KUALA LUMPUR: The Energy, Science, Technology, Environment and Climate Change Ministry is targeting to grow renewable energy's (RE) proportion of generation mix from the current two per cent to 20% by 2025-2030.
This bodes well with the electricity supply industry (ESI), now grappling with the escalating global coal price. Eventually, this new target might allow for more stable tariffs in the future, analysts said.
Fifty-three per cent of Malaysia's electricity comes from coal, 42% from natural gas and the remainder from hydro and RE.
Coal price is currently hovering above US$100 (RM418) per tonne, up by more than 100% after reaching a 10 year-low in 2016 when it fell below US$50 (RM209) per tonne.
The price increase since last July has thrown a spanner in the ESI's generation costs as coal is 100% imported.
Over 60% of the coal is purchased from Indonesia, and the rest from Australia, South Africa and Russia.
“Coal demand in the next two years is expected to remain stable at around current levels,” said Hans van Cleef, Senior Energy Economist at ABN Amro.
“Although headlines in the newspapers may suggest that coal demand will peak soon, in reality, demand will remain solid in the coming years,” he added.
To prepare for such scenario, the industry has taken steps to achieve greater efficiency in power generation through coal power plants.
All new coal-fired power plants now use ultra-supercritical (USC) technology that burns less coal for more power, while complying with emission standards.
Tenaga Nasional Bhd's (TNB) 1,000MW Manjung 4 power plant, which commenced operations in 2015, is Southeast Asia's first USC coal fired power plant capable of producing enough electricity for two million homes with a three per cent reduction in coal consumption.
Going forward, the government has put in place a few mechanisms to boost RE's contribution in power generation, including Net Energy Metering, Large Scale Solar (LSS), Green Sukuk Financing Scheme and Feed-in Tariff mechanisms.
As the national utility corporation, TNB is committed to support the government's RE agenda and aspires to be the Asean leader in RE as demand for green energy grows.
The company has embarked on the country's largest LSS park with the 50MW project in Kuala Langat, Selangor, as well a few joint ventures in biomass and biogas power stations.
TNB's most recent venture is through its RE subsidiary, where the company plans to offer financing self-generation packages for solar photovoltaic panels for residential customers by year-end.
These packages have already been offered to commercial and industrials customers.
The government's immediate near-term focus is to explore large-scale renewable projects that are viable under similar levelised tariffs as fossil fuel-based plants.
This is important to keep prices low in ensuring affordability of electricity tariff.
Through the strong drive by MESTECC and with great support by TNB and the industry, the country is well underway in fulfilling its pledge to the United Nation's Framework Convention on Climate Change to reduce its greenhouse gas emissions intensity of GDP by 45 per cent by 2030. — Bernama