Securing a Bright, Green Future


Dr Maximus Johnity Ongkili
KeTTHA

We have discussed a wide range of topics in this Strategic Review, from definitions of green energy, pricing and tariff structures, and grid parity, to investment and financing issues, energy efficiency and innovation.

Debate has been very constructive. I would like to conclude on a similar note by requesting that everyone mentions three key points that they believe are fundamental to drive the green space forward. Let’s start with Adif.

Adif Zulkifli
PETRONAS

First, the single most determinant factor in promoting energy efficiency, technology and innovation is having an energy industry that is market driven. This requires deregulation and liberalisation to create an environment in which market forces prevail.

Second, it is important to implement clear targets in regard to COP 21 that can be cascaded accordingly to the respective sectors. This will facilitate economic growth, as well as understanding and cooperation between different players in reducing the nation’s overall carbon emissions.

Third, energy stakeholders must be pragmatic. It is crucial that the most important players find the right balance between, for example, capital and life-cycle costs, as well as economic, social and environmental benefits in order to secure the long-term stability and sustainability of the energy sector as a whole.

Ahmad Jauhari Yahya
Cenergi SEA

My first point relates to what Adif just said about the importance of setting targets to implement Malaysia’s COP 21 commitments. I would go one step further by suggesting that these commitments become obligations, with parties that fail to meet their agreed objectives being sanctioned, as happens in Australia.

Second, in relation to interconnection, there are energy gaps in terms of stranded generation that need to be resolved in order to curb energy wastage. Therefore, it is important for parties to identify ways to connect these facilities. The NEM mechanism mentioned by Zaini is an immediate boost and this should be explored further.

Third, it is fundamental that all stakeholders move from discussing energy efficiency to practising energy efficiency. This involves proving how serious we, the stakeholders, are by putting into place concrete plans with tax breaks and other incentives in order to begin the process as soon as possible.

Ahmad Fauzi Hasan
Energy Commission

I would like to reiterate the sentiments of Ahmad by stressing the need for the ‘carrot and stick’ approach to boost the growth of the green energy space. So my first point, the ‘carrot’, is to enhance pre-existing incentives in this field by emphasising the usefulness of international best practices, for example, to make agri-solar more viable.

My second point is the ‘stick’. The Energy Commission facilitates this approach via the application of existing regulations for energy efficiency. Furthermore, we have amended the Electricity Supply Act to create more efficiency in the energy sector through various means and have modified the Gas Supply Act to liberalise the gas supply sector through increased competition. We will be working to enhance further regulations moving forward.

Third, it is important to pursue coordinated efforts to boost education and awareness raising about green energy, among both industry players and consumers. The Energy Commission is playing its part in this regard by publishing diverse reports and upgrading our website to provide real-time information about the latest news and trends in the energy sector.

James Kendell 
APERC

The first of my three points is rationalising energy tariffs. The Malaysian Government has made a solid start in this direction, but to reiterate what my fellow panellists have mentioned, more needs to be done to reduce subsidies and provide a level playing field for the various types of fuels.

Second, the 11MP focuses on supporting the renewable energy space, which, as we have discussed, includes large hydropower, not just mini hydro. There is a lot of potential in Malaysia for hydro and this is one area that requires additional attention.

Finally, in light of Malaysia’s move towards coal in the medium-term, it is essential to identify ways to mitigate carbon emissions from coal plants. This includes considering approaches such as making CCS mandatory for new power plants and the introduction of supercritical and/or ultra-supercritical technologies or power stations, since these require less coal per megawatt-hour, leading to lower emissions, higher efficiency and lower fuel costs per megawatt.

Daud Ahmad
Cypark Resources Berhad

I have two points to mention. First, a critical aspect moving forward is for government policy to create additional opportunities and incentives to encourage greater innovation in green energy, since State financial assistance is crucial for driving down R&D costs. It is also essential that account is taken of innovative technologies from abroad, for example floating solar, the development and implementation of which is underway in Japan and Europe.

Second, the GTFS funding limit is too low and needs to be revised to match the scale of green technology. This could include other changes to the system, which I call ‘non-cost’ government incentives, for example lengthening the power purchase agreements accrued via the GTFS, particularly for promising segments such as biomass.

Dr Sanjayan Velautham
ASEAN Centre for Energy

First, in terms of the energy mix between coal, gas and renewable energy, the technical choices we make today will lock us in for 40 years, in line with the lifecycle of most power plants. Therefore, it is essential to consider all options and select the one that is most suitable for the country.

Second, the acceptance and embracement of the benefits and role of green energy has to be reflected in public consumer behaviour, including a willingness to pay ‘to be green’. This is only possible through awareness-raising campaigns and it is crucial that the government takes the lead in this educational drive.

Third, from a regional perspective, Malaysia should leverage the platforms available at the regional level and utilise these to the benefit of green energy growth.

Torstein Dale Sjøtveit
Sarawak Energy

The first point is to harvest the low-hanging fruit. As I have mentioned already, this includes incorporating more hydropower into the renewable energy mix.

The second point is to concentrate efforts on revising energy tariffs. Long-term tariff revisions will be a tremendous fillip for energy efficiency and, as a result, financial savings. Restructuring tariffs and removing subsidies for fossil fuels will also contribute directly to the enhanced utilisation of solar and bioenergy, as well as have a positive impact in terms of security of supply. A far more sustainable investment environment will emerge as a result.

My third point relates to government affordability by moving away from fuel subsidies. If the country is serious about boosting the development of the green energy space, this is an essential step.

Roslina Zainal
Tenaga

My first point is the importance of designing an innovation framework for renewable energy and, within that, green energy. Such a framework can look into technologies such as energy storage, which is a pressing need, as well as floating solar, which has huge potential. It can also bring together players from the public and private sector as well as academics, who, through collaboration and the exchange of knowledge, can generate a learning curve from which to further consolidate and engender innovation.

The second point is to ensure that the most appropriate channels of communication are used to disseminate the value and importance of energy efficiency. This requires information to be shared across social media to target the younger generations.

My final point is for industry stakeholders to consider the potential of renewable energy to provide base load power, and this may include energy generated from large hydro or even nuclear sources, given their low carbon emissions at the point of generation.

Ahmad Farouk Mohammed
Khazanah

The first priority is the need to increase the participation of green energy sources in Malaysia’s energy mix. As we have discussed, this will require new milestones and targets for investment, and project development and completion, in addition to commitment and proactivity from both the public and private sector.

Second, as Roslina just mentioned, it is essential to raise awareness of green energy, including building social awareness and a collective conscience whereby Malaysians can accept renewable forms of energy and are willing to pay for ‘greener’ electricity.

Third, it is important to hold further discussions between the public and private sector to review the industry structure. This includes clarifying aspects of ownership in relation to a range of issues, such as connectivity between energy producers and the grid, policy-making, enforcement, and compliance and sanctions, among others.

Mohammed Rafidz Ahmed Rasiddi 
BPMB

Funding is not an issue due to the amount of liquidity from the banking side, and there is a great deal of interest from investors. However, one important aspect moving forward is to make the green energy project-implementation environment more conducive to success in the long term.

While the government has done a great amount, examples from other countries may be useful in this regard. For instance, authorities in Sweden and Denmark play an active role throughout the supply chain, from feedstock procurement to energy distribution, as part of a concerted effort to ensure that the entire environment propagates success. Replicating this in Malaysia would bring potentially huge benefits in terms of financial and energy sustainability.

My second point relates to the need to improve the scrutiny of project executers, as I explained earlier. In order to guarantee that energy projects are a long-term success, it is necessary to verify the capabilities of parties that secure the required licences.

Dr Zaini Ujang
KeTTHA

To conclude, I would like to mention a few areas in regard to KeTTHA’s priorities in this sector. The first is our intention to make energy efficiency mandatory. Plans are still being developed and we will be working in collaboration with professional bodies and relevant institutions on how best to move forward.

Second, efforts are underway to revise the regulatory framework and liberalise the market. This process began with the launch of the NEM in November 2016 and is being intensified throughout 2017.

Third, it is important to raise the 1.6 per cent renewable energy surcharge in order to generate increased financing for the green energy space.

Fourth, is to promote the benefits of a sustainable lifestyle in Malaysia, including encouraging people about the advantages of ‘being green’.

Fifth, is affordability. The 11MP established an initiative to rationalise the fuel subsidy and steps have been taken over the last three years to reduce the amounts directed towards the fossil fuel sector as a result. These steps will continue over the next few years.

Finally, as Roslina mentioned, it is important to consider base load power and the role that renewable and green energy sources will play in a balanced energy market moving forward. Such efforts must, necessarily, concentrate on the management of intermittency issues relating to green energy resources.

Dr Maximus Johnity Ongkili
KeTTHA

I want to stress the Malaysian Government’s commitment to growing the green energy sector and expanding its role in the energy mix. Our objective is to decarbonise gradually as part of the greening process; the green energy sector is a fundamental component in terms of achieving this goal. We are also moving towards grid parity. As such, we understand the importance of setting targets and devising schedules in order to ensure that public and private sector players are able to plan for the future and adjust their strategic planning accordingly.

I also want to emphasise the role of innovation and R&D in driving the green energy space and the energy sector as a whole, not only due to our COP 21 commitments, but also as part of our wider efforts to make Malaysia more sustainable for future generations. This includes creating and promoting industry champions in the green energy space, from which other actors can learn and be inspired.

We have reached the end of what has been a highly productive discussion and I look forward to reconvening to discuss progress in the Strategic Review No. 2. Thank you for your time.