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.

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Comments

  1. Hi. I would like to know whether forecasting in Malaysia is done for peak demand and annual consumption every year for the subsequent years to come? if there is, where can I find this information?

      • Thanks a lot for the link. However, I believe the malaysia electricity supply industry outlook was first published only in 2013. I am unable to find earlier versions of it. I was searching for reports of earlier years where some forecast for the current year has been done. for example, 2010 forecast of 2014, 2011 forecast of 2014 etc, 2012 forecast of 2014 etc.

        Would you kindly be able to help me out?

        • Hi Vinay,

          Sorry I hadn’t seen your question before. You’re right that the Industry Outlook is a recent development.

          The various forecasts are updated & not always readily available. Is there any particular reason why you need that info?

    • Hi Roy,
      The official data on the demand growth was given in The STARBIZWEEK of 31 May, 2014 inn the article “Point of no return?”. Briefly, the demand growth is as follows:-

      FY 2010 – MD MW 15,072 (May 24, 10)
      FY 2011 – MD MW 15,474 (May 09, 11)
      FY 2012 – MS MW 15,826 (June 20, 12)
      FY 2013 – MD MW 16,562 (May 13, 13)
      FY 2014 – MD MW 16,294 (Mar 26, 14).

      In this respect, you may also wish to see a reader’s letter (by ELGY BEE of P.J.) in The Star of Tuesday June 3, 14 under the heading “Power supply at point of no return”. The Star articles can be accessed on line.

      I hope this info satisfies your interest.

  2. I would like to know how the increase of power demand is estimated. It seemed to me that the increase may not have taken into account any changes in the economic drivers. If Malaysia was to become high-income economy, manufacturing will take a back seat. Manufacturing, particularly heavy manufacturing, has traditionally been the biggest user of energy. If this sector is reduced, energy demand would also reduced. Was any input taken from MITI?

    • Good and valid comment Steven Lee.

      You are right to question the basis for projecting the electricity demand growth to derive the demand to be fed. I had mentioned that the BAU demand growth was according to the demand growth as forecast by TNB to be about 3.2% pa up to 2020. This growth rate is substantially lower than the actual growth rate in the 1970s to 1990s which was about 8% to 9% pa as the country embarked on industrialisation and when energy intensive heavy industries were set up.

      TNB, as any utility, would have used national economic development forecasts from MITI and EPU as parts of the economic development input to derive the demand growth projections. In addition, TNB would also have used other parameters such as national development of industrial areas, new townships and commercial buildings, changing consumer end-use trends due to increasing affluence, etc. I believe that TNB has a good record of “accurate” demand forecasting over the decades from its LLN and CEB eras.

      The electricity demand growth rate has moderated significantly over the years due to a combination of factors, which include:

      1) – Structural change in national economic growth from energy intensive industries to lower energy consuming service-industries,

      2) – Electrical appliances and equipment today being more energy efficient compared with even a decade ago,

      3) – Greater awareness of energy efficiency and its impact on environmental degradation, and consumer willingness to act on these concerns (and reduce energy costs too due to escallating energy tariffs), and

      4) – Not least the larger ‘base’ energy use which makes the absolute growth lower as a percentage of the base, as it also does for GDP growth.

      I hope these points have answered your valid concerns.

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