From 2% to 20% – Accelerating Renewable Energy Development in Malaysia, part 2

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Renewable Energy Policy Highlights

Malaysia Energy Plan started in 1966, with the first wave focused on providing adequate energy and water supply. Since then, there have been several stages of that plan, which addresses various energy challenges to the country in response to internal and global influences and challenges. The figure below shows the change in the dominant energy source in Malaysia until 2010. It also illustrates how Malaysia steered away from oil after the oil crisis and opted to increase its usage of natural gas.

Supply mix of Malaysia from 1976 until 2010

Renewable energy starts to enter the picture during the 6th and 7th Malaysia Plan from the years 1991-2000. During the 6th Plan, Malaysia focused on ensuring adequate and reliable electricity supply, tapping into its indigenous resources while considering the effects of power generation on the environment. This resulted in a shift to natural gas as a primary fuel for power generation, which is slightly cleaner than oil. The 7th Plan revolved on sustainable development and began the country’s focus on deploying renewable energy sources aside from the established hydropower.

Fast forward to the 9th Plan, the target of 5% RE (excluding hydropower) in the energy mix was set between the period of 2006-2010. In 2010, the National Renewable Energy Policy of Malaysia was launched, which set a target of 11% for energy coming from renewable sources by 2020. In 2011, Malaysia enforced the Renewable Energy Act, which introduced the Feed-in Tariff system with an annual installed capacity cap until 2030. Sustainable Energy Development Authority of Malaysia (SEDA) was also established to regulate the FiT system and ensure effective generation, purchase, and distribution of power from renewable sources. The RE uptake targets from the Malaysia Plans remain unrealized, as well as the target set forth in the National Renewable Energy Policy, despite the enforcement of FiT, as the current RE penetration is only at 2%.

Description: A view of a body of water with a mountain in the background

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2.4 GW Bakun Hydropower plant in Sarawak owned and operated by SEB

Barriers to RE development in Malaysia

Contrary to other nations where policy is lacking to support RE development, Malaysia has been issuing plans and policies supporting RE for the last two decades. Challenges to RE development can be classified under technical and economic or commercial barriers.

Technical barriers pertain to the availability of renewable energy sources that can generate power in a cost-competitive manner, given the current technology. Malaysia has a lower wind potential compared to other countries; hence, low-speed wind turbines are required, but this technology remains in its prototype stage and costs significantly compared to the amount of energy it can generate. Wan Shakyrah et al. (2019) also pointed out that biogas and RE-integrated battery storage system are still in its early stage and will require continuous research and pilot study before full deployment in Malaysia. Among the renewable energy technologies, solar power has been the most promising due to the vast solar potential of the country.

When Malaysia sets out the target for RE, the cost of these new RE technologies (solar, wind, biomass) is considerably high, and they are not competitive with fossil fuel generation, especially since fuel (specifically gas) is heavily subsidized by the government. However, the cost of renewable energy declined over the last couple of years and continues to decrease and become cost-competitive with fossil fuel. The country will require substantial investments of up to US$8 billion to achieve its 20% renewable energy target by 2025. This colossal capital cannot be supplied by the government alone, but from public-private partnerships and private financing (Tan, 2019).

Malaysia’s Current RE Target

The current renewable energy target of Malaysia is 20% renewable energy penetration by 2025. This is an ambitious feat considering that the 2019 RE percentage is only at 2%. Prior news items and reports mentioned the target deadline to be 2030. However, recent announcements made by Yeo Yee Bin (Malaysia’s minister for Energy, Science, Technology, Environment, and Climate Change) confirmed that the deadline is indeed 2025, and the government had a line-up of strategies to facilitate this rapid and massive RE uptake.


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