Electricity demand and supply in Peninsular Malaysia: Energy efficiency, renewable energy, or nuclear? (Part 2)

This is Ir. G. Lalchand’s second article in his series of Malaysia’s energy challenges.

As mentioned in the Part 1 of this article, adequate, reliable and affordable electricity supply has been, and will remain, as the cornerstone of economic development in Malaysia.

Minister of the Ministry of Energy, Green Technology and Water (KeTTHA), YB Datuk Seri Peter Chin Fah Kui, has assured the nation of this provision in stating that “Going forward, we will ensure that the energy supply in Malaysia is sufficient, reliable and cost effective to ensure our regional competitiveness in trade and industry”.

Tanjung Bin Power Plant, a 2,100-MW coal-fired power plant in Tanjung Bin, Johor (photo from www.iskandarmalaysia.com.my)

What are the pertinent points that we need to be assured of to be convinced that the above commitment can be guaranteed for the nation for the time horizon concerned, i.e., up to 2030? Some of these points are as below:

  • The projected power demand for the period in question;
  • The existing and planned additional power generating plant to be developed during the period, and their timing to suit the demand needs;
  • The successful implementation of the Renewable Energy (RE) Act and its related Feed-in tariff (FiT) mechanism;
  • The impact of the forthcoming EE&C Act (scheduled to be enacted by 2014); and
  • How these issues will influence the economics of the planned system development for national energy security.

There is irrevocable evidence that human intervention has caused global warming, and we need to do our part to help to reduce the damaging effects of rising global temperature.

Now, what would be the expected demand forecast based on currently known parameters?

The expected demand growth under a BAU (Business As Usual) scenario is at a growth rate of 3.2% per annum for the period 2010 to 2020 as reported in Tenaga Nasional Berhad’s (TNB) annual report for the year 2009.

The demand growth according to an Energy Efficiency (EE) scenario foresees a conservative reduction in the demand by 0.5% per annum starting in 2013 so that the demand reduction by 2030 is 9.0% below the BAU case.

The EE scenario is based on the assumption that the Energy Efficiency and Conservation (EE&C) Act would be enacted by early 2014 but that its impact would begin to be seen from 2013 as awareness and promotion efforts have been on going.

Moreover, the larger electricity consumers, who use more than an average of 500,000 kWh a month, are obliged to practise formal energy management under the Efficient Management of Electrical Energy Regulations (EMEER), which came into force in December 2008.

Additionally, electricity tariffs are also expected to increase as gas subsidies are reduced as announced by the government. This action would likely “persuade” more electricity consumers to consider implementation of EE measures to reduce their costs for energy, thus accelerating the adoption of EE initiatives by all categories of consumers.

The demand saving from the adoption of EE, whether voluntarily or when mandated under the EE&C Act, is envisaged to be only 826 MW by 2020 and 2,547 MW by 2030. These figures are far more conservative than the figures quoted by YB Minister KeTTHA since the EE&C Act has yet to be enacted and its provisions be implemented and enforced.

This shows that it may be possible to achieve a “demand reduction equivalent to about 3.6 GW” as has been mentioned by YB Minister KeTTHA, but only by around 2030 but only if the efforts under the EE&C Act are pursued at a more aggressive pace than the conservative basis indicated above.

The chart below demonstrates the projected power demand and the generation capacity development required to ensure adequate (25%) reserve margin for safe and reliable power supply in Peninsular Malaysia.

Projected electricity demand (Business-as-usual is at 3.2% per annum growth rate)

Let us consider the known power generation capacity and its additions as announced by KeTTHA and the Energy Commission (ST).

The current generation capacity is about 22,100 MW, while licenses for two coal-fired power plants of 1,000 MW each have been awarded to date (one each  to TNB and Tanjung Bin Power Plant) for commissioning around 2015 to 2017.

ST has also publicised its request for bids for a total of about 7,300 MW of power generating capacity, assumed to include the 2,000 MW already awarded, and scheduled for commissioning by 2020. It is assumed that this capacity would not include the proposed NPP, where the first unit is scheduled to be commissioned in 2021 (after 2020).

These initiatives have been stated to be necessary to replace the decommissioning of some of the 1st generation IPPs (about 4,100 MW capacity) whose original licenses were due to expire by 2020.

Latest reports indicate that the ST is negotiating (apparently successfully) for the possible extension of the 1st generation IPP licenses for up to 10 years. Under this scenario, the total power generating capacity for the duration up to 2030 could be of the order as shown in the table below.

Table 1. Projected conventional power generation capacity 2010 to 2030

These figures exclude consideration of any existing plant that are scheduled to be decommissioned during the period up to 2025.

KeTTHA has taken advantage that UNDP/GEF (United Nations Development Programme / Global Environment Facility) supported MBIPV (Malaysia Building Integrated Photovoltaic) project (2006 to 2011) to pursue the formulation of a REPAP (RE Policy and Action Plan) and enactment of the Renewable Energy Act 2011, which was passed in April 2011. This included the FiT mechanism as well as the SEDA (Sustainable Energy Development Authority) Act 2011 to establish a dedicated agency to implement the RE Act and its FiT mechanism.

Implementation of the RE Act to accelerate the development of RE power generation in Malaysia commenced on 1 December 2011 and appears to be on track to achieve its targets. The RE capacity development under the RE Act and the FiT mechanism, is expected to add substantial power generating capacity to the electricity supply network in Peninsular Malaysia during this period.

However, it is estimated that the actual RE capacity development may not match the initial projections as the plantation waste (as feedstock) has now become a valuable commodity and has become too costly to burn for power generation due to its alternative uses.

Oil palm waste to energy. Source: Presentation by Noel Wambeck at the FEDEPALMA XV Palm Oil International Conference, Cartagena, Columbia, 22 Sept. 2006.

Hence, a conservative and more realistic forecast is considered for comparison with the “official forecast”. These projected capacities as shown in the table below.

Table 2. Renewable energy generation capacity projections

The revised grid connected power generation capacity may thus be moderated as follows:

Table 3. Projected total grid connected power generation capacity

KeTTHA has also formulated an NEEMP (National EE Master Plan), which had been peer-reviewed by an APEC (Asia Pacific Economic Cooperation) team of industry experts. KeTTHA is currently in the process of formulating an EE&C (Energy Efficiency and Conservation) Act to enable accelerating the adoption of EE in Malaysia.

Average electricity consumption breakdown (%)

KeTTHA also implemented its SAVE (Sustainability Achieved Via Energy efficiency) programme from July 2011 as a part of the ETP’s EPP 9 to catalyse the adoption of EE through the purchase of EE appliances (5-Star refrigerators and EE air conditioners).

The government’s plans for the NPP have been incorporated in the ETP (Economic Transformation Programme) under EPP (Entry Point Project) 11. As indicated above the first unit of 1,000 MW is scheduled to be commissioned in 2021. However, the development of an NPP is now an even more controversial issue than it was initially following the unfortunate incident at Japan’s Fukushima NPP in March 2011. Hence, the potential capacity of the proposed NPP units (2,000 MW) is not considered for this discussion.

A comparison of the required and anticipated power generation capacities in Malaysia to satisfy the power demand needs under an EE scenario is shown in the table below.

Table 4. Comparison of power supply and demand balance 2010 – 2030 (Energy efficiency)

This clearly shows that Malaysia does not need to add any nuclear (or other fossil-fuelled) power generation plant until after 2025 provided that the RE development (even when moderated) and adoption of EE initiatives (even on a conservative basis) are pursued diligently.

There is widespread public perception, at least in Malaysia, as to whether the frequently touted EE initiatives can really deliver the promises made for it. How difficult, or easy, is it to achieve the ambitious demand saving targets that are often announced by various authorities?

Under this scenario, it is worth mentioning the following response, which the writer’s question elicited from a very credible and world-renowned energy expert.

Dr. Rajendra Pachauri of the IPCC (International Panel on Climate Change) visited Malaysia in April 2011 to give his perspectives on nuclear power and climate change, post Fukushima. When asked about the Malaysian Government’s apparent decision to proceed with the development of the twin unit nuclear power plant for commissioning of the first unit by 2021, Dr. Pachauri had an interesting comment to make.

He mentioned that Malaysia should “harvest the lowest hanging fruits first”, which are:

  1. Adopting energy efficiency (EE) first,
  2. Developing renewable energy generation next, and then only
  3. Going for more fossil fuelled or nuclear powered generation plants.

So where does Malaysia stand with respect to this “conventional wisdom”? In addition, are we on the right path to achieving these objectives in an optimally cost-effective manner? These issues will be the subject of the next segment.

Electricity demand and supply in Peninsular Malaysia: Energy efficiency, renewable energy, or nuclear?

I am glad to have Ir. G. Lalchand as my blog’s guest contributor. The following article is the first in his series about Malaysia’s energy challenges.

Adequate, reliable and affordable electricity supply has been the cornerstone of economic development in Malaysia. This is still an important imperative for Malaysia to follow in order to achieve the desired objectives of “Wawasan 2020” and the more recent aim to become a “High Income Economy” by 2020.

From where is Malaysia’s additional electricity going to come? (photo from cdn.theborneopost.com)

Recent statements from the government policy and regulatory bodies have laid out some strategies to ensure that the nation’s energy needs will continue to be assured to power the economic development strategies required to achieve the planned GDP growth rates desired as mentioned in the ETP (Economic Transformation Programme).

The Minister of the Ministry of Energy, Green Technology and Water (KeTTHA), YB Datuk Seri Peter Chin Fah Kui, speaking on the “Future Energy in Malaysia” at the Malaysian International Chamber of Commerce & Industry (MICCI) event on 24 April 2012 assured his audience that “Going forward, we will ensure that the energy supply in Malaysia is sufficient, reliable and cost effective to ensure our regional competitiveness in trade and industry.”

Why can’t we get by with less?

How does Malaysia plan to ensure that these key assurances are guaranteed for the future economic development to achieve the 2020 objectives mentioned above? In his address, the YB Minister touched on a variety of issues which included energy security, fuel supply and pricing (especially on gas pricing), renewable energy, energy efficiency and conservation, nuclear option, and the restructuring of the electricity supply industry.

Touching on EE (Energy Efficiency) YB Minister mentioned “The proposed National Energy Efficiency Master Plan has set a target for a period of 10 years from 2012, where the total accumulated energy savings from the three sectors identified which are Industrial, Commercial and Residential is 79.8 TWh. This will enable the reduction of 59.16 million tonnes of CO2 from polluting our environment and warming our mother earth. In terms of energy security, the total energy saved is equivalent to the power generated from a 3.6 GW generation capacity based on current generation load”.

For RE (Renewable Energy), YB Minister indicated that the applications for a total of about 311 MW of various RE power plants have been approved under the RE Act with the grant of FiT (feed-in tariff) rates. The estimated RE capacity that may be developed by 2020 could reach over 2,000 MW and over 3,000 MW by 2030.

With these statements of intent, should we consider nuclear energy as an urgent option for Peninsular Malaysia? The nuclear option has been a contentious issue in Malaysia even before the Fukushima nuclear incident in Japan. So what is the significance of YB Minister’s reference to the nuclear option, especially after the Fukushima incident in March 2011?

The PEMANDU-led EPP 11: Deploying Nuclear Energy for Power Generation under the ETP  in 2010 projected the development of two units of NPP (nuclear power plants) of 1,000 MW each, with the first unit to be commissioned in 2021. These two units are estimated to cost about RM 21.3 billion. The ETP was formulated in 2010 before the serious Fukushima NPP incident.

At an earlier National Energy Security Conference 2012 (on 28 Feb. 2012), a KeTTHA presentation included the slide below to show the electric power demand and supply projection for Peninsular Malaysia up to 2031.

Peninsular Malaysia Power Development Plan

This is an excellent presentation because it clearly shows the demand projection and generating plant development planned to achieve an appropriate “Reserve Margin (%)” of below 20% from the current excessive margin of the order of 40%.

However, the table in the top left hand corner of the chart appears to give incorrect information. The current generating capacity in Peninsular Malaysia is a bit over 22,000 MW without any nuclear (shown as 5,000 MW in the table). As shown in the chart, the required generating capacity by 2030 will need to be a little over 30,000 MW.

This type of “transparent” information was an integral part of statistical data presentations in LLN’s (National Electricity Board) Annual Reports, which also showed the system load profile, until 1990. TNB (Tenaga Nasional Berhad) has however deleted this information from its Annual Reports right from its formation in 1990. Can this information be of such commercial confidentiality that it has to be hidden from the public?

What is perhaps less comforting from the KeTTHA presentation is the absence of any reference to EE and potential RE development in the energy mix especially when the RE Act and its accompanying FiT mechanism has been implemented from Dec. 1, 2011.

Even more disconcerting is the indication that Malaysia plans to install 5,000 MW of nuclear power capacity by 2030. It would appear from the above that the government has “made up its mind to go nuclear”, apparently without taking into account public opinion and acceptance of the nuclear option, even after the Fukushima incident last year.

Notwithstanding the “nuclear disasters” of Chernobyl (said to be a disaster waiting to happen) and Fukushima (where humans had under-estimated the power, or the “wrath”, of nature), NPP are not inherently dangerous. However, post Fukushima, we need to consider very carefully the public acceptance of NPP as a source of low-carbon primary energy in our efforts to ensure indigenous energy security.

The dangers of nuclear radiation hazards have raised fears among the Malaysian population with the “bad” experience of the Asian Rare Earth fiasco in Perak and the ongoing hassle over the LAMP (Lynas Advanced Materials Plant) in Gebeng Pahang. These fears have yet to be resolved and continue to be opposed as demonstrated by the Anti-Lynas protestors.

Anti-Lynas in Malaysia (photo from zorro-zorro-unmasked.blogspot.com)

It is therefore even more critical that public sentiments be adequately addressed on such a critical matter as it affects not only the present population in the country but our descendants over many generations to come.

EE buildings can save over 50% of electricity used by a typical Malaysian building (photo from 1bina.my)

An even more critical question to answer is “Do we really need any nuclear power plants in the next decade”? Successful adoption of EE initiatives and RE development can reduce the need for alternative generating plant capacity. This question needs to be answered before any firm commitments are made to develop any NPP and that too after getting public acceptance of the technology that is to be employed.

It is worth repeating YB Minister’s earlier statement “Going forward, we will ensure that the energy supply in Malaysia is sufficient, reliable and cost effective to ensure our regional competitiveness in trade and industry”.

So are we on the right path to achieving these objectives in an optimally cost-effective manner?