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Malaysia: Establishment of Energy Exchange Platform for Cross-Border Electricity Sales and 100MW Pilot Project with Singapore

18 April 2024

In line with Malaysia’s National Energy Transition Roadmap, which identified the establishment of a renewable energy (‘RE’) exchange hub for cross-border RE trading as a key initiative1, the Ministry of Energy Transition and Water Transformation (‘PETRA’) announced on 15 April 2024 the launching of the Energy Exchange Malaysia (‘ENEGEM’).2 ENEGEM is a platform for cross-border sales of green electricity from Malaysia to its neighbouring countries, namely Singapore and Thailand.
 
WHAT IS ENEGEM AND HOW DOES IT WORK?
 
ENEGEM was developed to act as a marketplace for the sale of green electricity between Malaysia and neighbouring countries in the region. The Single Buyer will operate ENEGEM and conduct any sales through a bidding mechanism.3
 
It is intended for the roll-out of cross-border electricity sales to be conducted in phases, with the first phase having an offered capacity of up to 300MW using the existing interconnection between Malaysia and Singapore. All such sales shall be in accordance with the requirements of the latest Guide for Cross-Border Electricity Sales (‘CBES Guide’) issued by the Energy Commission.4
 
INAUGURAL AUCTION FOR 100MW PILOT PROJECT WITH SINGAPORE
 
In conjunction with the establishment of ENEGEM, PETRA has also announced an auction for an offered capacity of 100MW with respect to cross-border sales of green electricity from Malaysia to Singapore. Interested bidders may register their interest to participate in the said auction starting from 16 April 2024.
 
The key features of this auction are as follows: 
  1. Only renewable energy bidders that hold generation and/or retailer licences for the Singapore electricity market are eligible to participate. This means that foreign companies are not restricted from participating. 

  2. Interested bidders must complete and submit an Expression of Interest Form in order to participate in the auction. Upon such submission, the Single Buyer will provide eligible bidders with an Invitation to Bid containing details on the registration process, the bidding process, and other rules and requirements in relation to participation in the auction. 

  3. Bidders must register themselves for ENEGEM in order to participate in the auction. 

  4. Based on the CBES Guide, bidders may be required to furnish a commitment bond to the Single Buyer in order to participate. However, this will be dependent on the requirements of the Single Buyer as set out in the Invitation to Bid documents.

  5. Bidders must complete and submit a Default Declaration Form to the Single Buyer for purposes of due diligence by the Single Buyer. Under the Default Declaration Form, a bidder is required to provide the following details and documents: 
  • Corporate details such as name and type of entity, registration number, addresses and contact number;
  • Declaration of ultimate beneficial ownership;

  • Other declarations in relation to convictions, implementation of compliance policies and procedures, and any relationships that shareholders or directors of the bidders may have;

  • Declarations in relation to political, trade, financial and economic sanctions; and

  • Supporting corporate documents such as certificates of incorporation, constituent documents, allotment of shares, register of directors, and annual reports (as applicable). 
  1. In the event a bidder successfully qualifies for participation in the auction, they will be notified by the Single Buyer and invited to submit bids to purchase green electricity on the auction day. 

  2. Successful bidders shall then enter into a Renewable Energy Supply Agreement with the Single Buyer for the sale and purchase of green electricity. 
A NEW FUTURE FOR CROSS-BORDER ELECTRICITY SALES
 
PETRA has stated that the introduction of cross-border electricity sales will allow for strengthened cross-border electricity integration and cross-border energy trading between ASEAN countries. In addition, it will encourage the development of RE in Malaysia. This will ultimately support the country’s journey towards achieving a 70% RE installed capacity by year 2050.
 
When the cross-border electricity sales framework was first introduced in December 2020, the response was rather muted. A major factor for this was the previous restriction on the export of electricity generated from RE sources to Singapore.5 This made the import of electricity from Malaysia into Singapore difficult, as Singapore’s Energy Market Authority’s pilot project for such import which was being tendered at that particular time required generation using clean energy. The restriction therefore left participants with the sole option of gas as their energy source.
 
With the lifting of the restriction on exporting green electricity to Singapore, however, and the management of ENEGEM by the Single Buyer, cross-border electricity sales will likely be more viable now. It will be interesting to see if the response to the auction, and to this new framework in general, is a positive one.
 
For enquiries, please contact Richard Khoo (Partner) and Rachel Chiah (Senior Associate) of the Energy Practice of Skrine.
 
 
1 Our earlier Alerts on the National Energy Transition Roadmap are available here and here.
2 The media statement issued by PETRA in relation to ENEGEM is available here.
3 Further information and documents in relation to ENEGEM are available here on the Single Buyer’s website.
4 The latest Guide on Cross-Border Electricity Sales is available here on the Energy Commission’s website.
5 Our earlier Alert on the previous Cross-Border Electricity Sales framework is available here.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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