The energy industry is facing an unprecedented time of disruption, renewable energy transformation, informed ‘prosumers’, and regional power sharing. These were the words of YB Yeo Bee Yin, Malaysian Minister of Energy, Science, Technology, Environment and Climate Change (MESTECC), speaking at the opening of the recent Asian Utility Week , held in Kuala Lumpur this September.
In a world where disruption is the norm, the Minister identified four key transformations steering the future of power. In tandem with her Ministry’s recent announcement of the Malaysian Electricity Supply Industry reforms 2.0 (MESI 2.0), these changes represent an important evolution for Malaysia. The new reforms will deliver a gradual liberalisation of the electricity industry, one designed to respond to the four key areas of disruption highlighted by Minister Yeo Bee Yin.
Transformation I: A Time of Disruption Technology has always been a harbinger of change, and it’s playing an increasingly important role in transforming the power industry. Emerging solutions offered by the internet of things (IoT), artificial intelligence (AI) and widespread digitisation provide a catalyst for industry evolution.
“ With IoT, Artificial Intelligence (AI) and Virtual Reality (VR), this will allow more efficient generation and maintenance of generation assets, which digitalisation of grid will allow more creative distribution according to time of use; also offering different packages from what we could offer previously. With the line of the power industry being blurred, the utility company is no longer just providing power – people who do not innovate will be left behind.”
Transformation II: A Time of Renewables The sun is shining on renewable energy generation. Renewable adoption continues to accelerate across the globe, leading to economies of scale that truly create a time of renewable energy.
“ This is a time of renewable energy, near to parity, if not already at parity. Let me give you a very clear example; in Malaysia, the generation cost of coal is 15.74 sen per kWh. For gas, it’s 23.22 sen per kWh. We have just finished our third round of large-scale solar bidding. The first four projects, which encompassed 365 MW out of 500 MW, bid below the gas price – it bid below 23.22 kWh. That means for Malaysia, for large scale solar (above 100MW) is already below the generation cost.”
Transformation III: A Time of Demand Management and Prosumers Digitalisation across the power ecosystem is providing new opportunities for informed consumption, and even informed production. So-called ‘prosumers’ are taking advantage of distributed renewable energy resources to produce, consume, and potentially sell back energy to the grid.
“ With the customers demanding more from utility companies, business as usual is not the way to go. The government is working on a few things; the first thing is, how do we better help customers manage their energy demands? We are coming up with a new bill, the Energy Efficiency & Conservation Act. Hopefully we will table it by next year and have it passed, so we have a regulatory framework for energy efficiency.
We are also looking at co-generation policies to help the industry better manage their steam turbine and thermal energy to electricity. We are also looking at prosumers, which is why we’ve enhanced our Net Energy Metering (NEM) scheme, where we previously worked at selling to TNB at a displaced cost – we have enhanced the NEM policy on a 1-on-1 offset basis. Three years prior to launching the enhanced the enhanced NEM 2.0, the take-up rate was 27.7 MW. After we enhanced the NEM policy to NEM 2.0, this year from January to now, the take-up rate is more than what we’ve seen over the past 3 years. Therefore, there is a demand for putting up solar panels on rooftops.”
Transformation IV: A Time of Power Sharing in ASEAN A shared ASEAN power grid has long been the dream of many, but one which has travelled a bumpy road towards materialising in any meaningful way. The 2016 power trade agreement between Laos, Thailand and Malaysia was an important step on this journey. With an expansion of that deal on the horizon, we may well be witnessing an exciting time for supporters of the ASEAN power grid.
“ Most of the topics of my bilateral meetings are on international connections. International connections between Malaysia and Singapore, Malaysia and Indonesia, Malaysia and Thailand and Laos. And ASEAN is ready for an ASEAN power grid. We will see the historical first multilateral agreement between Malaysia, Thailand, and Laos in power trading. This will be the first but will not be the last for ASEAN’s power grid.
We see a lot of potential for regional collaboration. We see a lot of potential of a competitive advantage in power generation for one country to supply to another country. Of course, the enabler of it is a regional regulatory and technical framework that must be similar between the countries, and of course continuous peace time between all ASEAN countries.
Malaysia does not believe that it should be the sole winner in the ASEAN power grid. We want all countries to thrive with us, so that all our electricity supply is affordable, sustainable, and reliable through regional collaboration
So, we are witnessing an exciting time. Charles Dickens said, ““It was the best of times, it was the worst of times”, but for me, to describe our power transition, this is a challenging time, this is an exciting time.”