Such a transfer might not be preferrred for the native vitality sector in the interim because of the complexity of coping with a number of events in built-in electrical energy planning.
Sanjayan Velautham, chief working officer of Malaysia’s Power Fee, the important thing statutory board regulating Peninsular Malaysia’s electrical energy and piped gasoline provide, mentioned examples from developed vitality markets present that whole liberalisation has resulted in market manipulation the place gamers management the market when it comes to provide and pricing.
Talking at a sustainability occasion in Kuala Lumpur final month, he mentioned that whereas the federal government has learnt that the vitality transition calls for a diversified and versatile strategy, shifting aggressively into free competitors may have an effect on the reliability of Malaysia’s electrical energy provide or result in greater prices.
“It shouldn’t be a one-size-fits-all strategy,” he mentioned, in reference to resolving Malaysia’s vitality trilemma – of vitality safety, affordability and sustainability – and taking classes from developed markets. Whereas liberalisation introduces competitors, regulators want to ensure it brings about good outcomes akin to a discount in value and extra decisions for the shoppers, he added.
Malaysia’s vitality sector operates with centralised utility methods which are being managed by single entities. Finish customers supply their electrical energy, together with that from typical sources, from Tenaga Nasional Bhd (TNB), Malaysia’s largest utility and the only operator of the nationwide grid.
Energy era was opened to non-public sector gamers within the Nineteen Nineties with the introduction of impartial energy producers (IPPs), which have been allowed to inject electrical energy immediately into the nationwide grid.
With the introduction of the Company Renewable Power Provide Scheme (CRESS) in September final yr by the Ministry of Power Transition and Water Transformation (PETRA), third events can now promote or buy electrical energy by means of an open entry grid system, although TNB nonetheless holds full management over the transmission and distribution networks in Peninsular Malaysia.
At an Eco-Enterprise occasion in August final yr, environmental sustainability minister Nik Nazmi Nik Ahmad signalled that there’s authorities will to finally shift away from a regime wherein TNB has close to monopoly on vitality distribution. Some market gamers have additionally been pushing for additional liberalisation of the electrical energy market.
There’s rising enthusiasm from the business to take part in CRESS, with current gamers additionally expressing curiosity to commerce and procure clear vitality underneath the initiative – which isn’t but allowed, shared PETRA deputy minister Akmal Nasrullah Mohd Nasir final week.
At present, CRESS primarily caters to new renewable vitality turbines linked to the high-voltage grid and new business and industrial electrical energy customers underneath TNB Retail, the utility’s wholly-owned subsidiary.
For current prospects who signed vitality provide agreements earlier than the scheme kicked in, they will solely be a part of the scheme with a request for an extra load above 100 megawatts of electrical energy, which would be the remaining load of their present provide contracts, as suggested by the Power Fee.
On the Discussion board Ekonomi Malaysia organised by the federal government, Akmal mentioned the response is a constructive sign for the authorities to look into realising the potential for extra renewable vitality coming into the system.
Power premium for knowledge centres
With Malaysia set for a surge in energy-intensive knowledge centre operations by 2025, there’s a higher push to additional liberalise the renewable vitality market, enabling higher participation from further gamers within the system.
Sanjayan acknowledged the rising demand, and in addition cautioned {that a} full liberalisation of the vitality sector will usher in “complexity” – that regulators have to be prepared for. Managing a single entity would imply it’s simpler to impose controls, he mentioned.
He confused the necessity for improved self-regulation inside a liberalised market framework to make sure stability and stop market manipulation.
“If we transfer too cautiously, we’d miss important investments, like the information centres which are coming in. We wish these investments, however we additionally want to know their long-term supply-side impacts,” he mentioned, including that balancing liberalisation with regulatory oversight could be key to addressing present challenges within the vitality sector.
He additionally identified that Malaysia’s journey over the previous 25 years in upgrading its vitality infrastructure presents precious insights. Whereas studying from superior economies like the UK, United States and Australia is essential, options should additionally account for Malaysia’s distinctive circumstances, he confused.
Malaysia’s energy sector accounts for about 80 per cent of the nation’s whole greenhouse gasoline emissions. As a part of its dedication to reaching web zero by 2050, the federal government has recognized that decarbonising the vitality sector by means of a renewable vitality push is important.
The nation has emerged as a world hotspot for knowledge centres, storage services that allow fast-growing applied sciences akin to synthetic intelligence and cloud computing. It has attracted greater than US$16 billion in funding commitments over the previous yr from Amazon, Nvidia, Google, Microsoft and TikTok proprietor ByteDance, most of it for improvement tasks within the southern state of Johor, which borders Singapore.
In an interview with the Monetary Instances revealed final Sunday, Nik Nazmi mentioned that the federal government was turning into “extra selective” after the current knowledge centre growth put a number of stress on Malaysia’s water and vitality sources, although he describes knowledge because the “new oil of the twenty first century” and a motion that the nation needs to be a part of. Know-how gamers working such operations could be anticipated to pay a premium for entry to vitality provides, he mentioned.
