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Power Policy & National Development Plan

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PRESENTATION OUTLINE

1Introduction

2

Challenges In Meeting Demand

3

Initiatives To Address Challenges

4C l iConclusion
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I
Introduction:di
Malaysia’s Energy Outlook

Snapshot of Energy Sector in Malaysia

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National Overview
MALAYSIA
Total Land Area: 329,733 sq. km.
T t l Population:Total
Pl ti3030.4
4 million
illi (2014)

PENINSULAR MALAYSIA
40% of land area;
80% of population;
87% off electricity
l t i it generatingti capacity;it
90% of electricity demand.

SABAH & SARAWAK
60% off landl d area;
20% of population;
13% of electricity
generating capacity;
10% of electricityy demand.

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Energy Resources (2015)
OilGasCoal
Hydro (potential)
RE (potential) – mini

5.85 bbl
98 315 Tscf
98.315
1.938.37 bil ton(low grade)
20 GW
2,700MWhydro,hdro biomass
biomass, biogas
biogas, municipalm nicipal
waste, geothermal)

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Malaysia Energy Policies
NationalPetroleum Policy(1975)• Efficient utilization of petroleum resources• Ensuring the nation exercises majority control in themanagement and operation of the industry• Supply Objective: Ensure adequate, secure and cost‐effective energy supply.

National EnergyPolicy (1979)• Utilization
lObjective:b
Promote efficientffutilization
loff
energy and eliminate wasteful and non‐productiveusage• Environmental
E it l Objective
Obj ti : Minimize
Mi i i negativeti impacts
it totthe environment

Nationalil Depletionl iPolicy (1980)• To prolong the life span of the nation’s oil and gas
reserves

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Malaysia Energy Policies
Four fuel Policy
Four‐fuel(1981)

Five fuel Policy
Five‐fuel(2001)
Renewable Energy(RE) Policy +Action Plan (2010)• AimedAi d att ensuring
i reliability
li bilit andd security
it off supplyl
through diversification of fuel (oil, gas, hydro andcoal)• Encourage
g the utilization of renewable resources suchas biomass, solar, mini hydro etc• Efficient utilization of energy• Outlines
O litheh major
j strategies
i to promote RE in
i thehcountry. Main highlight is the Feed‐in‐Tariff (FiT)
mechanism

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Trends In GDP, Primary Energy Supply And Final
Energy Consumption

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Primary Energy Supply by Type of Fuels

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Electricity Generation Capacity & Fuel Mix
GenerationCapacity (MW)PeakDemand(MW)Reserve
Margin (%)

1.3%

Sarawak

25.4%

Pen.
Malaysia21,954

16,90130%

Sabah

1 324
1,324

914

45%

Sarawak

3,244

2,819

15%

48.2%

25.2%

Source: JPPPET 1/2015
Hydro

3.6%

0.5%
1.8% 0.0%

Gas

CoalDiesel

Peninsular
5.7%

Sabah

3.6%

14.9%

42.3%
51.8%

75.7%

Coal

Gas

Hydro

MFO & Distillate

Co‐genInterconnection

Gas

MFO & Diesel

Hydro

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Major Utility Companies in Malaysia

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Projected Generation MixoIf nuclear is notavailable post‐2020,post 2020
Peninsular Malaysia
will be highlydependent on fossil
fuelse. gas and coalo C
Coall iis 100%00%
imported;o indigenous gas isdepletingo Renewable Energy is
not able to provide
base‐loadrequiremento H
Hydrod capacity
it iinPeninsular Malaysia isnearly fully developed

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LONG TERM LOAD FORECAST FOR PENINSULA MALAYSIA‐ PROJECTED AVERAGE ANNUAL DEMAND GROWTH RATE OF 2.3% UNTIL 2030

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Fuel Input to Power Stations14

Source: National Energy Balance 2013

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Energy Outlook
ChallengesMalaysia’s
In Sustainably
Meeting Demand15

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Malaysia’s Key ChallengesAvailability• High dependence on depleting Peninsula gas supply• Under investment and over‐consumption due to subsidized pricing

Accessibility• Limited reserve capacity for primary fuel and aging infrastructure• Coal imports highly concentrated

Affordability• Frequent gas supply curtailment has led to increase usage of high costalternatives (distillate)

Acceptabilitybl• Increasing sensitivities to the environment• Increase the share of Renewable Energy in fuel mix• Promoting the efficient use of energy
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Malaysia’s Key Challenges
Strong Policy Needed to tackle the challenges…

Transparency
Industry Structure

Optimizing Resources

Economic Growth

Depleting Resources

Governance/Regulatory

Price Volatility

Demand Management

Subsidies

Meeting Demand

Energy Security

Real Price

Realizing Regional Cooperation
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Malaysia’s
Energy Outlook
Initiatives
to Address
Challenges

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New Enhanced Dispatch Arrangement (NEDA)• Provides an opportunity for the power sector to improve its
efficiency and be more cost effective in generating electricity;• Introduces short run competition in daily generation dispatch
among independent IPPs with PPAs,PPAs TNB generation with SLAs
beginning 1st October 2015;• For merchant generators who do not have PPA, NEDA will beavailable for them by first quarter of 2016;• Is a step
p up
p from the current competitive
pbiddingg pprocessintroduced in 2012 for new generation capacity with long term
PPA;
• Will ensure sufficient firm capacity at the most competitive
price for consumers and establish a positive market foriinvestment.
tt
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ASEAN Power Grid (APG)•APG is a flagship program mandated in 1997 by the ASEAN Heads ofStates/Governments
States/Goe
e ts uunderde tthee ASEAN
SVisions o 2020
0 0 totowards
a ds eensuring
su g regionaleg o aenergy security while promoting the efficient utilization and sharing of resources;•To pursue the program,
program ASEAN adopts a strategy that encourages
interconnections of 15 identified projects, first on cross‐border bilateral terms,
then gradually expand to sub‐regional basis and, finally to a totally integrated
Southeast Asian power grid system;•Objective of APG is to facilitate and expedite the implementation of the ASEAN
Interconnection Master Planl andd to further
f h harmonize
htechnicalhl standards
d d anddoperating procedures as well as regulatory and policy frameworks among theASEAN Member States.

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ASEAN Power Grid (APG)
Earliest COD
1)
2)
••••
3)
4)
5)
6)
7)8)
•••9)
••••••••10)
11)
12)
13)
14)
15)
16)

P.Malaysia ‐ Singapore (New)Thailand ‐ P.Malaysia
Sadao ‐ Bukit Keteri
Khlong Ngae ‐ Gurun
Su Ngai Kolok ‐ Rantau Panjang
Khlong Ngae – Gurun (2nd Phase, 300MW)
Sarawak ‐ P. Malaysia
P.Malaysia ‐ Sumatra
B tBatam‐ Singapore
Si
Sarawak ‐ West Kalimantan
Philippines ‐ Sabah
Sarawak ‐ Sabah – Brunei
Sarawak –Sabah
Sabah – Brunei
Sarawak – Brunei
Thailand ‐ Lao PDR
Roi Et 2 ‐ Nam Theun 2Sakon Nakhon 2 – Thakhek – Then Hinboun (Exp.)
Mae Moh 3 ‐ Nan ‐ Hong Sa
Udon Thani 3‐ Nabong (converted to 500KV)
Ubon Ratchathani 3 – Pakse – Xe Pian Xe Namnoy
Khon Kaen 4 – Loei 2 – Xayaburi
Nakhon Phanom – Thakhek
Thailand – Lao PDR (New)Lao PDR ‐ Vietnam
Thailand ‐ Myanmar
Vietnam ‐ Cambodia (New)Lao PDR ‐ Cambodia
Thailand ‐ Cambodia (New)East Sabah ‐ East Kalimantan
Singapore – Sumatra

Priority Projects

post 2020
Existing
Existing
TBC
TBC
2025
2020
2020
2015
2020
2020
Not Selected2018
Existing
Existing
2015
2019
2019
2019
2015
2019‐2023
2016‐TBC
2018‐2026
TBC2017
post 2020
post 2020
post21 2020

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Under the 11th Malaysia Plan : Encouraging
Sustainable Energy Use to Support Growth
Strengthening stakeholder coordination and collaboration in the energy
S1 sector
Ei theh security
i off supply
l andd reliability
li bili forf theh oilil andd gas
S2 Ensuringsubsector within a market‐based approach

S3 Enabling the growth in the oil and gas subsector
S4 Managing supply diversity for security of electricity subsector
S5Improving the sustainability, efficiency and reliability of the electricity
subsector
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S1 : Strengthening Stakeholder Coordination andCollaboration in the Energy
gy Sector
Fostering greater institutional collaboration on energyplanning• A comprehensive
h i governance, thatth t allows
llf more structured
for
t t d
inter‐agency collaboration in the area of planning andmanagement for the energy sector, will be instituted.

Engaging end
end‐users
users on efficient energy consumption• Comprehensive and effective communication plan on thesustainable use of energy resources is required to improvepublic awareness and understanding, and to manage public
perception of the subsidy rationalisation programme.
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S2 : Ensuring the security of supply and reliability for the oiland ggas subsector within a market‐based approachpp
Ensuring security of supply for gas• construction of pipelines from the Malaysia‐Thailand Joint
Development Area to Kerteh, Terengganu, RGT‐2 in Pengerang,
J hJohor;• commissioning of two floating LNG units offshore Sabah andSarawak with a capacity
py of 2.7 mtpa;
p ;• to ensure undisrupted supply during emergencies, a swing fieldoffshore east of Peninsular Malaysia will provide an additional 100‐
200 mmscfd
fd off naturalt l gas. TheseThadditionaldditi
l volumes,
lt th withtogether
ith
a 15% buffer of storage capacity from RGT‐1 in Sungai Udang,
Melaka, will cater for gas demand in Peninsular Malaysia; and• Reliability of gas supply in Sabah will be improved with additional
pipeline connections from offshore fields to demand centres in FTLabuan as well as Kota Kinabalu and Kimanis in Sabah.
Labuan,Sabah24

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S3 : Enabling the growth in the oil and gas subsector
Supporting the development of Pengerang IntegratedPetroleum Complexp• The facility will be able to produce EURO 4M and EURO 5 grade petrol, inaddition to 7.7 mtpa of various grades of specialized products such assynthetic rubber and high grade polymer by 2020.
2020 The complex will have a1,220 MW co‐generation power plant of which 620 MW will be utilized byRAPID and the remaining 600 MW exported to the grid.

Moving towards third party access for gas supply to allow
new entrants• ThirdThi d party gas players
lwillill bbe ablebl to utilize
ili gas supply
l iinfrastructurefthrough the enforcement of the amended Gas Supply Act, 1993 (Act 501) in2016.

Implementation of clean fuel in the transport sector• The utilization of environmentally friendly fuel will be implemented when
RON 95 petrol with EURO 4M, and diesel with EURO 5 standards.
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S4 : Managing supply diversity for security of electricity
subsector
Ensuring electricity supply
management of resources
reso rcessecurity

throughbetter• the optimization of fuel mix and exploration of alternative fuels will begiven priority to reduce the nation’s dependency on fossil fuels forelectricity generation;• future power planting up must incorporate more stringent emission control
technologies to ensure a progressive reduction of the energy industry
industry’ss
carbon footprint;• Usage of clean and green energy sources in power generation will be madeap
priorityy and is expectedpto be increased substantiallyy in the ggeneration
mix.

Augmenting rurall electrificationlf• Rural electrification pprograms,g, especiallypy in Sabah and Sarawak,, will beenhanced to improve national coverage to 99% by 2020.
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Optimisation of Fuel Mix

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S4 : Managing supply diversity for security of electricity
subsector
Enhancing alternative energy sources• biomass and biogas power plants will be pursued because of the large
potential of these sources;• Electricity generation capacity through renewable sources including
biomass, biogas, solar PV, and mini hydro are targeted to reach 7.8% of
total installed capacity in Peninsular Malaysia and Sabah by 2020, or
about 2,080 MW;• The usage of nuclear power as an alternative energy resource will beexplored further. In this regard, an independent atomic energy
regulatory commission will be established based on a newcomprehensive nuclear law for electricity generation;• The implementation of net energy metering (NEM), especially for solar‐
generated electricity, will provide savings on electricity bills toconsumers.
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Final Energy Consumption by Sectors

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Increasing Share Of Renewables In Energy Mix

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S5 : Improving the sustainability, efficiency and reliability ofthe electricityy subsector
Creating a sustainable tariff frameworks• Subsidy rationalization for electricity tariffs will continue to beimplemented;• The Special Industrial Tariff will be abolished by 2020 and theimplementation of IBR will be continued to ensure utility companies
provide efficient services;• New additions of power plants and extensions of existing power plants willcontinuetit be
tob selectedl t d throughthh competitive
titi
biddi
bidding
fforgreaterttransparency.

IImproving
i efficiency
ffi iandd reliability
li bilit off electricity
l t i it supplyl• Construction of new power plants to produce 7,626 MW will be initiated toreplace retiring plants and meet the growing peak demand.
demand A number of 500
kV and 275 kV transmission projects to reinforce the grid systems will becompleted to enhance the security of supply to major load demand centres;• The additional ggeneration capacitypy coupledpwith expandedptransmission anddistribution networks will improve the SAIDI for Peninsular Malaysia, Sabah,and Sarawak.
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SIT Implementation
Phasing Out Special Industrial Tariff (SIT)12%10%

SIT Discount

8%
6%
4%
2%
0%

Kadar Diskaun SIT
SemasaJan '16

Jan '17

Jan '18

Jan '19

Jan '20

Tarif E3s

10.30%

8.30%

6.30%

4.30%

2.30%

0.00%

Tarif E2s

8.30%

6.30%

4.30%

2.30%

0.30%

0.00%

Tarif E1s

4.80%

2.80%

0.80%

0.00%

0.00%

0.00%

Tarif Ds3.00%

3.00%

3.00%

1.00%

0.00%

0.00%

SIT discount will be phased out beginning

SIT discount ending

1 January 2016

1 January 2020

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Improving Efficiency and Reliability Of Electricity Supply

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Imbalance Cost Pass Through (ICPT)• The electricity tariff in Peninsular Malaysia is determined through theIncentive
ce t e Based
ased Regulation
egu at o (IBR)( ) frameworka e o anda d thet e Imbalanceba a ce Cost PassassThrough (ICPT) mechanism implemented in January 2014.
• The ICPT mechanism allows the government to review the tariff every six
months based on changes in fuel and generation costs to reflect the true
cost of electricity and provide transparency in the whole process.
• ICPT takes into account changes in the price of piped gas, LNG, coal,medium fuel oil, distillate and other generation costs such as thoserelatedl d to theh PPAs, displacedd l d cost fromfRenewable
bl Energy andd theh cost off
importing electricity.
• A system similar to ICPT has been adopted by many developed anddeveloping countries such as Australia, UK as well as ASEAN countries
such as Singapore,g p , Thailand and the Philippines.
pp
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Malaysia’sEnergy Outlook
Conclusion

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Conclusion•The security of energy supply is of paramountimportance as energy is the primary driver of thenation’s growth – affecting not only the quality of life
for all Malaysians but also enabling the continued
growth of the economy;•Malaysia is committed to ensuring energy security forthe nation while
hile improving
impro ing infrastructure
infrastr ct re and service
ser icedelivery for the oil, gas and electricity subsectors;
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Conclusion•Efforts were undertaken to ensure the long‐termlong term
sustainability of the energy sector through resource
diversification continuous investments in new
diversification,infrastructure, and technology enhancement. In
addition the improvement of the implementation ofaddition,
efficient resource utilization measures were also
undertaken including rationalizing energy subsidies tomove towards a market based energy pricing.

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Malaysia’s
EnergyOutlookThankYou

Contact : report@tky.ieej.or.jp
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