Malaysia, Singapore continue energy talks

The talks would provide B2B opportunities in the new energy space

By MARK RAO & AFIQ AZIZ / Pic By RAZAK GHAZALI

MALAYSIA is expected to conduct further discussions with Singapore to potentially bring the latter onboard the Asean Power Grid that would provide business-to-business (B2B) opportunities in the new energy space.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin (picture) said she will be attending the Singapore International Energy Week later this month to continue discussions between both nations towards an energy supply agreement.

She said the initiative is a result of an earlier agreement between Malaysia, Laos and Thailand to expand the energy capacity from a trilateral Power Integration Project (PIP) to 300MW under the Asean energy grid.

“That has piqued Singapore interest to be connected to the Asean grid,” she said during the International Greentech and Eco Products Exhibition and Conference Malaysia 2019 in Kuala Lumpur yesterday.

She said Malaysia is already constructing an undersea cable to connect to Singapore’s power grid, with the first phase of 550MW to be completed by year-end, while the second phase is to be finalised by April next year.

Yeo said the Singaporean government is keen on power trading, especially in renewable energy (RE), as multinational companies in the country are keen on purchasing RE by electrons as opposed to via certificates (or carbon offsets).

Should the plan materialises, Yeo said it would be done on a B2B basis with the Malaysian government to provide the “highway” or infrastructure to facilitate the energy trading.

“We have started the conversation (last year) before Australia. Hopefully, we will be able to further our discussions at the end of this month,” she said.

The initiative is also in tandem with the plan by Singapore’s Sun Cable Pte Ltd to build the world’s largest solar farm, valued at an estimate of US$14 billion (RM58.66 billion), in the northern region of Australia, which could export 3GW of power via a 3,800km subsea cable to the island republic.

The Asean Power Grid, meanwhile, is aimed at ensuring greater energy security between South-East Asian countries via regional cooperation.

The project is ultimately geared towards creating a secure, reliable and sustainable energy grid in the region.

Yeo was speaking during a session on the Malaysia Electricity Supply Industry (MESI) 2.0 which is aimed at driving a more efficient and competitive electricity supply market.

This includes liberalisation and allowing third access in the power market, which was previously dominated by Tenaga Nasional Bhd and Petroliam Nasional Bhd, and ending power purchase agreements (PPAs).

Currently, PPAs provide independent power producers with guaranteed capacity and energy payments. This will be replaced by a capacity and energy market.

Yeo said the first auction for the capacity market will commence in 2023, while her ministry engages with power players, financial institutions and stakeholders to determine the best framework to facilitate the transition.

“The rules and the approval of the capacity market design will take about from now till the end of 2021 (to finalise). It will take a long time, so we will continue to engage,” she said.

The liberalised and transformed market will further allow power generators to source their own fuel to optimise cost.

Yeo said fuel makes up the bulk or 42% of the total tariff cost in Malaysia.

The retail tariff, in contrast, is only at one sen per kilowatt hour.

Injecting more competition in fuel procurement will thus create more competitive fuel costs in terms of electricity generation, she added.

Last month, The Malaysian Reserve reported that Yeo planned to execute 80% of what is currently in the pipeline under MESI 2.0 in 2020.

This master plan and framework will prepare Malaysia to cope with changing trends in electricity demand and consumption in the future, as well as technological changes.

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