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A Brighter Future for Reliable Power in Malaysia

Malaysia has made impressive progress on ensuring reliable power supply in recent decades. Long gone are the days of widespread blackouts witnessed in the late ‘90s and early ‘00s, with Peninsular Malaysia now positioned as a regional leader in reliable power supplies.

The System Average Interruption Duration Index (SAIDI) in Malaysia—a recognised global measure of system reliability—was just 48.13 minutes per customer in 2019. That not only places Malaysia at the top of the table of regional peers but outperforms markets around the world.

These improvements are a clear representation of the positive impact Incentive-Based Regulation (IBR) has had on Malaysia, and continued commitment by Government and utility Tenaga Nasional Berhad (TNB) to invest in this essential backbone of our electricity ecosystem. That focus is vital for ensuring consumers receive the service they deserve according to Mr Saravanan Thambirajah, Chief Executive Officer (CEO) of the Federation of Malaysian Consumers (FOMCA), speaking recently to Energy Watch.

“FOMCA’s main concern is not only value for money but, more so, value for people. Energy is one of humanity’s most basic needs, and is rightly recognised in the [UN’s] 2030 Agenda for Sustainable Development as central to human progress.”

IBR is a system which incentivises positive performance in operators, providing a transparent operating environment that delivers reliable, sustainable power for all. When it comes to reliable power, that means investing in the future of Malaysia’s power grid.

“Consumers have learned to appreciate a reliable source of energy… As time goes on, consumers are also becoming more aware of the need of sustainable energy and how climate change is becoming an ever-present problem. From this view alone, more consumers are appreciating initiatives by utility providers to dive into a more sustainable form of power generation,” said Saravanan.

Investing in reliable power infrastructure not only provides an important path to integration of new, low-cost and low-carbon renewable energy opportunities, but ensures reliable delivery of power to the nation’s vital economic backbone. That is good for the economy, consumers, and the power industry.

“Reliability is very important for consumers in using utility services, especially during this pandemic… consumers have enough problems to deal with, so utility services should provide a reliable supply. As more and more consumers start to adopt work from home… a steady electric supply is essential,” said Saravanan.

The cost of a single blackout can be significant for businesses. The US Department of Energy has estimated that electricity outages cost the US economy around USD150bil annually. A single 2003 blackout in Malaysia reportedly cost businesses USD13.8mil.

“Energy also leads to the creation of new markets, businesses, and job openings, which provide more opportunities for individuals to earn an income and lift themselves, their families, and their communities out of poverty.”

Access to electricity doesn’t just prevent losses however, it unlocks new opportunities argues Saravanan. “Energy also leads to the creation of new markets, businesses, and job openings, which provide more opportunities for individuals to earn an income and lift themselves, their families, and their communities out of poverty.”

This is particularly important given the reality of the energy burden—whereby poorer households pay a disproportionate amount of their income on energy. Malaysia has brought in a range of measures to address this highlights Saravanan, including programmes such as the RM40 Electric Bill Rebate Programme, although more focus on areas such as supporting improved energy efficiency would also be welcome. This can be important to reduce demand, and help reduce the strain on the grid.

“We have seen that consumers are willing to adopt an energy efficient lifestyle if there are incentives for them to be energy efficient. Major buildings like schools and offices are able to reduce their annual electricity consumption up to 46%, thus proving there are many rooms for improvement in terms of energy efficiency.”

Peninsular Malaysia’s electricity ecosystem is far removed from previous days of disruption, recording just 0.27 minutes of system disruption in 2019. It has consistently been below the two-minute measure since 2009.

“Malaysia has come a long way in terms of reliability, especially in the peninsular given that our current disruption rate is below 2%. Reliability of energy access has been vital in bridging the gap across society… for many, a reliable source of energy has been the difference in getting better education to improve economic standing,” said Saravanan.

“Another importance of a reliable and stable service is to promote trust and willingness to pay, and encourage consumers to invest in appliances, increase their demand, and even rely on electricity for powering new income-generating businesses.”

The World Bank provide their own measure of power disruption as part its Doing Business series of analysis. Under its measure, Malaysia experienced just 0.5 hours of disruption in 2020. That compares to 2.1 hours in Vietnam, 2.8 hours in Indonesia, 3.6 hours in Philippines, 4 hours in Laos, and over 20 hours in Cambodia. Malaysia performs roughly on par with neighbour Thailand, and only Singapore, with its compact urban status, achieved better across the region by the World Bank’s measure.

The impact of major blackouts and failed electricity infrastructure can be devastating. Europe’s worst blackout in recent history occurred in 2003, when failing intra-regional European power infrastructure plunged 57 million citizens in Italy into darkness, reportedly causing four related deaths.

A more recent example of these impacts can be seen with the remarkable weather-related shutdown of power in the US’ state of Texas. An unseasonably cold period of weather caused massive spikes in demand for heating. At the same time, power generation was hit hard by failures in infrastructure that was poorly prepared for these winter temperatures. Texas, unlike many states, also operated an independent grid, meaning it had no backup when its own supplies failed. This catastrophic combination of factors led to widespread power disruption for weeks, threatening clean water supplies already impacted by freezing pipes, and causing a number of related deaths due to an inability to heat homes.

A modern electricity grid isn’t just about providing for the needs of today, it’s about building for the future and unlocking opportunities for consumers.

“As the world’s energy grids get “smarter”, the average citizen will become a “prosumer” who both produces and consumes power. Smart grids will bring in a new paradigm of active distribution that can dramatically change the role of the consumer and communities, transforming “passive” users into “active” players – both as producers and consumers,” argues Saravanan.

Sustainable solutions will play a big part continues Saravanan. “Renewable energy also becomes cheaper day by day to a point in which consumers would not have to pay extra for renewable energy. On the other hand, consumers are also willing to dive into renewable energy due to the social impact, economic impact, and environmental impact.”

Bringing these solutions together creates a big opportunity for Malaysia.

He goes on to argue that the way the industry works must change. “They need to anticipate new, future needs and actually identify solutions to problems before consumers realise there is an issue… Applications such as smart meters have created a major shift in energy consumption patterns, as consumers now can monitor their daily energy usage via the myTNB application. Companies need to embrace consumer-driven models and develop technologies like this to provide convenience and new services to deliver their existing products to consumers.”

Bringing these solutions together creates a big opportunity for Malaysia. That means smart systems for more efficient transmission, advanced solutions for growing penetration of renewable technologies, and a fit-for-purpose modern grid that can continue to deliver reliable power to the people and businesses of Malaysia.

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