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Round Table: Energy Sector Third Session

Round Table: Energy Sector Third Session – Renewables and Electrification

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On 3 August 2021, Climate Governance Malaysia (CGM) and CEO Action Network (CAN) convened the third Energy Sector roundtable on Renewables and Electrification.

This roundtable discussion was aimed to understand the barriers and enablers to electrification of the economy as well as how Malaysia can increase renewable energy (RE) share of power generation without compromising on stability, affordability, and security. The conversation deep dived into government interventions, infrastructure readiness, supply, and customer lenses.

In his welcome note, Encik Adnan Zainol Abidin, Executive Vice President & CEO, Gas & New Energy, PETRONAS emphasized the recognition that while the power sector has been one of the main contributors to global greenhouse gas (GHG) emissions, this sector is also the least difficult to decarbonize, compared to other end-use energy sectors according to the integrated modelling scenarios in the 2014 Intergovernmental Panel on Climate Change (IPCC) report.

For Malaysia to truly reach Net Zero, more efforts are needed beyond the RE target of 2035 as set in the Malaysia Energy Transition Plan 2021 to 2040. The ambitious Net Zero goal for Malaysia can only materialise with a “Whole of Society” and “All of Government” approach.

Moreover, government intervention must take into consideration all key factors to ensure alignment of government policy between economic, climate and energy priorities, whilst ensuring the socio-economic wellbeing of Malaysians.

In her keynote address, Puan Noor Afifah Abdul Razak, Deputy Secretary General (Energy), Ministry of Energy and Natural Resources (KeTSA) recapped that the Government has a target of increasing the existing RE capacity mix from the current 23% to 31% in 2025 and a further 40% in 2035.

These targets were determined based on technical, social, and economic considerations including grid penetration limit, grid flexibility, reserves margin as well as impact to consumer’s tariff. She also underscored the importance of setting a higher RE target for Malaysia.

However, policy makers have been trading the sustainability path cautiously because integrating RE into the power system comes with a lot of techno economic challenges associated with the energy trilemma. These challenges and means to address them are currently being studied by the Energy Commission together with Single Buyer and Grid System Operator.

Puan Noor Afifah also shared that by 2033 more than 7 GW of coal Power Purchase Agreement (PPA)s will expire and be replaced mostly by gas and RE, lowering our carbon emissions.

In the current planning, no new coal power plants are expected when the existing plants retire. However, there is still possibilities of the existing coal power plants life to be extended. With higher RE in the grid, efforts will have to be undertaken to enhance grid flexibility through the digitalization and integration of the battery energy and storage system (BESS), which is being planned in stages from 2030 onwards.

By 2035, a total 500 MW of BESS will be integrated into the grid enabling additional RE capacity into the system.

This was followed by a panel discussion moderated by Ir. Ahmad Hadri Haris of Shell, which encompasses the perspectives of government interventions, infrastructure, supply and demand.

There is a consensus that while there are challenges associated in the integration of RE into the power system, there is also an opportunity to solve this together through a lot more open discussions between the private sectors and the government. Industries can give suggestions and solutions that can be affordable. However, the industry needs the right market signal.

Dr Jay Mariyappan, Head, New Energy, PETRONAS urged for Malaysia Electricity Supply Industry (MESI) 2.0 plans to be implemented soonest as part of the Peninsular Malaysia power market liberalization. Third party access, deregulated retail segment and gentailers can accelerate the growth of RE while encouraging competition that will enhance efficiency and affordability.

Mr. Davis Chong, President, Malaysian Photovoltaic Industry Association (MPIA) acknowledged that while it is true that there will be cost involved in the solar energy integration into the grid, there are also a lot of commercial investors that are interested to enable the growth of RE. What is needed is clear market signal that would open the opportunity to the interested investors.

Mr. Charan Jit Singh, Chief Executive Officer, Single Buyer echoed the potential benefits of having investments by other parties in areas such as BESS in providing ancillary services to the power system. This should be considered as part of the implementation of MESI 2.0.

Furthermore, in order for the socio economics benefits from RE to be enjoyed by all levels of societies, Encik Ibrahim Ariffin, Director, Strategic Planning, Sustainable Energy Development Authority (SEDA) explained that there are opportunities in the untap potentials for RE to co-exist with fossil fuels industry through technologies advancements in carbon capture, co-firing methods or blending of natural gas with resources such as biofuel and hydrogen.

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