“Malaysia’s domestic tariff is actually lowest amongst all Southeast Asia countries, but our commercial industry [tariff] is second or third. How we stay ahead of this competitive tariff is to make sure that our value chain of providing electricity itself is actually competitive,” said Yeo Bee Yin, Malaysia’s Energy, Technology, Science, Climate Change and Environment (MESTECC) Minister.
Speaking in a recent interview with Energy Watch, the Minister explains that while Malaysian consumers enjoy some of the lowest electricity tariffs in the region, the on-going Malaysian Electricity Supply Industry (MESI) 2.0 reforms aim to incentivise Malaysians to consume energy more efficiently, sustainably, and smartly.
One such area is the opening up of the electricity retail market, where the industry is opened to multiple suppliers who can offer different packages to consumers. “We see that opening up retail will provide more choice for customers, and it then gives them better power in terms of choosing who they want as a service provider,” added Minister Yeo Bee Yin.
Beyond options, the reforms also aim to help consumers to unlock the benefits of new and evolving technologies. The roll out of a targeted 9.1 million smart meters by 2026 is designed to give rise to a population of consumers who are informed and able to understand and respond to their own electricity demand. According to Minister Yeo Bee Yin, the true value of a smart grid can only be unlocked through educating consumers.
The proposed ‘green tariff rider’ function will allow consumers to customise their energy mix
On top of this, a Time of Use (TOU) pilot project is also anticipated to be launched in 2021, offering a tariff structure that reflects the fluctuating costs of electricity throughout the day. Minister Yeo Bee Yin points out that currently, the system marginal costs varies at different times of the day. This essentially means that at different times of the day, energy might be more expensive, or cheaper, to generate. A time of use tariff aims to reflect this difference to provide consumers access to better manage their consumption, based on peak (popular) and non-peak hours.
Currently, this is already being offered to large Commercial and Industrial (C&I) consumers in Malaysia. By 2021, this existing TOU model will be further enhanced to reflect the changing electricity demand and supply profile. In the same year, small C&I and Domestic consumers with smart meters will also be offered a TOU tariff option.
Low-carbon power is another key focus of the on-going electricity ecosystem reforms. The newly launched MyGreen+ renewable energy certificates and Malaysia Green Attribute Tracking (mGATS) initiatives also support choices that contribute to Malaysia’s goal of generating 20% of the country’s electricity from renewable sources by 2025. The mGATS platform does this by allowing the trading of renewable energy certificates so that consumers can control their carbon offset.
Over 90% of Malaysia’s general electricity mix is generated from fossil fuels. With the proposed ‘green tariff rider’ function, consumers will be able to customise their energy mix – allowing them to choose exactly how much of their electricity consumption can be attributed to renewable sources.
“For example, if I want my electricity to be 20% green, then I then opt for the 20% green, and the green rider [green energy electricity tariff] will come in your bill. Then you can say that my electricity produces a [reduced] amount of carbon footprint, instead of from a general electricity mix.”
Rural electrification remains a priority for the government
Another area of evolving technology is peer-to-peer (P2P) trading. Currently, trials are underway to explore P2P to provide choice for ‘prosumers’ to sell electricity directly to other consumers on the grid. New exploratory technologies such as this may be allowed to access the grid once the Third-Party Access framework and use-of-network charges is in place. This could provide an additional option for consumers to access carbon-free power harnessed from renewable sources.
While these new reforms are targeted at those with access to existing electricity infrastructure, the MESTECC Minister is keen to point out that rural electrification remains a urgent priority for the government.
“In Malaysia, only about 1-2% of the nation is not electrified. However, statistics sometimes blind you from the real life people go through. In 2020, we will look into a policy level on how do we make sure [electricity access] is equitable for everyone in Malaysia, not just for the majority of Malaysians.”
With this end vision in mind, the end question is then posed to us: How do we ensure electricity is sustainable, secure and accessible for all? It’s clear that with the MESI 2.0 reforms, Minister Yeo Bee Yin believes that Malaysia is on the right track to an answer.
*As of 24 February 2020, YB Yeo Bee Yin is no longer the Minister of Energy, Science, Technology, Environment and Climate Change (MESTECC)*