Electricity Reforms in Malaysia? (Part 2)

A market-driven approach with several players for generation and distribution is helpful for the consumer.  An independent third party is held responsible for transmission and renewal of grid lines.

To be fair, Malaysia intends to introduce its own TPA programme, called the Corporate Renewable Energy Supply Scheme (CRESS), is meant to start in September 2024, as part of a bigger plan to liberalise the energy sector. However, the access charges revealed earlier have got the industry riled up – they are more expensive than what they were hoping for.

The access charges are 45 sen/kWh for those pumping in non-firm renewable energy into the grid while it is 25 sen/kWh if the producer sorts out the intermittency via his own capital expenditure thus only selling firm output of energy through the grid.

The intermittency refers to solar power which is only generated during certain peak hours of the day.

It is yet to be determined if these rates are written in stone or that they are being reviewed by the government with industry feedback. Now, it is too high for healthy competition.

Looking at the 25 sen/kWh charge, where the grid owner doesn’t have to deal with any intermittency issues and is receiving energy in a similar way from what traditional power plants are producing, it is higher than what TNB has stipulated as its transmission and distribution costs. That figure stands at 12.44 sen/kWh.

This figure is cited in the breakdown of all the charges that go into how much electricity is charged in the country, which stands at 39.95 sen/kWh although that doesn’t include imbalance cost pass-through charges (see chart).

If the producer must pay 45 sen/kWh for access charges to the grid, then his end price to his customers will be around 65 sen/kWh, industry experts predict. This price will be more expensive than any green energy tariff in the country. Breakdown of cost structure would be helpful. And perhaps we will understand better if the renewal of grid and distribution network costs require further capex?

Can we get serious and implement a TPA that makes sense?

References:

Taking a leaf of electricity reforms from other countries, Doreenn Leong, The Star, 31 August 2024

Opening the national electricity grid, Risen Jayaseelan, The Star, 31 August 2024