Malaysia’s arduous journey to a sustainable and secure energy future

The country is setting an ambitious target of having 20% energy generated from RE sources in its total energy mix by 2025 from the current 2%


THE absence of a regulatory framework governing energy efficiency and an over reliance on solar power could challenge Malaysia’s goal of increasing its renewable energy (RE) mix tenfold by 2025.

Malaysia set itself the ambitious target of having 20% energy generated from RE sources in its total energy mix by 2025 from the current 2%, which translates into adding some 3.9GW in additional RE capacity within the next seven years.

According to the World Economic Forum’s (WEF) latest Energy Transition Index, Malaysia ranked a respectable 31st with system performance and transition readiness at 68% and 55% respectively.

The index measures a country’s readiness to transition into an equitable, sustainable and affordable energy future.

While only performing behind Singapore and Japan in Asia Pacific, Malaysia is still lagging behind in terms of environmental sustainability and its energy system structure, the index highlighted.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin (picture) said injecting and commercialising the additional 3.9GW RE capacity nationwide poses a “real challenge” for the country.

She stated while initiatives are present to incentivise energy efficient practise among consumers and businesses, a clear regulatory framework needs to be in place to ensure the sustainability of such initiatives.

“We must have a regulatory framework for energy efficiency,” she said during the WEF in Kuala Lumpur yesterday, adding that the shift towards renewables is not just about protecting the environment, but enabling economic development in Malaysia.

Yeo said her ministry is drafting an Energy Efficiency and Conservation Act (EECA) to be tabled to Parliament for approval by the beginning of next year.

“We are in the process of drafting the EECA. I will see the last draft next week, then we will table (it) to a town hall for more engagement through the minister’s office. Hopefully, we will be able to table it as soon as the beginning of next year,” she said.

The ministry has introduced several initiatives towards meeting Malaysia’s goal of a 20% RE in the energy generation mix by 2025.

This includes a net energy metering scheme which allows consumers to generate electricity via rooftop solar panels to sell the energy to national power utility, Tenaga Nasional Bhd (TNB), at a one-to-one price, as well as tax incentives, allowances and financing for companies going green.

Association of Water and Energy Research Malaysia president S Piarapakaran said Malaysia is over-reliant on solar energy which is insufficient to cope with the 24-hour energy demand.

“Putting high solar mix is not a good option. Solar is good only for peak loading. We need base loading to run the nation,” he told The Malaysian Reserve.

He said base loading refers to the energy demand that exists throughout the day, and prolonged periods of rainfall will compromise Malaysia’s energy security if it were too dependent on solar-generated energy.

Achieving a sustainable energy future cannot be divorced from security and affordability, creating what many countries today term the energy trilemma.

Biomass is seen as a potential growth enabler to generate RE, while at the same time position Malaysia as a biomass hub, but achieving this will be challenged by the presence of a wide variety of groups with invested inte- rests in the industry, he said.

Piarapakaran expects RE to account for only 3% of Malaysia’s overall generation mix in 2020, with coal at 53%, natural gas 29% and hydroelectric 15%.

“If hydroelectric data is not part of RE, it is not possible to reach this target by 2025. We see a more palatable date before 2030.”

Malaysia’s target of a 20% RE mix excludes large-scale hydro facilities above 100MW capacity.

“Energy is the enabler of economic development and prosperity for this nation,” Yeo said at the WEF yesterday.

She said the question is now, how Malaysia can leverage on the global decarbonisation trend to create jobs and economic opportunities in the country.

“RE generates more jobs per GW hour of production than fossil fuel,” she said. “We are not only talking about saving the world, but talking about creating a new industry and new economic frontier for economic growth in Malaysia,” she said.

The economic opportunities have to be balanced against the potential returns for promoters as RE remains a lower return business compared to coal and oil and gas (O&G).

Coal and O&G are the main resources relied upon by TNB and Petroliam Nasional Bhd, Malaysia’s national utility and O&G company respectively, but achieving a higher RE mix will be driven just as much by independent power producers (IPPs).

“If planting up of new power plants is done via competitive bidding with power purchase agreement, it is also a low return business compared to direct negotiations the power sector used to get in the 1990s,” Piarapakaran said.

He said companies selling electricity will constantly be wary of the longevity of the business as it is contract-dependent, while companies selling technology can continue to participate in new projects that other companies bid in.