ENERGY EFFICIENCY IN MALAYSIA

ByDatuk Ir. Ahmad Fauzi HasanEnergy Commission, Malaysia

12 March 2014

Energy Efficiency In Malaysia’s Key Energy Policies

• To ensure adequacy, security and cost-effectiveness of energy supply

• To promote efficient utilization of energy

• To minimize negative environmental impacts in the energy supply chain

Five-Fuel Diversification Strategy 2001

Four-Fuel Diversification Strategy 1981

National Depletion Policy 1980

National Energy Policy 1979

National Petroleum Policy 1975

PetroleumDevelopment

Act 1974

• Vested on PETRONAS the exclusive rights to explore, develop and produce petroleum resources of Malaysia

• To regulate downstream oil & gas industry via the Petroleum Regulations 1974

• To prolong lifespan of Malaysia’s oil reserves for future security & stability of oil supply

• To pursue balanced utilization of oil, gas, hydro and coal

• Renewable Energy included as the “fifth fuel” in energy supply mix

Energy Supply and Demand

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Primary Energy Supply (ktoe) 21,471 26,335 29,291 29,925 31,662 33,879 37,840 43,173 40,996 44,534 50,710 51,979 53,196 57,565 62,836 66,211 67,021 72,389 76,032 74,583 76,809 79,289

Final Energy Demand (ktoe) 13,146 14,563 16,185 17,728 19,287 22,164 24,181 26,167 25,558 27,228 29,699 31,515 33,289 34,586 37,323 38,285 38,567 41,606 41,968 40,845 41,476 43,455

GDP at 2005 Prices (RM million)* 217,047 237,766 258,891 284,509 310,718 341,258 375,393 402,882 373,231 396,140 431,234 433,466 456,834 483,278 516,061 543,578 573,936 610,087 639,565 629,885 676,653 711,351

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ktoeRM Million (at 2005 prices)

Note: i) Primary Energy Supply does not include Renewable Energy (RE) except HydropowerSource: i) Department of Statistics Malaysia

ii) National Energy Balance 2011

Energy Efficiency Initiatives In Malaysia

• Energy efficiency promotion in the Seventh Malaysia Plan (1996-2000)

• Malaysian Industrial Efficiency Improvement Programme (MIEEP) (1999)

• Fiscal incentives for EE (2001)

• Development of Malaysian Standard MS 1525 (2001)

• Capacity building on EE and DSM for key institutions (2002)

• Energy audit on government buildings (2002)

• EE and RE in education curriculum and university courses (2002)

• Energy efficient building demonstration projects (2004)

• Development of EE guidelines for Malaysian industries (2006)

• Efficient Management Of Electrical Energy Regulations (2008)

• Green Building Index (GBI) (2009)

• EE rating and labelling (2009)

• Green Technology Financing Scheme (2010)

• EE equipment rebate scheme (2011)

• Minimum energy performance standards (MEPS) regulations (2013)

• Incentive-based tariff regulation (2014)

• 5% energy reduction target for government buildings (2014)

Malaysia’s Final Energy Intensity

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Final Energy Intensity (toe/ RM Million at 2005 Prices)* 60.5761.2562.5262.3162.0764.9564.4264.9568.4868.7368.8772.7072.8771.5772.3270.4367.2068.2065.6264.8561.3061.09

Industrial Energy Intensity (toe/ RM Million at 2005 Prices)**49.4352.3756.2259.6858.1057.9259.0758.9163.6057.9158.4362.4564.9062.1562.7462.8061.9564.6863.2363.8957.2461.08

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toe/RM Million (at 2005 prices)

Note: Intensity = Quantity of energy required per unit output or activity

(*): Final Energy Demand / GDP at 2005 prices(**): Industrial Energy Demand / Industrial GDP at 2005 prices

Source: i) Department of Statistics Malaysiaii) National Energy Balance 2011

Malaysia’s Electricity Intensity

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Electricity Intensity (toe/GDP at 2005 Prices (RM Million))* 7.9 8.1 8.6 8.6 9.4 9.9 10.1 10.9 12.3 12.2 12.2 12.9 13.0 13.1 12.9 12.8 12.7 12.6 12.5 13.2 13.3 13.0

Electricity Intensity (GWh/ GDP at 2005 Prices (RM Million))** 0.0920.0940.1000.1000.1100.1150.1170.1260.1430.1410.1420.1500.1510.1520.1500.1480.1470.1460.1450.1530.1550.151

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toe / RM Million(at 2005 prices)

GWh / RM Million (at 2005 prices)

Note: Intensity = Quantity of energy required per unit output or activity(*): Electricity Intensity (toe/RM Million GDP at 2005 prices(**): Electricity Intensity (GWh/RM Million GDP) at 2005 prices

Sources: i) Department of Statistics Malaysiaii) TNB, SESB, SEB and IPPsiii) National Energy Balance 2011

Heavily subsidised gas price does not make EE attractive

8Diesel data available from 2005 onward – source: Department of Statistics

Gradual move towards market pricing of gas and electricity

Peninsular Malaysia’s electricity tariff over the years

Electricity Tariff Comparison

10

Implementing new generation capacity bidding Implementing new generation capacity bidding mechanismmechanism

Promoting co-generationPromoting co-generation

Gradual phasing-out of fuel subsidies with selective Gradual phasing-out of fuel subsidies with selective subsidizationsubsidization

Implementing incentive-based electricity tariff regulationImplementing incentive-based electricity tariff regulation

Minimizing technical and non-technical losses in the Minimizing technical and non-technical losses in the supply chain supply chain

Enhancing governance in grid system operations Enhancing governance in grid system operations through ring-fencing mechanismthrough ring-fencing mechanism

To continue enhancing supply-side EE initiativesTo continue enhancing supply-side EE initiatives

Introduction of a National EE Action PlanIntroduction of a National EE Action Plan

Strenthening of EE institutional frameworkStrenthening of EE institutional framework

Strenghtening and updating of EE legislative frameworkStrenghtening and updating of EE legislative framework

Enhancement and streamlining of EE initiativesEnhancement and streamlining of EE initiatives

Implementation of EE improvement programmes and activitiesImplementation of EE improvement programmes and activities

Savings target and target groupsSavings target and target groups

Priority areasPriority areas

• Capacity building in energy managementCapacity building in energy management

• Technology applicationsTechnology applications

• Technical supportTechnical support

• Funding mechanismFunding mechanism

• Promotion and information disseminationPromotion and information dissemination

To strengthen demand-side EE implementation frameworkTo strengthen demand-side EE implementation framework

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Need For Benchmarking And Progress Monitoring

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