KUALA LUMPUR: BETWEEN 2014 and this year, the power sector has undergone “transitional pains” to facilitate reforms to address issues of overcapacity and direct awards of independent power producers (IPPs).
Malaysia Energy Council chairman Datuk Abdul Razak Abdul Majid said Malaysia had to undergo reforms since 2009 until last year for it to arrive at a more liberalised energy sector it is today.
“We had issues in 2009 where there were calls for better efficiency, transparency and tariff mechanism, and we wanted a better performance-driven industry, putting people first while taking care of what the customer wants and incorporating green technology into the system.
“The tariff design was more or less similar at the time, and fuel was an issue then, which reached US$148 a barrel — too high for Malaysia.
“And we pondered on how do we deal with the first generation PPAs (power purchase agreements) where we had cries from the press over the IPPs having allegedly accumulated huge profits at the time,” he said during his presentation, titled “MESI Transformation: Evolution in a Revolution”.
Abdul Razak said Malaysia had gone a long way since 2009, but the sector needed to evolve into an industry that incorporated customer expectations on energy usage.
“There will be a new industry where customers are not only consumers, but also generators of electricity that will be given back to the grid.
“There must be a way that this can be done.
“There is no question on the security of supply as it has to be maintained at a world-class level, and no excuse of a day or even a few hours of outage throughout the year,” he added.
Asked on Malaysia’s power overcapacity, Abdul Razak said although the reserve margin was slightly high, currently at 30 per cent, it was acceptable when taking into account the aspect of fuel security.
“In terms of reserve margin, today we are at about 30 per cent. That is more than what our planned margin level was, but it is not too bad when considering the aspect of fuel security.
“We may have the capacity, but if we do not have the fuel, we may face a shortfall in supply and this is to cater for eventualities. That is why we allow for more margin to cater for possible fuel shortfall.”
He was speaking at the three-day Conference of the Electric Power Supply Industry 2018 (Cepsi 2018) which ended yesterday, gathering about 2,000 industry participants globally.