PRESS RELEASE
Date: 13th OCTOBER 2021 (WEDNESDAY)
SHORT-CIRCUITING ENERGY ISSUES IN 12TH MALAYSIA PLAN
Association of Water and Energy Research Malaysia (AWER) has prepared comments on 12th Malaysia Plan (12MP). These comments are based on previous reports and suggestions published by AWER as well as information in 12MP, 11th Malaysia Plan, 10th Malaysia Plan and 9th Malaysia Plan.
1. Developing Biomass Sector
The Renewable Energy Roadmap for Malaysia was basically marred with office politics and failed to realise a better biomass sector for the past decade. Primarily, the government must stock take all biomass inputs from various activities and it must be identified and quantified. The proposal for incentives to reduce the logistics issue in biomass sector must be outcome based. It is also vital to develop local expertise and processing technology as biomass input varies based on different waste streams. Building a reliable biomass energy mix needs a major paradigm shift to address load factor as well as generation efficiency issues which are directly related to the stabilisation of biomass input calorific value. A holistic development in biomass sector will contribute in reduced pollution by implementing zero waste target.
2. Energy Efficiency In Building
A new Building Energy Efficiency Regulation must be developed to be enforced on new buildings and retrofitting existing buildings. The regulation must assist in improving Heating, Ventilation and Air Conditioning (HVAC) System, building materials and design, insulation materials and other emerging applications. Proper transition period, enforcement and guidelines (to cover various building operations/functions) must also be developed. This regulation must have a 5 year review period to ensure it keeps up with latest available technology. Through this, all buildings (government, commercial and domestic) can be designed to be energy efficient at construction stage continuously and will be able to assist in reducing peak load.
3. Rural Electrification
The government targets to bring electricity to another 28,000 households to achieve 99% of rural electrification by 2025. This is a remarkable achievement for a developing nation. AWER would like to urge the government to audit the past 2 decades’ allocation for rural electrification and its actual achievement versus targeted output. It is important for Malaysia to identify cost effectiveness, obstacles and potential lessons learnt to ensure the future operation, maintenance and upgrading works can be done in a more effective manner.
4. Developing Oil and Gas Subsector In Sabah and Sarawak
Developing industrial sector for Sabah and Sarawak will benefit the local economy immensely. AWER would like to caution the government on the Net Zero commitment by 2050 and its planning for Sabah and Sarawak. Having a 30 years gap for Net Zero, what are the returns on investment as well as sustainability of such infrastructure developments in Sabah and Sarawak beyond 2050? We urge a proper cost benefit analysis as well as potential retrofitting solutions to be done to yield long term results for such infrastructures for Sabah and Sarawak.
5. Developing “Comprehensive” National Energy Policy
While a major fuel mix and primary energy transition will take place in the coming 3 decades, it is important for the government to stock take past failures that have unfairly made Malaysians and the economic sector to pay higher cost. Government must look into full scale energy efficiency (EE) implementation across the board. It is vital to ensure consumption pattern for energy is moved towards more efficient solution by behavioural changes, technology overhauling and retrofitting. Efficiency is the major parameter in keeping energy demand curve flatter. In addition to that, the technological solutions chosen must be made after proper Life Cycle Analysis (LCA) studies are done to ensure we do not end up with new environmental problems. The government must also “select and match” energy resources with respective utilisation sectors so that each economic and public sector does not over-invest into infrastructures. By using “select and match” approach, targeted and efficient infrastructure developments can be done in a speedier manner. A mistake in National Energy policy will lead to a devastating outcome by 2050 and cause irreversible damage to our economy.
6. Biofuel – Food or Fuel Debate
When the government removed control price mechanism for cooking oil, the bottled cooking oil price increased steadily to reflect market price. However, when the crude palm oil price slumped, the cooking oil price did not reduce. After government introduced affirmative action to have mandatory biofuel blend into diesel, the palm oil sector enjoyed a quick rebound. In achieving Net Zero, biofuel will start to take up a bigger primary energy market share and it will definitely impact the palm oil price and its edible derivatives. Does the government have sufficient safety net against profit driven palm oil sector to ensure we do not end up with a food or fuel debate in coming decade? Monocrop sectors are also contributor to environmental degradation, non-point source pollution and flooding.
7. Natural Gas as a “Transition Fuel”
Many oil and gas companies globally are quick to position natural gas as a suitable and reliable transition fuel to achieve 2050 Net Zero target. The coming 3 decades will pose huge supply and cost risk to Malaysia when the transition begins. The government must set transition time frame and type of fuel mix that will change over the coming 30 years. Fuel type and target sectors must be correctly identified to optimise infrastructure developments as well as cost effectiveness to ensure maximum connectivity. Energy balance and Life Cycle Assessment (LCA) must be developed to evaluate alternative fuel to determine its overall environmental benefits before choosing such solution as part of our energy mix.
8. Increasing Renewable Energy (RE) Installed Capacity
The main issue with RE is the intermittence characteristic of the energy input. The load factor, reliability and meeting base load demand will determine the future of RE and its corresponding cost implications. The other challenge we are facing in Malaysia right now is the high reserve margin of electricity supply due to failure of Energy Commission’s (ST) management that allowed direct negotiations and planting up new power plants including some Renewable Energy projects before the actual need. AWER has objected this move since 2014 and warned of future cost implication to the electricity tariff. Today, the projected reserve margin jumped from 32% in 2020 to a 52% in 2021 based on reports published by ST. The reserve margin will continue to be above 40% until 2027. In addition to that, increasing RE installed capacity from 2021 onwards will only add more system cost to electricity. Why should consumers and businesses shoulder ST’s failure? Moreover, based on ST’s report in 2013, Planning and Implementation Committee for Electricity Supply and Tariff (JPPPET) criteria for reserve margin is Loss of Load Equivalent (LOLE) at < = 1 day. This is equivalent to 22% reserve margin benchmark to developing economies. Will the government take action against ST and its former commissioners for this blunder? AWER does not oppose increasing RE mix to the electricity supply. However, such move must not burden the public or waste taxpayers money.
9. Enhancing Energy Efficiency (EE)
There is no need to enact a new law (Energy Efficiency and Conservation Act) to enhance EE implementation in Malaysia. It is much easier to amend Energy Commission Act to give enabler clauses to empower Energy Commission (ST) to implement EE across the board. EE drive is a technical approach and technologies are evolving rapidly throughout the world to meet the 2050 Net Zero target. It is more pragmatic to have rules and regulations which can be reviewed faster without the need to go to Parliament. This is the similar approach taken under water sector via Suruhanjaya Perkhidmatan Air Negara (SPAN). The government should utilise existing platform and optimise results.
10. Auditor General Must Investigate Electricity Sector
AWER would like to urge the Auditor General to investigate electricity sector as too much additional cost has been passed to consumers and it is against Electricity Supply Act. We urge Auditor General to audit the following issues:
(i) audit all approval processes and award letters for power plant in KeTSA, Energy Commission and Sustainable Energy Development Authority (SEDA) from 2011 onwards;
(ii) audit all JPPPET decisions, meeting minutes, documentations and presentations from 2012 onwards;
(iii) handling of competitive bidding process for new power plants and documentation including how nodal points and land requirements (green field and brown field) are set;
(iv) extension process of old power plants and its bidding process; and
(v) failure of SEDA and FiT to meet RE mix target as well as SEDA mysterious set up process and FiT mechanism.
PIARAPAKARAN S.
President
Association of Water and Energy Research Malaysia (AWER)
