Key Highlights: Malaysia’s National Energy Transition Roadmap (Part One)
01 August 2023
On 27 July 2023, Malaysia’s Minister of Economy launched the first part of the country’s National Energy Transition Roadmap (‘NETR 1
. The NETR 1 is underpinned by four principles, namely:
- aligning the energy sector with the country’s aspirations and commitments to sustainable development;
- ensuring the transition is just, inclusive and cost-effective;
- the need for effective governance and a whole-of-the-nation approach; and
- creating high-value employment for people and generating high-impact economic opportunities for small and medium enterprises (“SMEs”).
The NETR 1 identifies six energy transition levers to facilitate Malaysia’s transition to clean energy and outlines the Malaysian Government’s proposed catalyst projects under each lever. These projects take into account key considerations such as reduction of carbon emissions, the generation of investment and creation of job opportunities, cost effectiveness, and accessibility to clean energy sources.
THE SIX ENERGY TRANSITION LEVERS
|ENERGY TRANSITION LEVER
- Regulation of energy-intensive users, buildings and products under the proposed Energy Efficiency and Conservation Act.
- Energy audit exercise by railway operators to identify current consumption baseline and identify potential energy savings.
||Renewable Energy (‘RE’)
- Development by UEM Group Berhad and ITRAMAS Corporation of pilot RE zone comprising an industrial park, residential development and data centre, integrated with one gigawatt solar photovoltaic power plant (the largest solar photovoltaic power plant in Southeast Asia)2.
- Development by Tenaga Nasional Berhad (‘TNB’) (in partnership with SMEs, cooperatives and state economic development corporations) of large scale solar power parks across five sites in several states, with 100MW deployment per site.
- Development by TNB of 2,500MW hybrid hydro-floating solar projects at TNB’s hydro dam reservoirs.
- Construction by Sime Darby Property of 4.5MW solar capacity across 450 homes in City of Elmina and Bandar Bukit Raja, with up to 10kW solar capacity per house and offtake by commercial and industrial users within the township.
- Development of utility-scale energy storage systems.
- Initiative for securing long-term energy supply for state of Sabah through development of large-scale solar and small hydropower plants, formulation of biowaste policy and regulatory framework, and geothermal power generation.
- Implementation of three integrated projects for production of green hydrogen – one in Kuching by 2025 for domestic use, and two in Bintulu by 2027 for export purposes.
- Collaboration between Petroliam Nasional Berhad (PETRONAS) and TNB for co-firing of hydrogen and ammonia for decarbonisation of TNB generation plants.
- Development of potential biomass clusters with a centralised plant to secure larger and more reliable feedstock.
- Co-firing of biomass with coal at the 2,100MW Tanjung Bin Power Plant by Malakoff Corporation Berhad, with a view to scale up to a minimum of 15% biomass firing capacity by 2027.
- Installation of 10,000 electric vehicle charging stations by 2025 at highways and selected commercial buildings in collaboration with strategic partners such as TNB, Plus Malaysia Berhad, Permodalan Nasional Berhad, and Sunway Group,
- Introduction of mobile hydrogen refuelling stations in Peninsular Malaysia.
- Electrification of first and last mile public transport, including upgrading bus depot infrastructure for charging.
- Installation of solar photovoltaic systems for electricity usage in rail stations and depots.
- Development of a bio-refinery in Pengerang, Johor for the production of bio-based products including sustainable aviation fuel and hydrotreated vegetable oil.
||Carbon Capture, Utilisation & Storage (‘CCUS’)
- Development of policy and regulatory framework for CCUS projects.
- Implementation of catalyst projects for Kasawari and Lang Lebah high-carbon dioxide gas fields.
The NETR 1 identifies the agencies and bodies corporate that will spearhead the abovementioned catalyst projects which are expected to create investment opportunities ranging between RM435 billion to RM1.85 trillion by 2050.
OTHER ENERGY TRANSITION INITIATIVES
In addition, pursuant to the review of the existing RE policies by the Ministry of Economy in collaboration with the Ministry of Natural Resources, Environment and Climate Change, the Malaysian Government intends to:
- increase the target for installed RE capacity from 40% in 2035 to 70% by 2050;
- diversify existing RE programmes;
- allocate RM80 million3 to scale up installation of solar system in government buildings;
- establish an electricity exchange system to encourage cross-border trade of RE.
- Introduce smart grid features; and
- enable third party access to the grid.
Information on how the projects and initiatives under the NETR 1 will be rolled-out are presently not available. However, these will likely be dependent on the details of the second phase of the National Energy Transition Roadmap (‘NETR 2
WHAT WILL PART TWO OF MALAYSIA’S NATIONAL ENERGY TRANSITION ROADMAP ADDRESS?
The NETR 2 will focus on realising Malaysia’s goal to be a net-zero nation by 2050 and will consider the establishment of a low-carbon pathway, the national energy mix and emissions reduction targets. It will also outline the action plans and initiatives required to enable the energy transition, including legislative reforms and incentive fundings4
. It is anticipated that the NETR 2 will be released in late August 2023.
A BRIGHT FUTURE FOR MALAYSIA’S ENERGY TRANSITION
With a range of catalyst projects and identified focus areas, the NETR 1 is reflective of the Malaysian Government’s commitment to effecting an energy transition which addresses the energy trilemma: security, equity, and sustainability. It also recognises that the involvement of the private sector and members of the public is pivotal in such a transition, as evidenced by the fact that a number of the catalyst projects will be driven by these parties. The NETR 2 will likely provide further insights into how the implementation of the National Energy Transition Roadmap will be carried out and encouraged, as well as the envisaged impact of the same.
Alert by Richard Khoo (Partner) and Rachel Chiah (Senior Associate) of the Energy Practice of Skrine.
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 firstname.lastname@example.org.
The NETR 1 can be viewed here
UEM Group Berhad and ITRAMAS Corporation will also be collaborating with I Squared Capital’s wholly owned renewable energy platform, HEXA Renewables Malaysia and Blueleaf Energy, a portfolio company of Macquarie Asset Management’s Green Investment Group in relation to the development. News coverage on the foregoing can be viewed here