The govt’s decision to sell only non-RE demonstrates its perseverance to advance RE in efforts to achieve a sustainable energy mix

by BERNAMA / pic by TMR FILE

THE government is allowing only non-renewable energy (non-RE) exports to Singapore and not allowing private power sales.

There is justification in this as Malaysia could gain by way of foreign direct investments (FDIs), increased job opportunities, competitive advantages and benefits to local RE players.

This decision is both logical and pragmatic as it will benefit Malaysians in what is an environmentally friendly way of living.

Additionally, Malaysia’s RE is still in its infancy stage, which means there is no excess energy to be sold to others.

Last year, electricity generation in Peninsula Malaysia comprised 4.4% hydroelectricity, 32% gas, 61.7% coal, 1.1% solar energy, 0.5% biomass and 0.3% biogas.

Malaysia’s decision is even more necessary in view that the development of RE is costly and entails massive investments.

The Energy and Natural Resources Ministry (KeTSA) said in October that the government decided to review the Guide for Cross-Border Electricity Sales issued by the Energy Commission Malaysia to include two matters.

It said the government has also agreed that the wheeling charges for the sale of electricity to Singapore for the two-year trial period will be US$2.28 (RM9.50)/kilowatt-hour (kWh).

Malaysia’s decision considers that FDIs are increasingly headed to countries that source green energy.

Therefore, the country should not give others the competitive advantage by exporting the scarce and expensive RE.

Moreover, the decision will boost the development of local RE players as Malaysia aspires to reach its climate change goals.

Meanwhile, the government could also allocate additional solar quota to benefit Malaysians RE players.

It is also in line with Prime Minister Datuk Seri Ismail Sabri Yaakob’s aspiration to have Malaysia achieve its carbon-neutral nation status by 2050.

More importantly, the move will contribute towards post-Covid-19 recovery by creating investments to the tune of RM1.2 billion and creating 3,600 jobs.

These all point to Malaysia’s commitment to fight global warming unabated as evidenced by its emphasis on RE.

According to the COP26 climate summit at Glasgow, countries are running out of time in their battle against global warning and avert a global disaster. To prevent these, RE like solar and wind are tools of crucial importance.

In addition to other conventional sources, adopting RE as a source of electricity is the most practical alternative for achieving this goal.

According to the country’s generation development plan last year, it is set to achieve 31% RE which will be integrated into the system by 2025.

Peninsula Malaysia will contribute 26% of RE, therefore developing Malaysia’s own RE projects and retain them in the country is the way to go as it will speed up achieving the goals.

As it will be crucial to promote FDIs in RE, there will be an increased pressure for companies to operate using green energy.

As such, the country must preserve its green energy to promote foreign investments for these companies.

This is a critical factor since FDIs will bring widespread spillover benefits to the economy, people and country.

Another advantage of Malaysia’s decision to only export energy which is not renewable is that it will enable the development of an effective Renewable Energy Certificate (REC), which is also the government’s focus now as the country has its own source of RE.

In planning for the future, the Malaysian Green Attribute Tracking System — a national marketplace for RECs, was established in October 2019.

It is a platform which enables potential buyers to purchase RECs generated in Malaysia, a critical component of RE development whereby the country can be the centre of REC trading.

As for the current REC market in Malaysia, they are sold separately from electricity.

Companies that want to meet sustainability goals could choose to purchase RECs as part of their RE sourcing portfolio.

Equally important is RE development’s need for large land areas, which means that each land use will compromise with other forms of development.

While locals will benefit from the spinoffs, it is only logical that Malaysians and not others benefit from using Malaysian land for such development, hence, the need to retain RE locally.

Besides this, electricity generated from conventional power plants is still available for cross-border trades which will benefit Malaysia.

This will put Malaysia in a better position to be a reliable energy supplier to neighbouring countries.

The decision to keep RE within Malaysia is also due to recent spikes in fossil fuel prices and coal power price reforms, which will help boost the competitiveness of RE.

This round of fossil fuel price increases in the market has made the cost advantages of RE even more apparent. In the meantime, the production costs of RE, including wind and solar, have continued to fall in recent years.

Renewables accounted for almost 30% of global electricity output last year, according to the International Energy Agency (IEA).

In conclusion, Malaysia’s decision to sell only non-RE demonstrates its perseverance to advance RE in efforts to achieve a sustainable energy mix and do its part for a greener future.