SESB’s Perspective on “Challengers and Prospects in Enhancing Energy Security” Presenter : Ir. Abdul Nasser Abdul Wahid Senior General Manager (Asset Development)

28 February 2012

1 Presentation Contents

• SUPPLY AND DEMAND GROWTH • CAPITAL INVESTMENT & OPERATING SUBSIDY • WAY FORWARD – FUTURE DEVELOPMENT – RENEWABLE ENERGY DEVELOPMENT – DEMAND SIDE MANAGEMENT – ENERGY EFFICIENCY • CONCLUSION 2 SUPPLY & DEMAND GROWTH

3 ELECTRICITY SUPPLY SYSTEM 1984

KUDAT • LLS BECOME A FEDERAL AGENCY UNDER THE 6MW MINISTRY OF ENERGY, TELECOMMUNICATION AND POST • ISOLATED SMALL SYSTEM 2MW MD 2.5MW • MOSTLY DIESEL GEN SET WITH ONE HYDRO MD 1.5MW • GRID SYSTEM COVERING WEST COAST ONLY • <50% ELECTRICITY COVERAGE KOTA BELUD

TG.ARU 95MW 42 MW

MD 23.6MW SANDAKAN

PAPAR MD 69.3MW 4 MW BEAUFORT MD 2.8MW KENINGAU 7 MW WP LABUAN MD 3.5MW LAHAD DATU •ESTIMATED OVERALLTENOM MAXIMUM DEMAND : 134MW LABUAN •NO. OFPANGI CUSTOMERS : 109,716 28MW

MD 12.3MW PANGI HIDRO 2 MW 66 MW SEMPORNA 41 MW MD 1.5MW LEGEND MD 16MW TAWAU SESB INSTALLED CAPACITY 44 MAXIMUM DEMAND ELECTRICITY SUPPLY SYSTEM SABAH 1998

KUDAT • LLS WAS PRIVATIZED ON 1ST SEPTEMBER 1998 KUDAT ARL 13.9MW AND CALLED SABAH ELECTRICITY SDN. BHD. KOTA BELUD 50 MW MD 5.1MW • THE WEST COAST GRID SYSTEM GREW 8.9MW POWERTRON • GENERATION MIX CONSIST OF HYDRO 17%, GAS 136 MW MD 5.26MW K.BELUD 31% & OIL 52% SAYAP ST GANTISAN 1 MW • INTRODUCTION OF IPP WITH 1 PLANT 38 MW COMMISSIONED ON 31ST OCTOBER 1995 MELANGKAP MELAWA KOTA KINABALU 1 MW 44 MW SANDAKAN TG.ARU KIAU 41 MW 0.4MW 27 MW MD 244.9MW SANDAKAN MD 45.5MW PAPAR CARABAU 2 MW LIBARAN

BEAUFORT 64.4 MW •ESTIMATED OVERALLKENINGAU MAXIMUM DEMAND : 373MW

WP LABUAN•NO. OF CUSTOMERS : 262,696

LAHAD DATU LAHAD DATU TENOM 20.35MW PATAU-PATAU PANGI BOMBALAI (112 MW) TENOM PANGI HYDRO MEROTAI 1 MW MD 13.73MW 66 MW 1.3 MW

SEMPORNA LEGEND SEMPORNA TAWAU TAWAU 4 MW IPP INSTALLED CAPACITY 50 MW SESB INSTALLED CAPACITY MD 3 MW 5 MD 39.7MW SERUDONG 5 MAXIMUM DEMAND 37.5 MW ELECTRICITY SUPPLY SYSTEM SABAH ( As of Dec 2011)

SUTERA ESAJADI SG.PANGAPUYAN SEGUNTUR BIOENERGY • WEST & EAST COASTS INTER-CONNECTED KUDAT 38 MW 4.8 MW & KINA BIOPOWER 23 IN 2007 ARLT MW • GENERATION MIX CONSIST OF HYDRO 9%, 50 MW ESAJADI SG.KADAMAIAN SPC GAS 67%, BIOMASS 3% & OIL 21% TELUK SALUT 2.1 MW 34 MW • ELECTRIFICATION COVERAGE OF 81.5% 212 MW KOTA BELUD LIBARAN SBPC 64.4 MW 112 MW LABUK, SANDAKAN GANTISAN, SANDAKAN 9.4 MW 38 MW RUGADING 205 MW KOTA KINABALU BATU SAPI, SANDAKAN SIM-SIM RENTAL SETS MELA WA SEGALIUD 45 MW 20 MW 44 MW PAPAR KK RENTAL SANDAKAN LAHAD DATU SETS 21.7MW 21.5 MW K. •SYSTEMBEAUFORT MAXIMUM DEMAND ACHIEVED : 830MW LAHAD DATU POIC WP LABUAN •NO. OF CUSTOMERSKENINGAU : 464,053 RENTAL SETS 20 MW •SAIDI CY: SECTOR 1 (307.66) ; SECTOR 2 DAM(632 RD.28); SECTOR 3 (990.80) •SABAH SAIDITENOM YTD :494.57 L. DATU PATAU-PATAU PANGI SEMPORNA 112 MW 6 MW TENOM PANGI TSH BIOENERGY 66 MW 14 MW KALUMPANG SEMPORNA TAWAU 64 MW LEGEND TAWAU PASIR PUTIH SERUDONG IPP INSTALLED CAPACITY TAWAU RENTAL SETS 37.5 MW 21.2 MW SESB INSTALLED CAPACITY 66 MANUFACTURING: Sabah will leverage its natural resources as feedstock to capture value in downstream activities Wood-Based Industry Industrial Corridor Cluster

POIC Sandakan Business Link Centres Sabah Oil and Gas Terminal

Minerals Based Industry

Sipitang Energy Intensive POIC Lahad Datu Cluster

Incentives 7 Load Forecast 2012-2030 Load Forecast (MW)

2500

2000

~ 2500 MW! 1500 ~ 900 MW

1000 Load Forecast (MW)

500 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Load Forecast 918 1,001 1,074 1,152 1,223 1,312 1,387 1,476 1,546 1,634 1,714 1,808 1,887 1,978 2,059 2,162 2,257 2,369 2,474 (MW) 8 CAPITAL INVESTMENT & OPERATING SUBSIDY

9 Capital Investment (CAPEX)

• Over the last 15 years a total KUDATof RM 5.3 Billion had been invested by the Government and Private Investor in the development of Generation, Transmission, Distribution Projects And IPP/SREP projects.

Capex Funding •IN 2010 a special budget allocation of RM 419.5 Mill KOTA BELUD for the ‘SAIDI 700’ was approved by the Government. Subsequently RM200Mill in 2011 under ‘SAIDI 477’ and 150 RM88Mill in 2012 for ‘SAIDI 367’. KOTA KINABALU SANDAKAN

PAPAR 729 328 BEAUFORT SESB SAIDI CY2006 - 2011 KENINGAU357 5,000.00 WP LABUAN 703 27 4,030.00 4,000.00 TENOM LAHAD DATU 2,867.23 PANGI725 3,000.00 1,986.58 1,855.80 1103 2,000.00 867 1,000.00 687.38 494.64 290 SEMPORNA 48 - 2006 2007 2008 2009 2010 2011 TAWAU SAIDI 10 Cost of Production (OPEX)

KUDAT

KOTA BELUD

KOTA KINABALU SANDAKAN

PAPAR

BEAUFORT KENINGAU WP LABUAN

New tariff TENOM LAHAD DATU eff. 15 PANGI July 2011

29.08

SEMPORNA

TAWAU 1111 Operating Subsidy

KUDAT

• Since Privatization, SESB had been operating at a lost due to the high IPP and Fuel Payment KOTA BELUD • To ease SESB financial burden, the Government had subsidized the fuel oil consumed, whereby SESB will be reimbursed for fuel payment on Medium Fuel KOTA KINABALU Oil (MFO) and Diesel Fuel Oil (DFO) above the pricesSANDAKANof RM 0.42/liter and RM 0.495/liter respectively used by both IPP and SESB. PAPAR

BEAUFORT• Under the fuel pass through mechanism for IPP running on MFO, the IPP are required to pay forKENINGAUthe used of MFO at market priced, SESB will pay the IPP WP LABUAN based on the weighted average cost of fuel (RM/GJ) delivered to the IPP, SESB will then be reimbursedTENOM to cost of fuel base on the LAHADfuel supportDATU subsidy PANGI mechanism.

SEMPORNA

TAWAU 1212 SESB COST OF SUPPLY BY COST COMPONENT FY2010

80.000 75.54 sen/kWh 1.859 70.000 10.685 Petronas Foregone Gas Revenue 30.92 sen/kWh 60.000

50.000 26.720 44.62 sen/kWh 1.859 40.000 Fuel Oil (diesel & MFO) subsidy 10.685 12.93 sen/kWh

31.69 sen/kWh sen / kWh / sen 30.000 1.859 20.365 10.685 20.365 20.000

4.210 - 14.221 10.000 11.707 11.707 - 4.922 - Oil & Gas at Market Price Oil only at Market Price After Fuel subsidy

Fuel Cost (SESB) Petronas Foregone Gas Revenue (SESB) Payment IPP Petronas Foregone Gas Revenue (IPP) O&M (non fuel) Finance Cost Actual Financial Status 2004 - 2011

•TOTAL FUEL SUBSIDY BY GOVERNMENT SINCE 2005 IS AT RM 3,211 MILL

48 499 431 521 548 446 535 366

436 326 426 296 469 418 499 273 406 341 304 246 390 338

277 RM MILLION RM 186

977 774 1116 815 1108 880 662 706 529 724 585 828 635 867 747 466

Total Operating Income Payment to IPP Fuel Support Subsidy Fuel Cost (SESB) Tariff Support Subsidy O & M 14 FINANCIAL PROJECTIONS WITH TARIFF INCREASE NEVERTHELESS GOV SUBSIDY STILL REQUIRED (FUEL SUBSIDY AND TSS) SUMMARY INCOME STATEMENT FINANCIAL YEAR 2012 2013 2014 2015 2016 2017 2018 2019 2020 RM Million REVENUE Sale of Electricity 1,383 1,492 1,796 1,923 2,053 2,405 2,554 2,706 3,146 Transfer from consumer contribution 46 43 41 39 38 34 30 26 23 Goods and Services 33 33 30 27 29 29 29 30 29 Total Revenue 1,462 1,569 1,866 1,990 2,120 2,469 2,613 2,762 3,197

OPERATING COST Fuel Cost (SESB) 743 1,033 863 45 9 14 11 16 22 Payment to IPP 860 885 997 2,019 2,149 2,144 2,356 2,380 2,352 O & M 458 504 547 594 673 669 734 803 836 Total Operating Costs 2,061 2,422 2,406 2,659 2,832 2,827 3,101 3,199 3,210

Operating Profit/(Loss) (598) (853) (540) (669) (711) (359) (488) (437) (13)

Fuel subsidy (diesel & MFO) 641 870 729 33 - - - - - Tariff Support Subsidy 111 160 15 860 972 658 820 808 403 Transfer from Govt development grant 43 40 38 35 33 32 30 29 27 Other Operating Income 16 17 17 17 17 17 17 18 18

Interest on Loan (70) (91) (118) (127) (161) (187) (229) (263) (297)

Net Profit/(Loss) before tax 143 143 141 150 150 161 151 155 139

RORB 5% 5% 5% 5% 5% 5% 5% 5% 5%

LNG at market price FINANCIAL PROJECTIONS WITH TARIFF INCREASE NEVERTHELESS GOV SUBSIDY STILL REQUIRED (FUEL SUBSIDY AND TSS) SUMMARY INCOME STATEMENT FINANCIAL YEAR 2012 2013 2014 2015 2016 2017 2018 2019 2020 RM Million REVENUE Sale of Electricity 1,383 1,492 1,796 1,923 2,053 2,405 2,554 2,706 3,146 Transfer from consumer contribution 46 43 41 39 38 34 30 26 23 Goods and Services 33 33 30 27 29 29 29 30 29 Total Revenue 1,462 1,569 1,866 1,990 2,120 2,469 2,613 2,762 3,197

OPERATING COST Fuel Cost (SESB) 743 1,033 863 45 9 14 11 16 22 Payment to IPP 860 885 997 1,308 1,441 1,431 1,648 1,668 1,643 O & M 458 504 547 594 673 669 734 803 836 Total Operating Costs 2,061 2,422 2,406 1,947 2,123 2,115 2,393 2,486 2,501

Operating Profit/(Loss) (598) (853) (540) 43 (2) 354 220 276 696

Fuel subsidy (diesel & MFO) 641 870 729 33 - - - - - Tariff Support Subsidy 111 160 15 148 262 - 111 94 - Transfer from Govt development grant 43 40 38 35 33 32 30 29 27 Other Operating Income 16 17 17 17 17 17 17 18 18

Interest on Loan (70) (91) (118) (126) (160) (184) (224) (258) (285)

Net Profit/(Loss) before tax 143 143 141 150 151 219 154 158 456

RORB 5% 5% 5% 5% 5% 5% 5% 5% 5% Assumption: 1 20% Capex funded by Government Soft loan 2 Gas at subsidized price (RM/mmBTU) 6.40 3 LNG Price (2015 to 2020) (RM/mmBTU) 6.40 LNG subsidized at RM6.40 per mmBTU 4 Tariff Increase in 2014 12%, 2017 10% and 2020 10% 5 LNG plant using KPSB tariff GOVERNMENT SUBSIDIES & FOREGONE REVENUE FOR GAS – LNG at market price

Assumption: 1 20% Capex funded by Government Soft loan 2 Gas at subsidized price (RM/mmBTU) 6.40 3 LNG Price (2015 to 2020) (RM/mmBTU) 47.47 4 Tariff Increase in 2014 12%, 2017 10% and 2020 10% 5 LNG plant using KPSB tariff GOVERNMENT SUBSIDIES & FOREGONE REVENUE FOR GAS – LNG at RM6.40/mmBTU

2,500

2,000 2,106 2,253 1,968 2,118 2,249 1,309 2,385 1,500 1,524

1,202 RM RM Million 1,000 160

111 15

500 860 972 870 820 808 641 729 658 403

- 33 - - - - - 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fuel subsidy (diesel & MFO) Tariff Support Subsidy Petronas Foregone Revenue For Gas & LNG Assumption: 1 20% Capex funded by Government Soft loan 2 Gas at subsidized price (RM/mmBTU) 6.40 3 LNG Price (2015 to 2020) (RM/mmBTU) 6.40 4 Tariff Increase in 2014 12%, 2017 10% and 2020 10% 5 LNG plant using KPSB tariff Issues and Challenges in Meeting the Electricity Demand

1919 OTHER OPERATIONAL ISSUES & CHALLENGES

• 2nd tiered (CRF) IPP with financial problem & deteriorating performance • Too much dependency on natural gas (pipeline supplied) – DSM & Load Sheeding if gas curtailment happened – gas estimated to dominate 74% of Sabah Generation Mix in FY2015 • Prohibition in implementing 5 fuel-policy & Limited Future Generation Resources – Rejection of Coal Fired Power Plant in Sabah – Limited gas allocation to Energy Sector – Limited hydro resources • Escalation of fossil fuel generation cost – Retraction of fuel subsidy – high IPP tariff – high alternative fuel cost i.e LNG • Funding challenge for hydro projects – higher CAPEX however minimal operation cost – Stringent International financing requirement • Reliability issue of RE plants (mini hydro, biomass) 20 WAY FORWARD

21 FUTURE DEVELOPMENT

22

SESB Generation Plant-Up to Meet Demand & enhance Gen mix

SREP SREP (Decomm TSCC

MW LNG New

New OCGTNew

26 Limbang I

Start August 2011 CC LNG New

New OCGT New New EC Gas EC New 65 HEP Lawas

New LNG CC LNG New

(Decomm. TSH TSH (Decomm. SREP LimbangHEP II

(Decomm. ARL(Decomm. back option Genset back option SESB Oil

Terusan

TNB Teluk EwaTNB Teluk

UpperPadas

20MW + GTS 20MW RehabilitationGTS + 20MW 20MW + Eco 8.2MW + AFIE 10MW Cash Horse

20

MW

MW

MW)

100

(Decomm. Libaran (Decomm. (Decomm.Teluk Ewa (Decomm.Teluk

4650 300

HEP HEP

45

MW + New CCGT + New MW

45

65

MW

100

65

190

MW + Mobile Set Mobile + MW

MW + + Trusan MW

100

300

100

150

MW + Trusan + MW

250

MW

MW+ Trusan MW+

48

+ SPR SPR +

MW+ SBPC MW+

64

MW

MW

MW

MW

200

MW MW)

4150 80

MW + Kalansa + MW

MW + GTS GTS + MW

100

MW

10

(Decomm. SESB SESB OilPlant (Decomm.

(Decomm. Serudung Serudung (Decomm.

MW)

MW+

60

3 115 3

100

300

2 40 2

64 MW + SPC SPC + MW

3650 138

6

Tenom Pangi UpgradePangiTenom

MW + Sutera DG H. + MW

MW)

20

MW + + MW

MW

MW + Tenom Pangi New + PangiTenom MW

MW

MW + + Trusan MW

MW Rehabilitation)MW 5

3150 MW

34

-

MW)

36

Biomass

MW) 5 5

2650 125

20

8 8

MW)

MW MW + + MW

2150 (Decomm. Buy

1650 Legend: Dependable Capacity (MW) 1150 Load Demand (MW)

650 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Load Forecast 918 1,001 1,074 1,1521,223 1,312 1,387 1,476 1,5461,634 1,714 1,808 1,887 1,978 2,059 2,162 2,257 2,369 2,474 (MW) Dependable 2011 1,2072012 1,2662013 20141,504 20151,5041,6802016 1,6332017 1,7472018 20191,747 20201,8411,9802021 2,0852022 2,1502023 20242,250 2,4402025 2,4402026 2,6902027 2,6902028 2,7902029 2,8802030 Capacity (MW) R. Margin (%) 31% 26% 40% 31% 37% 24% 26% 18% 19% 21% 22% 19% 19% 23% 19% 24% 19% 18% 16% LOLE 0.745 1.504 0.099 0.4270.055 0.489 0.204 0.891 1.4090.770 0.748 1.248 1.121 0.168 0.726 0.037 0.237 0.336 0.456 (days/year) 24 Generation & Transmission Planning Up To 2019 Generation & Transmission Planning Up to 2019

Kudat Year Load Forecast Cumulative Reserve (MW) Capacity (MW) Margin (%) 46.5km 2012 918 1207 31 SPR 100 MW COD : 2014 Mengaris 2013 1001 1266 26 Project Cost : RM534 Million 55km 132kV Transmission Line Cost : RM110 Million 2014 1074 1504 40 G 2015 1152 1504 31 Kimanis 300MW Kota Belud COD : 2014 2016 1223 1680 37 Project Cost : RM1.5 Billion 2017 1312 1633 24 275kV Transmission Line Cost : 76km RM146 Million Sandakan Kota Kinabalu Sapi Nangoh 2018 1387 1747 26 G 2019 1476 1747 18 Kolopis 45km 35.5km Papar 31.5km 255km Segaliud LEGEND : Kimanis G 132 kV (current) 51km 275 kV (current) 68.5km 113km Beaufort 40km Keningau 132 kV (future) Labuan 70km 35.5km Dam Road 275 kV (future) Tenom Pangi 5.3km 110km Tenom II Southern Link 275kV Transmission Project Lahad Datu Tenom COD : 2017 G Proposed Project 40km Project Cost : RM800 Million Upper Padas 90km G Kunak New CCGT (LNG) 300MW COD : Year 2016 300km Kalumpang 50km SempornaProject Cost : RM1.172 Billion Upper Padas 150MW 33km 275kV Transmission Cost : RM224 COD : 2018 TNB Teluk Ewa 64MW G Million (Including upgrade of Project Cost : RM1.6 Billion COD : 2012 Tawau Kalumpang to Segaliud Line to Project Cost : RM80 Million 275kV) 25 Generation, Transmission & Distribution Projects

2400 224 >9Bill investment 2200 from 2012 to 2020 2000 100 1800 1600 1400 1200 2034

RM RM MIL 1000 1600 270 800 600 119 1172 1132 980 400 256 750 25 200 200 61 0 48 140 2012 2013 2014 2015 2016 2017 2018 2019 2020 YEAR IPP/Private Invester Generation Transmission Distribution 26 *Uo to 2013 Projected Financial Status 2012 - 2020

•FUTURE SUBSIDY NEEDED FROM GOVERNMENT FOR NEXT 9 YEARS RM 6,853 MILL 1005

1008 1012 954 916 930 837 774 710 496 651 652 458 79 81 101 104 550 598 76 527 586 492 RM MILLION RM 136 481 156 326

1395 1522 1644 1765 1294 1886 1658 2008 1738 2133 1764 2261 1725 2392 1749 985 1012 1185

Total Operating Income Payment to IPP Fuel Cost (SESB) Government Support Subsidy FSS & TSS O & M 27 RENEWABLE ENERGY DEVELOPMENT

28 RENEWABLE ENERGY DEVELOPMENT IN MALAYSIA

• RE as the 5th Fuel 8th Malaysia • Implied 5% RE in energy mix Plan (2001 - 2005)

• Targeted RE capacity to be connected to power utility grid: • 300 MW – Peninsular Malaysia; 50 MW - Sabah • Targeted power generation mix: 9th Malaysia • 56% natural gas, 36% coal, 6% hydro, 0.2% oil Plan • 1.8% Renewable Energy (2006 – 2010) • Carbon intensity reduction target: 40% lower than 2005 levels by 2020

• Connected to the utility grid (as of 2010): 61.2 MW (17.5% from 9th MP target) – 32MW in Sabah RE as of 31st • Off-grid: >430 MW (private palm oil millers and solar hybrid) December 2010

• New RE Policy and Action Plan T 10th Malaysia • Target: 985 MW of RE by 2015 (~5.5% of energy mix) Plan (2011-2015)

Source: Ministry of Energy, Green Technology and Water, Energy Commission 29 RENEWABLE ENERGY PROJECT IN SABAH

SREP by KK Powergreen Sdn Bhd SREP by Esajadi Power Sdn Bhd LEGEND : Sg Kadamaian, Kota Belud (4.5MW) KUDAT Sg Pangapuyan, Kota Marudu (4.5MW) Status : REPPA Negotiation Ongoing COD : January 2011 Completed Projects 36.5MW

KOTA MARUDU SREP by Esajadi Power Sdn Bhd Under Construction 73.9MW Sg Kadamaian, Kota Belud (2.0MW ) KOTA BELUD COD : 02 August 2009 Approved Projects 9.5MW SREP by Afie Power Sdn Bhd Sg Mulau & Sg. Mantaranau, Kiulu (8.9 MW) SREP Kalansa, (5.0MW) Total Exportable Status : Under Construction 119 .9MW Status : Under Construction Capacity

RANAU SREP Kina Biopower, Sandakan (10MW) K..KINABALU COD = January 2009 SANDAKAN SREP Warisan Harta, Sg. Mantaranau, Ranau PAPAR(5.0MW) SEGALIUD SREP Seguntor Bioenergy Sandakan (10MW) Status : REPPA approved for signing COD =March 2009

BEAUFORT SREP Cash Horse Sdn. Bhd (10MW)) KM38-40 Sandakan-Kota Kinabatangan Road KENINGAU Status : Under Construction WP LABUAN DAM RD TENOM SREP Eco-Biomass (20MW) POIC Lahad Datu SIPITANG SREP Tawau Green Energy(30.0MW) PANGI Status : Under Construction LAHAD DATU Status : Under Construction KUNAK KALUMPANG OPERATIONAL SREP PROJECTS SEMPORNA Exportable Capacity SREP TSH Bioenergy, Kunak (10MW) Biomass Plant 30.0 MW COD = Feb 2005 Mini Hydro Plant 6.5 MW TAWAU 30 FEED-IN TARIFF (FIT) MECHANISM

– A mechanism that allows electricity that is produced from indigenous RE resources to be sold to power utilities at a fixed premium price and for specific duration governed by Renewable Energy Act 2011 commencing 1 December 2011.

– The implementation agency is the Sustainable Energy Development Authority (SEDA)

– The type of RE will cover as such and limited to a maximum of 30MW per site:- • Biogas, • Biomass, • Mini Hydro and • Solar PV • Geothermal? 31 FEED-IN TARIFF (FIT) – ISSUES & CHALLENGES • Financial Aspect – Sufficiency of RE fund for payment – Commitment of payment for whole concession from SEDA (ie ~RM300 Mill) – Other sources of fund (ie state gov contribution) – Quantum of contribution from customer in Sabah (only RM10Mill per annum) – Cash flow issue of SESB (ie timely reimbursement from SEDA) • Administration & Management – Priority of FiT quota to the existing/REPPA signed RE – New REPPA / Migration of existing REPPA – Land Acquisition i.e. ROW – Public Awareness • Technical Aspect – Power System Study – Protection Coordination Study – RE critical contribution in Sabah Generation Capacity – Metering & Billing – Reliability of RE plant 32 RE DEVELOPMENT POTENTIAL UNDER FiT IN SABAH

No. Of N Proposed Type of RE Proposa Potential COD o Capacity (MW) l 1 Biomass 13 211.5++ 2014

2 Biogas 1 2 2013

3 Solar 12 90.05 2013

Municipal 4 1 TBA TBA Waste

5 Hydro 3 30++ 2015

GRAND TOTAL 20 333.55++

33 RE Policy & Action Plan: Targets 25,000 National Cumulative RE Installed Capacity (& Ratio to Peak Demand) 2050 Sabah Projected Cumulative 2050: RE11 Capacity.5 GW (& Ratio to Peak Demand) 21.4 GW (73%) 2030 20,000 452.75MW 39.3% 3.5 GW 500 392.75MW Sabah will play a vital 400 36.6% role in achieving 15,000 300 171.75MW National RE Target 200 17.2%

41.5MW MW 100 4.5% 10,000 2030: 2012 2013 2014 2015 4,000 MW (17%) 2020: 2,080 MW (11%) 1090% 2015: increase of BAU 5,000 985 MW (6%) RE (RE Policy & Action Plan) BAU 2050: < 2,000 MW RE (Business as Usual)

-

2025 2038 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Year Source: Ministry of Energy, Green Technology and Water, Energy Commission 34 DEMAND SIDE MANAGEMENT

35 Planning Way Forward -Lowering Load Forecast with Scenario DSM/EE

2500

2000

1500

1000 LoadLoad Forecast Demand (MW) Forecast (MW) 10Demand% reduce Side (MW) Management By 10% 15Demand% reduce Side (MW) Management t by 15% 500 201220122013201320142014 20152015 20162016 20172017 20182018 20192019 20202020 20212021 2022 2023 20242024 20252025 20262026 20272027 20282028 20292029 20302030 Load Forecast 918 1,001 1,074 1,152 1,223 1,312 1,387 1,476 1,546 1,634 1,714 1,808 1,887 1,978 2,059 2,162 2,257 2,369 2,474 (MW) Reduce Load Forecast 10% reduce 851 928 993 1063 1125 1205 1269 1346 1403 1477 1541 1618 1678 1748 1806 1883 1950 2032 2103 (MW) Reduce Load Forecast 15% reduce 848 921 982 1046 1101 1172 1226 1290 1333 1389 1432 1483 1514 1549 1565 1594 1604 1618 1610 (MW) 36 Planning Way Forward -Lowering Load Forecast with Scenario DSM/EE

2500 • Going for the Conventional Development to meet Load Demand is not sustainable. 2000

• Consumers can play a roll in ensuring the sustainability of supply 1500 through Demand Side Management. (DSM)

1000 • Energy Efficient is part of the DSM, which will reduced the Load Demand, hence reduced the capital investmentLoadLoad Forecast Demand (MW) Forecastrequired (MW) for 10%Demand reduce Side (MW) Management By 10% Sabah’s Generation Plant Up. 15%Demand reduce Side (MW) Management t by 15% 500 201220122013201320142014 20152015 20162016 20172017 20182018 20192019 20202020 20212021 2022 2023 20242024 20252025 20262026 20272027 20282028 20292029 20302030 Load Forecast 918 1,001 1,074 1,152 1,223 1,312 1,387 1,476 1,546 1,634 1,714 1,808 1,887 1,978 2,059 2,162 2,257 2,369 2,474 (MW) Reduce Load Forecast 10% reduce 851 928 993 1063 1125 1205 1269 1346 1403 1477 1541 1618 1678 1748 1806 1883 1950 2032 2103 (MW) Reduce Load Forecast 15% reduce 848 921 982 1046 1101 1172 1226 1290 1333 1389 1432 1483 1514 1549 1565 1594 1604 1618 1610 (MW) 37 Planning Way Forward -Lowering Load Forecast with Scenario DSM/EE

•Another Method For Energy Conservation Is To Do Of Peak Consumption (Peak SystemShifting) Profile •This Will Balance The Daily Base And Peak Load 750

FILL THE DIP 650 BY SHIFTING THE LOAD Typical Daily Load Profile 550 REDUCE PEAK DEMAND

Demand Demand (MW) 450

350 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Time (Hr)

Promote Demand Side Management with Load Shifting (Peak / Off Peak) 38 ENERGY EFFICIENCY PROGRAMMES IN SABAH

39 Energy Efficiency Program in Sabah

• Sabah Energy Efficiency Comm. (comprising of industrial players, local authorities and other stakeholders) • EE program with participation from stakeholders • Demo project - gov building & private building (via AAIBE fund) • Future Outlook - National Energy Efficiency Master Plan (NEEMP) Based on NKEA/EPP 9: Energy Efficiency, promotion of energy efficiency via 5 key initiatives:  Leadership by example  Promotion of EE appliances  Cogeneration  Building insulation  Transport efficiency CONCLUSION

41 Conclusion

• For sustainable development and operation, electricity tariff rationalisation + gov fuel subsidy must continue

• Renewable energy development leveraging Sabah abundant resources (FIT and hydro potentials)

• Demand side management via energy efficiency

42 THANK YOU

PRACTICE ENERGY EFFICIENCY, AN ACT OF RESPONSIBLE CONSUMERISM

43 Plant Average AF CY 2009 CY 2010 CY 2011 ARLT 57.89% 47.98% 49.45% Stratavest 88.12% 72.60% 49.33% Serudong 76.94% 93.37% 88.22% SPC 89.63% 78.24% 66.31% ISSUES AND CHALLENGES Fuel price volatility

Coal Prices in US Dollars/tonne 160.00 Northwest Europe marker price 140.00 Japan steam coal import cif price US Central Appalachian coal spot price index globalCoal RB Index (South Africa) 120.00 globalCoal NEWC Index (Australia) JPU 100.00 Platts Markers K1 (5900 GAR) (Indon) “Oil prices hit record peaks above 126 Platts Markers K2 (5000 GAR) (Indon)

80.00 dollars” AFP, May 2008 USD/tonne 60.00 Key Crude Oil Spot Prices in US Dollars/barrel 40.00 120.00 Brent 20.00 West Texas Intermediate (WTI) 100.00 Dubai 0.00 1987 1990 1993 1996 1999 2002 2005 2008 80.00

Natural Gas Prices in US Dollars/mmbtu 60.00 12.00 USA Henry Hub 40.00

LNG Japan USD/barrel 10.00 European Union cif Canada 20.00 8.00 0.00

6.00 1976 1980 1984 1988 1992 1996 2000 2004 2008 USD/mmbtu 4.00

2.00

0.00 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 Source: BP Statistical Review of World Energy 2007, International Energy Agency, Platts Report & TNB Fuel Trend & Outlook Fuel Price Historical & Projections in the US

• EIA fuel cost projections indicated that coal and nuclear is going to be stable and low in the long run • Coal in the US is stable mainly due to domestic production and high reserve • Nuclear fuel is still expected to be low and stable despite import of uranium • Situation is expected to be the same for Malaysia Source: EIA) Source: EIA – US Energy Price except for coal price

46 DEPENDANCY ON NATURAL GAS (PIPELINE SUPPLIED)

Generation Mix FY2014/2015 OIL HYDRO SESB BIOMASS HYDRO IPP/PRIVATE 8% 4% IPP/PRIVATE INVESTER INVESTER 6% 1%

OIL SESB 7% GAS SESB 11%

GAS IPP/PRIVATE INVESTER 63%

47 NATIONAL ENERGY POLICIES AND DEVELOPMENT PLAN Energy Policies

National National Four Fuel Five Fuel National Energy Depletion Green Policy Policy Policy (1979) Policy Technology (1981) (2001) (1980) Policy (2009)

• To ensure adequate, • To prolong • To pursue balance • RE as the fifth fuel • Green Tech. as the secure and cost- lifespan of utilisation of oil, in energy supply driver to accelerate the effective energy Malaysia’s oil gas, hydro and mix national economy and supplies using both reserves for future coal promote sustainable non-renewable and security and development renewable energy stability in fuel sources supply th • To promote efficient 8 Malaysia Plan (2001-2005) utilisation of energy RE as the fifth fuel • To minimise negative Target: 5% RE in energy mix impacts on the th environment in the 9 Malaysia Plan (2006-2010) energy supply chain Target: 300 MW grid-connected RE in Pen. Malaysia Target: 50 MW grid-connected RE in Sabah 10th Malaysia Plan (2011-2015) New RE Policy and Action Plan Target: 985 MW of RE by 2015 (~5.5% of energy mix) RELIABILITY ISSUE OF RE PLANTS

Operational SREP Performance (FY2009 - FY2011)

Description SREP TSH SREP Kinabio SREP Seguntor SREP Kadamaian SREP Pangapuyan

Average AF Average AF Average AF Average AF Average AF Yearly based on based on based on based on based on Contractual 64,000,000 82,344,000 82,344,000 14,366,400 30,353,400 Contractua Contractua Contractua Contractua Contractua Energy l Energy l Energy l Energy l Energy l Energy

FY2009 64,440,980 101% 19,155,430 23% 20,738,600 25% 0 0% 0 0%

FY2010 65,232,780 102% 45,134,970 55% 47,197,700 57% 8,532,616 59% 0 0%

FY2011 52,652,130 82% 57,015,680 69% 61,457,870 75% 12,349,657 86% 5,344,018 18%

Notes:- (i) Lower value of energy/AF for Seguntor and Kinabio in FY2009 & Pangapuyan in FY2011 due to plant only COD in the middle of the FY (ii) TSH achieve more than contractual energy in FY2010 & 2009

49