LETTER | Govt should liberalise energy market

LETTER | The government’s recent lift of the export ban on renewable energy is a very much applauded move, considering the country is in dire need of moving its dependency from fossil fuel to renewable energy (RE).

This aligns with the country’s effort to develop its clean energy industry and boost generation from non-fossil fuel sources.

Malaysia has set to roll out the Energy Transition Roadmap to achieve RE capacity of 70 percent by 2050. Alongside that, Malaysia also developed a rather ambitious yet optimistic goal to achieve net-zero carbon emissions in the same year.

A study by the International Renewable Energy Agency (Irena) in collaboration with the Natural Resources, Environment and Climate Change Ministry, shows that Malaysia can increase the share of RE to over half of its final energy mix by 2050, by aligning its low development strategies with Irena’s 1.5C Scenario.

The 1.5C Scenario is a pathway that posits electrification and efficiency as key drivers of the energy transition, championed by renewables, hydrogen, and sustainable biomass.

Malaysia, which acquires the potential to explore each of the sources, should work hand-in-hand with Irena to further develop these clean energy sources.

However, the country still needs to work on developing its RE industry. There needs to be more investments to accelerate the energy transition.

The Economy Ministry estimates that to roll out the Energy Transition Roadmap, the sector would require an investment of RM637 billion.

This whooping amount is needed to finance renewable energy generation sources and strengthen grid infrastructure, including transmission lines enhancement, energy storage system integration, and operation costs of grid system networks.

Electricity market

Malaysia should consider further reforming its electricity market by liberalising it.

Malaysia has already undergone two reforms, Mesi 1.0 and Mesi 2.0, in which the latter is still under review. Mesi 2.0 entails a move towards a more liberalised market, but to this day, we have yet to see concrete action.

By liberalising its traditionally monopolistic electricity market, it can enhance energy efficiency while promoting the use of RE resources.

Liberating the electricity market will reduce the monopolistic power of state-owned utilities while attracting more RE actors into the industry.

It will also allow access to various types of actors to the grid instead of being provided to only a few large private firms.

Furthermore, it also can transform a vertically integrated structure towards a more competitive value chain.

Apart from that, it will also influence consumers’ behaviour, making consumers aware of their choices and can opt for greener sources for their electricity.

Ipmuda Bhd chairperson Beroz Mirdin stated that liberalisation would give greater freedom to power producers and higher accessibility to the national grid.

He added that liberalisation would allow more energy independence, facilitating Malaysia’s shift towards self-generation without government intervention.

However, liberalising the electricity market alone will not do the trick. This is because liberalised electricity markets may not encourage low-carbon technologies due to uncertain environmental policies and market distortions, especially in the short term.

Government intervention is still needed to implement a fair policy and promote RE development.

Malaysia is actively promoting RE to businesses, the government, and households, as the country has announced various RE schemes such as large-scale solar, the feed-in tariff, and the net energy metering.

Appropriate policies and mechanisms are crucial to reform Malaysia’s electricity industry. In my opinion, liberalising the electric industry should be paralleled with the advancement of RE.

This is to ensure that Malaysia will have the appropriate infrastructure and regulations in place to accommodate electricity generation from RE.

Malaysia should take lessons from countries such as the UK, Nordic countries, and Singapore in reforming the sector to ensure the country can increase its energy efficiency and further facilitate the transition towards clean energy.

The writer is a research and advocacy officer with the Institute for Research and Development of Policy (IRDP), a think tank focused on strategic policy recommendations, governance and social inclusion.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.