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Powering The Nation: Exploring Malaysia’s Electricity Generation And The Road Ahead  

Electricity is often a valuable resource we all take for granted. Not only does it power our cooking appliances, air-conditioners, and computers, but. it also makes our life easier and gives us a higher -quality of life[1]. Today, it conveniently allows us to reach and communicate with our family and friends over long distances. 

Electricity plays a vital role in Malaysia’s development. As our country continues to grow in society and economy, so do our electricity demands. But when it comes to dependency on electricity, Malaysia is no different from other countries.  Do you ever wonder where Malaysia gets its electricity from?

This explainer will explore our country’s energy mix, its primary source of energy generation, and the growing demand for clean, renewable energy sources.

How Much Electricity Is Malaysia Generating And How Much Are We Consuming?

In October 2023, CEIC reported that Malaysia’s electricity generation reached 15,388 GWh (gigawatts per hour) as compared to 14,622 in the previous month. 

This is barely enough to supply our current electricity consumption.

According to WorldData, Malaysia consumes an average of 4,422 kWh per capita and this totals up to a whopping 150.06 billion kWh of electric energy consumption per year[2]

Source: The Star

The country also imports a significant amount of its electricity from countries such as Singapore and Thailand. 

In 2021, Malaysia imported around RM9 million worth of electricity, making it the world’s 99th largest importer of electricity. It ranked as Malaysia’s 1024th most imported commodity in the same year.

As modernisation and development continue to grow, so will our reliance and need for electricity. Our demand is on an upward trend and it is projected that Malaysia’s energy electricity demand will increase from 18,808 MW (megawatt) in 2020 to 24,050 MW by 2039 in light of our country’s growing population and urbanisation[3].

Being Fossil Foolish – Are We Still Dependent on Fossil Fuels?

Malaysia is also largely dependent on fossil fuels (coal, oil, and natural gas) for our energy needs. Our country has significant natural gas reserves; those situated off the east coast of Peninsular Malaysia are earmarked for consumption within the country, while reserves in Sarawak were allocated to generate revenue through exports of liquefied natural gas[4].

In 2018, the country’s primary energy supply came up to 100 Mtoe (million tonnes of oil equivalent), with natural gas (41%), crude oil (26%), coal and coke (22%), and petroleum products (4%) being the primary sources[5]. Even in 2021, fossil fuels still make up a significant amount (91%) of our energy generation[6].

Should we be worried about the numbers? The simple answer is yes – especially since we have been burning more coal now than ever in over 20 years, according to Sahabat Alam Malaysia (SAM) president Meenakshi Raman.

It was only in 2000 when the Fifth Fuel Diversification Policy (FFDP) was rolled out that biomass, biogas, solar and mini-hydro as sources of energy – collectively identified as the “fifth fuel” – were first introduced. It has been 20 years since the FFDP and Malaysia continues to burn more coal than ever today, contributing to the climate change crisis with carbon dioxide emissions. – Meenakshi Raman, Sahabat Alam Malaysia (SAM) president[7]

Coal has gradually displaced natural gas in Peninsular Malaysia, although natural gas remains Malaysia’s primary fuel for electricity generation[5].

The demand for coal was recorded high in 2022 and was expected to increase in 2023[8]. What makes this amount especially shocking is that in 1997, coal only contributed a meagre 7.4% as a source of electricity, while natural gas dominated at 63.4%[7]. This huge growth merely indicates our growing demand for coal and electricity in general.

Malaysia imports as much as 98% of the coal burned to generate about 40% of the country’s electricity. 2018 alone saw our country burn 35.3 million metric tonnes of coal[9]. In fact, in that same year, we were also the eighth-largest importer of coal briquettes in the world and the 12th-largest importer of bituminous coal (not agglomerated)[7].

Although using coal in electricity generation remains inefficient, its cheapness and reliability compared to other electricity sources make it a popular choice for electricity generation in our country. According to a 2020 report from Tenaga Nasional Berhad, the reason for the country’s reliance on coal is due to its price as it is the “cheapest source of fuel in Malaysia”. This is aside from the obvious environmental problems (i.e. air pollution and carbon dioxide emissions) attributed to coal burning.

Because of environmental concerns and the obvious problem of depleting fossil fuel reserves, Malaysia has moved towards renewable energy as an alternative source of electricity.

Malaysia’s Initiatives on Renewable Energy

In a post-COVID world, the renewable energy sector has proven itself relatively resilient amidst economic instability, making it a vital part of post-pandemic economic recovery.

Renewable energy has been on Malaysia’s development plans for quite a long time. Our country has implemented some renewable energy plans with varying degrees of success. One notable example is the Small Renewable Energy Power (SREP) Programme, introduced under the Eighth Malaysia Plan (2001-2005). 

One of the more recent plans is the Malaysia Renewable Energy Roadmap (MyRER) which was commissioned in 2021 to support further decarbonisation of the electricity sector in Malaysia through the 2035 milestone.This roadmap aims to increase Malaysia’s RE growth from 23%, equivalent to 8.45 GW (gigawatt) of RE, in 2020, to 31%, corresponding to 12.9 GW, by 2025, and further to 40%, amounting to 18.0 GW, by 2035.

Source: The Edge

Most of Malaysia’s renewable energy is derived from hydropower plants in Peninsular Malaysia, Sabah, and Sarawak, with hydropower making up 93% of the renewable energy generation mix in 2018[4].

But solar energy is catching up with increasing government support and reducing costs. Already the biggest employer of solar photovoltaics (PV) in ASEAN, Malaysia’s tropical climate, which provides year-round sunlight, has enabled it to establish a very profitable solar power industry, although most of the solar equipment is currently exported.

The expanding domestic manufacturing base for renewable components will ensure that there is a reliable and low-cost supply chain for project developers amid global falling technology costs. – Fitch Solutions Macro Research report[10]

Indeed, Malaysia has the potential to generate more than enough electricity to meet its current demand if all roofs in Peninsular Malaysia are fitted with solar panels. So far, there are over 4.12 million buildings with solar rooftop potential in Peninsular Malaysia, according to Malaysia’s then-Energy, Science, Technology, Environment and Climate Change Minister, Yeo Bee Yin. If fitted with solar PV systems, she noted that they could generate 34,194 megawatts (MW) of electricity.

Yeo also cited the reduced costs of solar energy compared to gas-generated power as a significant factor in the growth of Malaysia’s solar sector. When Malaysia opened bids for an estimated RM2 billion worth of projects under the third round of the Large-Scale Solar (LSS3) scheme in February 2020, Yeo revealed that the first four projects – 365 MW out of 500 MW – were bid below the gas-generation price of RM0.2322 per kWh.  

In the second round of LSS bidding (in 2017), RM0.32 per kWh was the lowest price; that became our reference price when we opened LSS3 for bidding this year. But when the bidding exercise closed, the lowest bid was at RM0.1777 per kWh. 

That is a 45% reduction in just a few years. That is why we are very confident that the renewable energy price will reach parity (with that of gas) in the foreseeable future. – Yeo Bee Yin, former Malaysia’s Energy, Science, Technology, Environment and Climate Change Minister[10]

More recently, Malaysia was chosen as a site for two pioneering global initiatives focusing on developing green hydrocarbon energy sources. These are Project H2ornbill, a collaboration between three Japanese companies to produce green hydrogen for conversion into methylcyclohexane (MCH) for export to Japan, and Project H2biscus, an alliance with a consortium of South Korean firms to export blue and green ammonia and green methanol.

Multiple factors make Sarawak the ideal location for these green hydrogen projects. Sarawak has a substantial amount of installed hydropower dams with a number of other potential hydroelectric dams that can be developed. – Robert Hardin, Chief Executive Officer, SEDC Energy Sdn. Bhd[11]

These are just some of the notable efforts taken by the government as part of its commitment to achieving net zero greenhouse gas (GHG) emissions and increasing renewable energy composition by 2050.

The Future Of Electricity In Malaysia

Source: The Star

Although it is projected that the expected advancements in renewable energy generation are likely to gradually replace the existing hydrocarbon-centred energy sector, the numbers suggest that renewable energy generation will still not make that much of an impact on Malaysia’s energy mix. The projections suggest that while the share of gas generation is expected to decline from 24% in 2021 to 23% by 2025, coal will continue to dominate with a 54% share in 2025[5].

Though our government has made repeated pledges to no longer build new coal-fired power plants and to reduce coal’s share of total power capacity, we saw the opening of two new coal power plants in 2019: Jimah East Power in Negeri Sembilan and Balingian Power Plant in Sarawak. Even disappointingly, at the COP26 climate summit in November 2021, Malaysia was not one of the 40 countries that committed to quit coal by 2030 (for developed countries) and 2040 (for other countries)[9]

Despite this, there is still strong support to develop sustainable energy in our country, and the government remains positive in meeting its goal of a 31% share in renewable energy growth by 2035[5].

Already, national utility Tenaga Nasional Berhad (TNB) has made its energy demand mitigation efforts by introducing programmes such as its Smart Meter rollout to foster better energy management practices in residential areas, and the Time of Use (ToU) tariff scheme to drive energy efficiency among commercial and industrial users.

Through the ToU scheme, commercial and industrial energy consumers can better manage their electricity usage by using less electricity during peak demand times and shifting their usage to off-peak hours, when electricity rates are lower. ToU also enables these consumers to self-regulate their electricity usage and costs, ultimately reducing overall strain on the central grid during peak hours[3].

In July 2023, the Ministry of Economy published the first phase of the National Energy Transformation Roadmap (NETR), outlining the government’s strategic objectives to foster the growth of the green energy market and enhance future capabilities with the ultimate goal of efficiently overseeing the energy transformation project.

Dr Izyan Munirah Mohd Zaideen, a senior lecturer at Universiti Malaya, notes, however, that Malaysia needs to place greater support and investment into the development of sustainable energy production to facilitate the speedy progress of Malaysia’s energy transformation and meet its goals of achieving a 31% share in renewable energy production by 2035[12].

That said, our appetite for electricity will only continue to grow as our economy develops, and with it, our demand for coal, in order to sate this appetite. With the Earth undergoing a climate crisis, our country is doing its best to develop its renewable energy industry to meet our ever-growing electricity demands.

For now, however, we must consider saving on our electrical usage, not just for our bills, but for the environment.

Explore our sources:

  1. Z. Sulman. (2023). 15 Reasons Why Electricity Is Important? Curious Desire. Link.
  2. Energy consumption in Malaysia. WorldData. Link.
  3. Energy Watch. (2021). Planning for Malaysia’s Future Energy Demand. Link.
  4. Malaysia Country Report. (2021). Link.
  5. Malaysia Renewable Energy Roadmap. (2021). SEDA Malaysia. Link.
  6. Asia Natural Gas & Energy Association. (2021). Malaysia – an Energy Snapshot. Link.
  7. M. Raman. (2020). Malaysia is burning more coal now than it did 20 years ago. The Star Link.
  8. International Energy Agency. (2023). Coal. Link.
  9. N. Fong. (2021). RISE OF COAL IN MALAYSIA. Macaranga. Link.
  10. The ASEAN Post. (2019). Malaysia’s solar sector on the rise. Link.
  11. Malaysia’s renewable energy transition. (2023). Reuters. Link.
  12. I.M. Mohd Zaideen. (2023). Malaysia’s energy transition depends on funding, support. New Straits Times. Link.

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