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Single Buyer? A Key Part of our Energy Ecosystem

What do you know about Single Buyer? It’s one of the most important elements of Malaysia’s electricity ecosystem; a crucial link between electricity generation and the moment when you flick a switch and a light turns on. But what does Single Buyer really do?

The role of Single Buyer

Single Buyer is a ring-fenced department within TNB, authorised to conduct electricity planning and manage electricity procurement services. It was introduced in 2012 as a prerequisite to Incentive Base Regulation (IBR). In 2015, the Malaysian Electricity Supply Act (ESA) was amended, recognising Single Buyer as Ring-fenced entity.

As an independent department, the Single Buyer’s roles include:

  • procuring electricity to meet demand, alongside Operating Reserve requirements, at the lowest possible cost
  • facilitating security of electricity supply
  • monitoring the adequacy of fuel supply to electricity generators
  • promoting transparency in our performance
  • enabling competition in generation, and confidence in the energy sector

“Our mission is to be a trusted and reputable energy planning and procurement organisation, and a world class market operator”, said Charanjit Singh, CEO of Single Buyer.

Single Buyer as part of MESI 9+1

Single Buyer’s emergence as a ring-fenced entity was a vital part of the Malaysian Electric Supply Industry (MESI) 9+1 reforms, designed to create a more efficient, open and sustainable energy landscape for Malaysia.  The overall drive behind these reforms was promoting an incentive-driven energy landscape. An energy ecosystem that rewards efficiency helps provide a framework that ensures continued sustainability, and represents a model which is being widely adopted around the world. Supporting that goal is a key priority of Single Buyer.

The EU mandates a high degree of separation between energy suppliers and network operators

“Single Buyer forecasts the electricity load demand in a short to long-term horizon, taking into account the impact of emerging trends and consumer behaviour. Based on this demand outlook, Single Buyer prepares the projected long-term generation supply plan. These demand and supply outlooks will be used as a basis for decision making by the government,” explains Charanjit Singh.

Account unbundling is a global drive

Single Buyer’s ring-fenced operating model helps improve cost-efficiencies while reducing potential conflicts of interest with fellow stakeholders in the energy market. This helps promote a flexible ecosystem which can adapt to transforming energy demands.

The incentive-based approach supported by account unbundling is practiced around the world, as governments aim to reduce consumer bills, enhance customer service and encourage positive market investments.

European Union: Energy market legislation in the EU mandates a high degree of separation between energy suppliers and network operators. This operational mandate stems from a desire to provide increased market transparency that improves competition, efficiency, and ultimately provides a more positive energy market for consumers.

Turkey: Account unbundling has been a crucial part of market reform in Turkey, and praised by the World Bank for its contribution to achieving energy security for the nation’s fast-growing economy while also ensuring that energy growth needs are met. That more efficient market enabled Turkey to add over 31 gigawatts of market-based power generation in the years between 2001 and 2014.

California (USA):
With electricity needs roughly three times that of Peninsular Malaysia, California is a state with a huge electricity market. The ring-fenced Independent System Operator (ISO) was established in 1998, and holds responsibility for ensuring sustainable operations across the largest part of California State. A notable period in its history came with the California Energy Crisis in the summer of 2000, revealing how an independent operator must be flexible to meet emerging market challenges. Today’s challenges include adapting to a diverse energy landscape, where renewable source account for as much as 30% of total electricity retail sales.

Single Buyer adapts to changing needs

Single Buyer’s mandate exists as part of an efficient, sustainable energy ecosystem. According to Charanjit Singh, that means understanding the transformations that are emerging.

“Newer technologies such as 5-star appliances and LED bulbs will result in more efficient use of electricity. People are also more energy conscious, and will use electricity more prudently. Single Buyer tries to capture these energy efficiency trends in load demand through the hybrid demand forecast, which uses a more detailed end-use model that captures various technologies across the whole energy ecosystem.

“By taking into account the usage and impact of new technologies, a more accurate demand forecast result can be developed. This will be revised on a yearly basis, thus keeping up with the emerging trends and electrification of things.”

So what does Single Buyer have to do with the electricity? The answer is – it’s essential. Single Buyer is a key element of an incentive-based electricity system that works to promote an efficient ecosystem which can deliver sustainable electricity into the future. What does that mean for consumers? An electricity market designed to work for them.

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