PETALING JAYA: The Malaysia Energy Supply Industry (MESI) 2.0 initiative is still being formulated, with early details expected to be disclosed in early 2019.
As such, there is limited disclosure on the electricity industry reforms at present.
According to a Maybank IB Research report on the Malaysia: A New Dawn conference, which featured a session with Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin, the broad agenda of MESI 2.0 is to accomplish three objectives, namely, encourage competition along the value chain, increase capacity for renewables as well as incentivise energy efficiency among consumers.
“The ministry is targeting to grow renewables’ proportion of generation mix from the current 2% to 20% by 2025 to 2030. This is with the caveat that there will be significant improvements in storage technology that will enhance generation cost competitiveness.
“Renewables will lower the overall vulnerability to fluctuating fossil fuel prices, allowing for more stable tariffs,” said Maybank IB Research.
Yeo had opined that it is not the ministry’s intention for renewable energy to be heavily subsidised, as such artificial growth is not sustainable.
Hence, the immediate near-term focus is to explore large-scale renewable projects that are viable under similar levelised tariffs as fossil fuel-based plants.
In the event that the improvement in storage technology does not happen as envisaged, the renewable mix target will then be reviewed.
Apart from that, the application for research grants from the government will need to be substantiated with proof of industry collaboration going forward.
“The minister is of the view that research undertaken has to be relevant so that it can generate value-add for the economy.
“Separately, scientific equipment owned by the government will be made available for leasing by interested parties in order to generate more bang-for-buck,” said Maybank IB Research.
Going forward, the ministry remains committed to a 35% reduction in carbon intensity (carbon dioxide emission as a ratio to gross domestic product) by 2030, from 2005 levels.
This is as stipulated by the Paris Agreement, with a further 10% reduction if international technology transfer occurs.
Yeo is presently building capability in the ministry for the sourcing of international green funding.
“On execution, the ministry will adopt a strategy of enforcement, engagement, and education.
“The reduction of plastic usage is an area of focus for Yeo, with possible disincentives relating to single-use plastic to be announced in the near future,” said Maybank IB Research.