Kasturi said energy is a strictly regulated sector, thus reforms will require political will and strong regulatory push.
PETALING JAYA: As Malaysia and neighbouring nations strive to meet their decarbonisation goals, interconnecting the electricity grids can aid efficient resource sharing.
Policymakers face an “energy trilemma” of ensuring energy security, affordability and sustainability. The Asean Power Grid (APG), envisioned to connect the national grids of Asean members, can play a role in solving this “trilemma”, experts said.
The benefits of grid interconnection are manifold, said Ernst & Young Consulting Sdn Bhd Malaysia Climate Change and Sustainability Services leader Arina Kok.
She said South-East Asian countries are at varying levels of maturity in their energy transition journeys and can draw on one another’s strength.
For one, an interconnected power system reduces the need for excessive capacity reserves in individual countries, Kok told StarBiz. “The importance of reliable electricity supply cannot be overstated as it has a direct impact on the overall value chain of any economy.
“For instance, if one country experiences a shortage in power supply, the interconnected system allows surplus electricity from another to be swiftly redirected to address the deficit,” she added.
Deloitte Malaysia Governance, Regulatory and Sustainability Services leader Kasturi Nathan said Malaysia within itself has an abundance of renewable energy (RE) potential that can be leveraged on.
However, operating in Malaysia also means dealing with the environmental terrain, which is not the most conducive for various RE mixes.
“We do not have the environment to harness the power of wind turbines, for instance.
“Moreover, the RE sources that are viable in Malaysia, such as hydro and solar power, face land availability constraints.
“This would again require a sizeable initial capital outlay, which is restrictive, especially for cash-strapped smaller players,” said Kasturi.
In the region, she said Vietnam has made gains in the global solar power market.
Indonesia and the Philippines produce a quarter of geothermal energy resources while Laos stands out as a hub for regional hydropower generation.
The APG was mooted in the late 1990s and its progress has been relatively slow. Only seven of the 16 power interconnection projects have been completed so far, according to reports.
Economic disparities and differing policies are among reasons for this, despite its huge potential.
In comparison, the Nordic electricity grid (connecting Sweden, Norway and eastern Denmark), which was conceived around the same time, is now well-established.
Kasturi said energy is a strictly regulated sector, thus reforms will require political will and strong regulatory push.
“Such region-wide transmission of electricity generated through RE would not only maximise the use of RE but also help to meet the rising demand and improve energy access at a lower cost over the long run,” she added.
Citing a report by the International Energy Agency, Kasturi said it showed how the grid was able to transmit cheaper electricity generated from hydropower resources in Sarawak to Indonesia, and in the process, replacing fuel-oil based generators in Indonesia.
“However, tangible actions are needed to upgrade grids to accommodate the significant amount of energy with minimum interruptions.
“This could be challenging due to the varying contributions of member countries,” said Kasturi, adding that there should be strategies to strengthen the grid via investments to expand the infrastructure and capacity to accommodate renewable resource-rich locations.
One more recent development was Malaysia’s successful green energy transactions through the Laos-Thailand-Malaysia grid initiative.
“Leveraging Thailand’s network as a conduit, Malaysia has showcased the technical feasibility of transmitting green energy from Laos to meet its own energy needs.
“This serves as a testament to the viability of such effort and bolsters confidence in regional cooperation,” Kok said.
Currently, 80% of South-East Asia’s energy supply is of fossil-fuel origin while about 30% of global coal exports come from the region, Bain & Company said in a recent report.
The consulting firm said while renewables appear cheaper than fossil fuels, storage and integration costs of RE make operating existing coal plants more competitive in reality.
Apart from Malaysia, it said Indonesia, Brunei and the Philippines still subsidise some fossil fuel use.
According to the report, Singapore and Brunei do not have sufficient RE potential to meet 100% of the respective countries’ electricity demand.
“There is a mismatch of RE demand and supply. South-East Asia has the renewables potential to be self-sufficient; and regional collaboration can help connect supply with demand,” Bain & Company said.
Malaysia recently lifted the ban on RE exports and plans to develop an electricity exchange system to enable cross-border RE trading – a move that will allow the country’s power players to tap on regional RE demand, particularly Singapore, which entails attractive rates.
