TRANSITIONING THE MALAYSIAN ELECTRICITY SUPPLY INDUSTRY
( AMEM – METI Meeting, 21 June 2021 )
His Excellencies Ministers of Energy of ASEAN,
His Excellency Hiroshi Kajiyama
Minister of Economy, Trade and Industry Japan
His Excellency Dato Lim Jock Hoi
Secretary-General of ASEAN
Ladies and gentlemen
1. It is a pleasure for me to be here today, with other ministers of energy of ASEAN and the Minister of Energy, Trade and Industry of Japan to discuss a very pertinent topic of transitioning our energy systems towards a lower carbon pathway.
2. I would like to take this opportunity to share Malaysia’s energy transition plan until 2040 with focus on our power generation plan. Let me start by sharing some basic information on the Malaysian electricity supply industry. As many of us here are aware of, Malaysia’s electricity supply system is divided into 3 sub-systems based on their geographical location. The biggest one is in Peninsular Malaysia accounting for 80% of the country’s electricity demand. The next largest system is in East Malaysia state of Sarawak followed by Sabah. In 2020, about 77% installed capacity in Malaysia are fossil-based based power plants while the rest, of about 23%, are made up of RE resources, mainly hydropower and solar. Out of the 23% RE in Malaysia, 55% of RE installations are in Peninsular Malaysia.
3. In charting our energy transition pathway, our energy policy and planning are guided by 3 main principles: security of supply, sustainability and affordability. The main challenge for us as policymakers in Malaysia, and I think everywhere else too, is trying to find the right balance between these 3 elements of the energy trilemma. Although we would like to push for a higher target of RE in our capacity mix, we must also take into account the affordability of our people and the resiliency of our energy system. In other words, we are treading the sustainability path cautiously because we know that it comes with a cost to electricity consumers. We believe that our energy transition plan should be an affordable energy transition in line with the Sustainable Development Goal 7 of ensuring access to affordable, reliable, sustainable and modern energy for all.
4. Hence, Malaysia has set a target of 31% Renewable Energy (RE) in its installed capacity in 2025 and 40% in 2035. To date, the installed capacity for RE in Malaysia is 7,995MW. By 2035, the RE installed capacity is projected to more than double from 8,000 MW to 18,000 MW.
5. As I have mentioned earlier, 80% of the electricity demand in Malaysia is from Peninsular. Therefore, to increase the share of RE in our capacity mix moving forward, our focus is on Peninsular Malaysia as it accounts for 80% of our energy demand. Out of the 31% RE target in 2025, 26% comes from Peninsular Malaysia in 2025 and out of the 40% target in 2035, Peninsular accounts for 32%. In other words, RE capacity in Peninsular is set to increase from the current 4,430MW to 10,944MW in the next 15 years.
6. With these RE targets, the carbon emission intensity is set to reduce by 45% in 2030, and a further 60% in 2035, compared to the 2005 level. This is in line with our NDC targets under the Paris Climate Agreement.
7. To further explain, by 2033, more than 7000 MW of coal power plants will have their PPAs expired and be replaced mostly by gas and RE, lowering our carbon emissions. Although we will not be building new coal power plants when the existing ones retire, we are also not discounting the option of extending the operation of those plants if the system requires. However, the decision for extension of these plants will depend on future availability of technologies in reducing emissions and also the cost of adopting those technologies. As solar has the highest potential in Peninsular, we foresee that most of our RE will be contributed by solar. Hence, we have plans to introduce battery energy storage systems (BESS) into our system. Our plan is to introduce utility scale BESS with a total capacity of 500MW from 2030-2034.
Excellencies, ladies and gentlemen,
8. The energy transition journey towards a lower carbon pathway is not without its challenges. Overcoming the challenges will necessitate ASEAN member states to continue working together. ASEAN will not be able to achieve its sustainable energy goals without the support of the various dialogue partners and international organisations. We always value the support given by our dialogue partners including Japan to further enhance our policies and introduce programmes which will help transition our energy systems towards a lower carbon pathway. As Malaysia navigates its path towards energy transition, Japan’s Asia Energy Transition Initiative (AETI) is timely and very much welcomed which will provide us support in terms of expertise, knowledge sharing and capacity building in our journey towards the development of a sustainable, affordable and reliable energy future.
YB DATUK DR SHAMSUL ANUAR NASARAH
Menteri Tenaga & Sumber Asli.
21 June 2021
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