - at the minimum, unbundling of national utility without separation of ownership.

New generation capacity of national utility and IPPs are contestable through competitive bidding process.

Single buyer in the national utility.

Regulation of tariff .

Industry regulation under the Energy Commission.


Current Initiatives

MESI Reform

Addressing the Cost-Price mis-match

Addressing the anticipated Demand–Supply gap


Immediate ChallengeToday and in moving ahead,

Striking the right balance between Ideals and Realities


“Problem? What problem?”


Thank You

securing a sustainable energy future for … is a net energy exporter, ... small renewable energy...

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