TOO RELIANT?

Malaysia relied on fossil fuels for 81% of its electricity in 2022. Its per capita power sector emissions are below the global average. Malaysia’s increasing power demand is instead being met by rising coal generation, which has doubled in the last two decades, overlooking its vast solar power potential.The BMI report said Malaysia’s power generation will remain heavily dependent on fossil fuels until 2033, with over 75% of the energy mix coming from conventional thermal power, despite a gradual decline in coal-fired generation. The country will continue to rely on fossil fuels to meet rising electricity demand, a strategy reinforced by the National Energy Transition Roadmap (NETR) launched in August 2023.

POWER DEMAND

Malaysia’s electricity consumption is expected to rise by over 20% in the next decade, driven by economic growth and the expansion of energy-intensive industries. According to a commentary published by BMI, a Fitch Solutions company, the domestic industrial and commercial sectors dominate electricity use. With continued investment in sectors like solar equipment manufacturing and data centres, electricity consumption is projected to grow at an average annual rate of 1.9%, increasing from 187TWh in 2024 to approximately 220TWh by 2033, BMI noted.

INCREASING IN ENERGY PAYMENT

Tenaga Nasional Bhd (KL:TENAGA), which operates the power grid in Peninsular Malaysia, announced on Dec 26 a proposed adjustment of the base electricity tariff to 45.62 sen/kWh in the fourth regulatory period (RP4, from 2025 to 2027) from 39.95 sen/kWh in RP3 (from 2022 to 2024). The utility giant pointed to higher fuel costs assumption-coal and gas as the main reason for the increment. Indeed, the proposed 14.2% rise is not the steepest. In 2009, the base tariff went up 24% to 32.5 sen/ kWh from 26.2 sen

Total Energy Consumption from 1984 to 2018. Source: Malaysia Energy Commission. Malaysia Energy Statistics Handbook

Energy Consumption by sector in 2018. Source: Malaysia Energy Commission. Malaysia Energy Statistics Handbook

CATASTROPHIC OR NOT?

Electricity power consumption has impact on climate change in Malaysia depending on the type of sources used. The average rain and temperature, carbon dioxide emission and arable land have long run relationship between electricity power consumption .Moreover, carbon emission will influence average temperature and rain fall. Yet, long run result indicate that electricity power consumption will increase average temperature and average rain fall in Malaysia. Conversely, increase in electricity power consumption will reduce arable land area and increase in forest area.

FDI inflows as a percentage of GDP. Source: World Bank Development Indicator

Total CO2 emissions (Mt) from 1984 to 2018. Source: Countryeconomy

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