The energy policy of Malaysia is determined by the Malaysian Government, which address issues of energy production, distribution, and consumption. The Department of Electricity and Gas Supply acts as the regulator while other players in the energy sector include energy supply and service companies, research and development institutions and consumers. Government-linked companies Petronas and Tenaga Nasional Berhad are major players in Malaysia's energy sector, with natural gas playing an outsized role in energy planning. Governmental agencies that contribute to the policy are the Ministry of Energy, Green Technology and Water, Energy Commission (Suruhanjaya Tenaga), and the Malaysia Energy Centre (Pusat Tenaga Malaysia). Among the documents that the policy is based on are the 1974 Petroleum Development Act, 1975 National Petroleum Policy, 1980 National Depletion Policy, 1990 Electricity Supply Act, 1993 Gas Supply Acts, 1994 Electricity Regulations, 1997 Gas Supply Regulation and the 2001 Energy Commission Act.
Policy overview
Energy policy is the responsibility of the Office of the Prime Minister, specifically the Economic Planning Unit and the Implementation and Coordination Unit. The Ministry of Energy, Green Technology and Water has identified three principal energy objectives that would be instrumental in guiding the development of its energy sector.
Supply To ensure the provision of adequate, secure and cost-effective energy supplies through developing indigenous energy resources both non-renewable and renewable energy resources using the latest cost options and diversification of supply sources both from within and outside the country. In pursuit of the supply objective, policy initiatives, particularly with respect to crude oil and natural gas, Malaysia have aimed at both extending the life of domestic non-renewable energy resources, as well as diversification away from oil dependence to include other forms of energy sources. Oil production peaked in 2016, with large and shallow oil fields having matured. Malaysia has cooperated with OPEC to reduce production in times of global slumps.
Utilisation To promote the efficient utilisation of energy and discourage wasteful and non-productive patterns of energy consumption. The policy's approach to realise this objective is to rely heavily on the energy industry and consumers to exercise efficiency in energy production, transportation, energy conversion, utilisation and consumption through the implementation of awareness programs. Demand side management initiatives by the utilities, particularly through tariff incentives, have had some impact on efficient utilisation and consumption. Government initiatives to encourage cogeneration are also aimed at promoting an efficient method for generating heat energy and electricity from a single energy source.
Environmental To minimise the negative impacts of energy production, transportation, conversion, utilisation and consumption on the environment. The environment objective has seen limited policy initiatives in the past. All major energy development projects are subjected to the mandatory environmental impact assessment requirement. Environmental consequences, such as emissions, discharges and noise are subjected to the environmental quality standards like air quality and emission standards.
Energy subsidies
Renewable energy policy
The Malaysian government is seeking to intensify the development of renewable energy, particularly biomass, as the 'fifth fuel' resource under the country's Fuel Diversification Policy. The policy, which was set out in 2001, had a target of renewable energy providing 5% of electricity generation by 2005, equal to between 500 and 600 megawatt (MW) of installed capacity. The policy has been reinforced by fiscal incentives, such as investment tax allowances and the Small Renewable Energy Programme (SREP), which encourages the connection of small renewable power generation plants to the national grid. In 2018, Malaysia set a 20% target of renewable energy in the country's energy mix by 2025, an 18% increase from the 2% Malaysia had in 2018. In order to reach the target, the country needs to attract a total of USD 8 billion of investment in renewable energy during this period; for attracting investment the government could improve its renewable energy governance and the investment climate for foreign investors. The Small Renewable Energy Program allows renewable projects with up to 10 MW of capacity to sell their electricity output to TNB, under 21-year licence agreements. Numerous applications for the program have been received, mainly involving biomass, and of these over half are for palm oil waste. In 2005 there were 28 approved biomass projects involving the installation of 194 MW of grid-connected capacity. There were also four approved landfill gas-based projects, with 9 MW of capacity, and 18 mini hydro-electric projects offering 69.9 MW of total capacity. In 2013, the Malaysian government announced investment tax allowance of 100 percentage on qualifying capital expenditures. Though QCE calculation was said to be considered for a maximum period of five years. This measure was taken in order to encourage investment in renewable energy sector. In 2016, the Sustainable Energy Development Authority (SEDA) of Malaysia has conducted a comprehensive onshore wind mapping effort. SEDA Malaysia is a statutory body formed under the Sustainable Energy Development Authority Act of 2011. One of the key roles of the SEDA is to administer and manage the implementation of the Feed-in Tariff (FiT) mechanism, including a Renewable Energy fund mandated under the Renewable Energy Act of 2011. The Renewable Energy fund was created to support the FiT scheme. The current onshore wind mapping exercise will determine whether wind energy should be included in the FiT regime. As of 2021, Malaysia is one of the major producers of solar panels in the world, but paradoxically it has yet to fully capitalize on this for domestic electricity generation.
… excerpt ends here. Continue reading the full article.




