10 /7/18 6:46 PM Success a successful highlights the Enhancing MYR 8.00 Volume 15 Volume MYR 8.00 Measuring The Energy Energy Malaysia Sabah Electricity Energy Malaysia www.st.gov.my SAIDI 100 Lab, an SAIDI 100 Lab, Sabah’s SAIDI and Sabah’s Volume 15 | 2018 15 | 2018 Volume initiative to improve Regulatory Period 1. Regulatory Period 1. Commission’s shines a spotlight on achievements during sabah’s supply sabah’s supply Supply Industry (SESI). Supply Industry (SESI).

Towards a World-Class Energy Sector Energy World-Class a Towards

Energy Industry RP2 Leading the Way for a Brighter Future A Brand NewA Brand Front Cover v1.indd 1 Energy Malaysia Volume 15 KDN: PP 18540/08/2014(033966) www.st.gov.my

S NT 20 ONT E C

Features Innovation 02 12 20 Chairman’s Message What Happens Now? A Technological Change With a successful RP1, the Artificial Intelligence (AI) is the future, industries are looking forward to invading one aspect of our life at a time. 03 the second regulatory period. Energy Matters We take a look at how AI is changing Energy Malaysia examines the the energy sector globally and how the The latest news and updates on changes within industries and how their nation’s energy sector is coping industry developments, government development is parallel to the with the digital invasion. initiatives and innovations in the energy industry’s transition. Malaysian energy sector. FEATURES Features 24 15 SAIDI 100 Lab: COVER STORY Keeping Up with the KPIs Powering up Sabah Energy Malaysia takes a look at The Sabah Electricity Supply Industry how the Energy Commission (SESI) has been facing various has achieved its targets during challenges. We took a look at SAIDI RP1 towards becoming a 100 Lab and its mission to improve more efficient regulatory body. Sabah’s electricity supply industry.

06 Out With the Old, 37 In With the New Energy Malaysia delves into what the future may hold for the energy industry with the implementation of Regulatory Period 2 (RP2) while highlighting the achievements in Regulatory Period 1 (RP1).

Contents v1.indd 2 11 /7/18 11:02 AM Editorial Board

Advisors Ir Azhar Omar 24 Abdul Razib Dawood Members Asma Aini Mohd Nadzri Ir Abdul Rahim Ibrahim Mohd Elmi Anas Ir Roslee Esman Ir Md Zakuan Ibrahim

Editorial Committee Siti Suhaila Ahmad Zairulliati Mali Sueharti Mokhtar VIEWS POWER PRACTICE Syarizman Mansor 28 35 Mohd Shafiz Amzary Abd Rahim Strengthening Processes Paving the Future of and Operations the Energy Industry © All rights reserved. Reproduction of all The newly appointed Chief Operating Now that you know what energy or any part of this publication via electronic, Officer (COO), Abdul Razib Dawood economists are, the next question mechanical, recording or other medium is gives his take on the transition to ask would be how to be one. strictly prohibited without written consent from the Energy Commission. happening within the energy industry Energy Malaysia features Bachelor of and his plans for leading the operations Economics (Energy) (Hons.) offered in ST Publication No: ST(P)10/04/2017 aspects of the Energy Commission. UNITEN, the course that shapes your future to become an energy economist. POWER PATHS Conceptualised, Produced 32 COUNTRY FOCUS and Published for Forecasting the 37 Energy Industry Views from the West SURUHANJAYA TENAGA Energy economists have always been A case study on a few countries in (ENERGY COMMISSION) the underdog in the energy industry. This Europe and how they have implemented by time, we shine a spotlight on energy the Incentive-Based Regulation (IBR) economists to further understand the mechanism in their own tariff systems. The IBR Asia Group Sdn. Bhd. role they play in the energy industry. (356247-V) ANALYSIS 10-3A, Jalan PJU8/3, 40 Damansara Perdana, An In Depth View of RP1 47820 Petaling Jaya, An analysis on how the energy Selangor Darul Ehsan, Malaysia. sector fared during RP1. Tel: +603-7729 4886 Fax: +603-7729 4887 Website: www.ibrasiagroup.com On-Site Printed by 43 Percetakan Skyline Sdn. Bhd. Highlights of events, forums, seminars, (135134-V) conferences and exhibitions organised 35 & 37, Jalan 12/32B, or attended by the Energy Commission. Jalan Kepong, 52100 Kuala Lumpur, Malaysia.

Contents v1.indd 3 11 /7/18 11:04 AM Chairman’s Message

Kick Starting Regulatory Period 2

The Malaysian energy industry is in transition, and this The shift from RP1 to RP2 is a period of transition, and is best seen in the implementation of the Incentive- incidentally, the Energy Commission is also transitioning, Based Regulation (IBR) mechanism as a means of from being a regulator to being an advocator and improving the performance and service quality in educator for the energy industry. But some things will electricity and gas supply and ensuring more efficient not change. We will still be committed to balancing the energy pricing. With the foundations for electricity IBR needs of different stakeholders, namely the government, having been successfully set in Regulatory Period 1 energy industry and consumers. We ensure a safe, (RP1), which ran from 2015 to 2017, we have since secure and reliable electricity supply at affordable embarked on Regulatory Period 2 (RP2) where we prices, safeguarding public interest and nurturing will further enhance the IBR mechanism and improve economic development and competitive markets in an efficiency, clarity and consumer awareness. environmentally sustainable fashion.

On a personal note, I am humbled and honoured to have The Commission also strives to be transparent in been named the Chairman as we embark on RP2, as determining electricity price and ensuring that electricity I was the CEO of the Energy Commission when we price is fair and affordable through the establishment of embarked on RP1 back in 2015. Of course, my role has a cost-reflective tariff. We have also carried out several changed, and instead of leading the execution of policy, initiatives to create awareness and an understanding of I look forward to working with our current CEO Ir Azhar how the mechanism works and how tariffs are calculated to Omar and his team, and offering my support and guidance. further educate the public at large.

Definitely, the groundwork laid out by my predecessor The Energy Commission welcomes all to work with Dato’ Abdul Razak Abdul Majid has ensured that we us towards achieving a world-class energy sector go into this period in a strong position, so on behalf of performance for the nation. everyone at the Energy Commission, we extend our sincere thanks to Dato’ Abdul Razak for his excellent Datuk Ir Ahmad Fauzi Hasan leadership and service. Energy Commission, Malaysia

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EM15 Chairman's Message.indd 2 10 /7/18 8:27 PM Energy Matters

hina State Grid Corporation is generation onto the Internet to looking to advance its plans for facilitate data tracking on web-enabled Internet of C an “Internet of Energy” by looking devices. The corporation is proposing into block chain technology. The energy a decentralised system that can pass giant has detailed its exploration of newly generated data through a hash Energy to a blockchain-powered system that it function and store the results on a claims can store and track information on tamper-proof blockchain. In addition, Conquer China’s consumer’s power consumption and share Bank of China, one of the four the data in a decentralised manner. state-owned commercial banks, has also moved to patent a solution that Electrical Grid The idea behind the utility’s Internet of it claims has the ability to solve the Energy is to integrate more information scaling issues that confront about electricity consumption and blockchains. – Coindesk

Malaysia Beats Singapore, UK in the Race of Electricity Reliability

ccording to World Bank’s Doing Japan and the United Kingdom, The ranking was achieved Business Report 2018, Malaysia demonstrating the reliability of the through close cooperation A has made it into the top 10 for country’s electrical supply. In the between the nation’s largest Getting Electricity. report, it states that it takes 31 days electricity utility supplier, Tenaga to get connected to the electrical Nasional Bhd (TNB) and the The nation is ranked eighth out of 190 grid in Malaysia, compared to 78 Energy Commission. – New countries, besting even Singapore, days across high-income economies. Straits Times

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Energy Matter v4.indd 3 12 /7/18 6:10 PM Source: AFP / JOE RAEDLE Solar Power for New Homes

alifornia has decided to take a giant “I’m really happy to get this to the finish line. leap by making a requirement that C all new homes must have solar One big step for mankind.” power. The initiative will take two years to be fully implemented, but it gained entry – Andrew McAllister, into the mainstream like never before. California Energy Commission. Though there were concerns that it might add thousands of dollars to the cost of home, state officials and clean-energy advocates say that the extra cost would or have made commitments to 100 Next year, a new rate structure will be be compensated in a form of lower energy per cent clean energy through various introduced whereby customers will be bills. That prospect has won over even the sources. California law requires at least charged based on the time of day they use construction industry, which has embraced 50 per cent of the state’s electricity to electricity. Therefore, homeowners with solar capability as a selling point. come from non carbon-producing sources energy-efficiency features, especially a by 2030. Solar power has increasingly battery, which would allow the storage of Several Californian cities require that become a driver in the growth of the energy when it is most efficiently used, could some new buildings include solar power, state’s alternative energy production. lead to a lower cost. – The New York Times

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Energy Matter v3.indd 4 11 /7/18 2:16 PM Energy Matters

Sarawak Gas Fields Under Sapura Energy

nder phase one of the SK408 production sharing contract (PSC), U Sapura Energy logged its largest single-day price gain since its listing six years ago to finish a fifth higher to 64.5 sen after it announced it was proceeding with the development of the Gorek, Larak and Bakong gas fields off Sarawak. Sapura Energy said the development and production operator of the Larak and Bakong fields would be its wholly-owned subsidiary.

Sapura Exploration and Production (Sarawak) Inc (Sapura E&P), and Sarawak Shell will be the development and production operator of the Gorek field. Sapura Energy added that the fields under the SK408 gas field development project are part of the discoveries made by Sapura E&P in its 2014 drilling campaign. The fields will be developed as three separate well-head platforms tied back to the existing Sarawak Shell-operated F6 processing facility. – The Edge

“The SK408 gas fields will be Sapura E&P’s second major upstream gas development project in East Malaysia, after the successful development of and commencement of production at the SK310 B15 gas field.” Collaboration – Sapura Energy for Renewable Energy

ypark Resources Bhd and German-based 21st Century Clean C Energy GmbH & Co KG will be collaborating in energy storage projects and to expand business opportunities in renewable energy (RE) in Malaysia.

Cypark said its wholly-owned subsidiary Cypark RE Store Sdn Bhd had signed a Memorandum of Understanding (MoU) with 21st Century to formalise the cooperation. It further added that the MoU comes into effect on the date of signing and will remain effective for two years and may be extended for a further period as may be agreed in writing by both companies. The MoU entails cooperation in developing business and marketing strategies for potential clients for battery energy storage projects in all over Malaysia. – The Edge

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Energy Matter v4.indd 5 12 /7/18 11:08 AM OUT with the old, IN WITH THE NEW

Welcoming Regulato ry Period 2

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Out With the Old, In With the New Welcoming Regulatory Period 2 v2.indd 6 11 /7/18 11:40 AM Cover Story

alaysia’s energy sector is in transition, and this is best reflected in the adoption of the Incentive-Based M Regulation (IBR) framework in the electricity tariff determination. Having been introduced in 2014 (Trial Period), the roll-out of IBR for Regulatory Period 1 (RP1) continues from 2015 till 2017. Halfway through 2018, Energy Malaysia takes a look at the achievements of RP1 and the aims of Regulatory Period 2. Welcoming Regulato ry Period 2

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Out With the Old, In With the New Welcoming Regulatory Period 2 v2.indd 7 11 /7/18 11:41 AM Source: AFP

Looking Back to RP1 lessons learnt in RP1 and the evolving compliance with all regulatory and landscape of the industry. licence conditions. Comprehensive Last year, the Energy Commission checks and balances are also to evaluated the effectiveness of the IBR One huge achievement for the be carried out to ensure that the mechanism during RP1 in order to Commission is the increased awareness Commission will uphold the highest ensure affordable tariffs in Peninsular regarding IBR in the industry. With the standards of governance during RP2. Malaysia. What makes IBR effective unbundling of the TNB cost component, is that tariffs are calculated based on the Commission has become There is a need to educate the public efficient cost (CAPEX and OPEX), more transparent in its Regulatory to fully understand the costs in the return and other associated parameters. Implementation Guidelines (RIGs). electricity supply chain which make up their electricity bill. The Energy RP1 has become the learning journey Moving Towards RP2 Commission has taken several for both TNB and the Commission initiatives to create awareness on as the regulator. As the learning The IBR mechanism has carried on to the subject matter. For example, curve prior to implement IBR in RP1 RP2 for the following three years from they educated the public at large is very steep, assistance and advice 2018-2020. In RP2, the Commission through various channels – website, from consultants and industry experts is looking to further enhance the advertisement and magazine articles. were required. Also, the Regulatory mechanism and at the same time, Engagement programmes with Implementation Guidelines (RIGs) that improve clarity, efficiency and continue stakeholders have also been carried was first published in 2012 for RP1 to enhance the consumers’ awareness. out to relieve them of their concerns implementation is now being revised to regarding the implementation of add and amend the provisions, as well Additionally, the Commission keeps RP2. All in all, the Commission has as to increase the clarity based on the TNB in check with regards to their become more customer-centric in

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Out With the Old, In With the New Welcoming Regulatory Period 2 v2.indd 8 11 /7/18 11:43 AM Cover Story

REAP is also responsible for the 2012, TNB forecasted the demand planning, coordinating as well as growth of between 3.3% to 4.2% providing advice on directions and for the Trial (2014) and RP1 (2015- strategy to TNB with respect to 2017). However, the actual demand regulatory submission while serving as growth recorded was only from 1.7% to the interface with ST for IBR-related 1.9%, partly explained by the structural matters. Post-tariff determination, changes in the Malaysian economy REAP has to ensure that all Regulated which is shifting from manufacturing/ Business Entities within TNB operate in industrial to a service-based economy a cost-efficient manner, invest prudently as the country moves towards becoming and efficiently in assets and achieve a high-income nation. Another reason the performance targets whilst ensuring for this slowdown in electricity growth quality, reliability and efficiency of is due to the increased penetration of electricity supply to consumers. Renewable Energy (RE) and awareness on energy efficiency (EE) . Therefore, Facing the Challenges many planned development projects linked to electricity demand were There are certain challenges faced revised. The allowed revenue that that may impede the success of RP2 has been factored in the base tariff in terms of governance, transparency calculation from projects that did not efficiency and reliability. materialise in RP1 were returned to the customers via a deduction in the In terms of governance, Ir. Azhar Omar, allowed revenue for RP2. In RP2, the the CEO of the Energy Commission forecast for demand growth has been said that the Commission’s main role revised to a range of 1.8% to 2.0% to is to ensure TNB complies with all reflect the above factors, including the regulatory and license conditions, to growing trend of Electric Vehicles (EVs) have a comprehensive checks and in Malaysia. balances to ensure that the Commission will uphold the highest standards The implementation of IBR and ICPT Moving towards Regulatory Period 2 of governance and to enhance the was not without challenges from (RP2), the Commission is ensuring standard of reporting. investors’ confidence point of view. One that the consumers are well aware of the tariff rates and how it is determined instance worth highlighting was the while simultaneously improving the The Commission also strives to temporary slump in TNB’s share price security of supply and efficiency. be transparent in determining the during the first ICPT implementation electricity price, ensuring that electricity in March 2015, as investors were still price is fair and affordable and at the uncertain on the IBR implementation same time establish a cost-reflective and lack understanding on ICPT the hope of gaining more confidence tariff for an efficient and fair tariff mechanism. Over the years and moving from the public. design. Ultimately, they want to into RP2, investors have gradually enhance the communication with the gained confidence with the ICPT that Taking one step further, the Energy public and stakeholders. is being implemented periodically Commission also organised forums for (i.e. every 6 months) and have the their stakeholders in which they share Based on the policies and procedures assurance that fluctuations in fuel the best practices of other jurisdictions stipulated in the RIGs, the Energy prices which are beyond utility’s control whilst simultaneously providing a Commission is determined to will be addressed accordingly. platform for public to share their views. improve the accuracy, efficiency and transparency of IBR process. They Implementing a new framework As the regulated entity, TNB plays an also strive to deliver efficient and such as IBR and ICPT requires important role to ensure the success reliable electricity supply at the lowest coordinated efforts of all stakeholders of IBR and ICPT. Its Regulatory efficient cost. in the industry with policy guidance Economics and Planning Division from the Government. In RP1, TNB (REAP) has been tasked and largely TNB also faced some hurdles during had conducted many engagements, involved in the development of the RP1, such as the lower actual demand educational and awareness sessions overall IBR RP1 and RP2 proposals. than what was forecasted. Back in as well as capacity building to

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Out With the Old, In With the New Welcoming Regulatory Period 2 v2.indd 9 11 /7/18 11:44 AM its stakeholders. TNB will continue with IBR approach that encourages the to carry out these efforts during RP2 delivery of cost-efficient services. the keep abreast of the evolving economic regulations. TNB remains committed to increase its efficiency and productivity by Joining Hands in achieving the target set by the a Learning Journey Commission in RP2. TNB has performed well in the majority of Internally, TNB has experienced the Performance Indicators (PI) a lot of changes in its structure during RP1. For a start, during and processes. In RP1, TNB RP1, the PIs were set only for established a dedicated department monitoring purpose with no to manage all IBR-related matters monetary incentive and penalty and redefined the departments/ being imposed. Most of the Pls divisions, based on the managed were geared towards ensuring market model structure described compliance and measured key in the RIGs which is linked to the technical operational performance “The Commission’s components that make up the such as SAIDI and System Minutes. overall tariff. Additional reporting The parameters were set by the goals have always requirements to the Commission Commission in order to balance revolved around were also introduced and financial the stakeholders’ expectation, discipline was emphasised in associated investment required security, affordability order to ensure TNB operates to achieve the targets as well as and environmental within its allowable CAPEX and TNB’s historical performance. These sustainability. We want OPEX. In RP2, these processes targets were also benchmarked will be continuously improved against best practice or standard. to become an effective by introducing automation and For RP2, the monetary incentive regulator, be more managing changes effectively or penalty mechanism will be across TNB. applicable, in which TNB will be consumer-centric to rewarded or penalised based on its protect the consumer TNB has passed-through RM6.3 billion operational performance. For RP2, worth of ICPT rebate to consumers along with the key technical PIs, and consumer’s interests up to June 2018 under the IBR new areas are also being measured while also making sure implementation. ICPT allows TNB to and monitored such as safety, pass-through any variance in actual customer satisfaction, EE initiatives that sustainability is on fuel and generation costs as compared and RE connectivity. the top of our list.” to the base costs to the consumers. In RP2, ICPT will continue to be in Innovations in RP2 – Ir. Azhar Omar, place as stipulated in the RIGs. Several Regulated Business Entities (RBEs) The highlight of the innovations is CEO of the Energy Commission under TNB that managed to deliver the implementation of Advanced efficiency savings in their RP1 OPEX Metering Infrastructure (AMI) which are incentivised with the Efficiency will see 1.5 million of Smart Meters Carryover Scheme in their respective to be installed in customer’s premises allowed revenue in RP2. This is in line in Klang Valley and Melaka. TNB and

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Out With the Old, In With the New Welcoming Regulatory Period 2 v2.indd 10 11 /7/18 11:45 AM Cover Story

“Malaysia is the second country in Asia to implement IBR after Philippines. During RP1, the framework was new to everybody so we focused more on engaging, increasing awareness and educating. For RP2, we are looking forward to more savings, more innovations and more consumer participation.”

– Ir. Joon Ibrahim, General Manager (Regulatory Economics) Regulatory Economics and Planning Division, TNB

the Energy Commission are looking within the approved budget. The (GoTF), as TNB would like to call forward to complete the installation of investment in modernising the grid it, is the modern grid and smarter 1.5 million of Smart Meters as planned is important to ensure high reliability network that has robust capability and to prepare for the following phase and efficiency of supply to the for bidirectional flows of electricity, of installation in the next RP. AMI will customers despite the increasing dynamic operations and self- provide a new environment for greater penetration of Renewable Energy healing. Apart from AMI as the key involvement from the customers. It will (RE) and Electric Vehicle (EV) into component, GoTF also comprises enable TNB to improve its services by the system. In addition, this modern other projects such as Distribution empowering the customers to better grid will open up opportunities to Automation (DA), Mobility Solutions, control their electricity consumption improve customer experience with Geospatial Information System (GIS), and production. fully digital touchpoints, higher billing LED Streetlighting and Volt-Var accuracy, faster fault restoration time Optimisation (VVO). Cumulatively, According to Ir. Joon Ibrahim, the and integration to homes energy under the GoTF, these projects will General Manager of Regulatory management system to further increase the grid efficiency, reliability Economics Department, with this, encourage energy efficiency. and resiliency, as well as providing TNB is expecting more participation seamless integration with the DG by the consumers in Distributed This is also in line with the and the emergent technologies of Generation (DG) using clean energy, Government’s National Green energy storage and microgrid. The smart homes and energy efficiency Agenda and the delivery of the approved CAPEX under the IBR initiatives. TNB is also aiming to next level of operational efficiency RP2 for these innovations amounts see more efficiency savings in its and reliability. Grid of the Future to RM2.7 billion. OPEX as a result of the investment in technologies coupled with other internal initiatives on increasing productivity and cost-saving. For RP2, the Energy Commission’s role stays the same Meanwhile, CAPEX will be spent prudently according to the plans – a regulator and an educator. Apart from enhancing approved by the Commission. their own governance, they also hope that every unit Project development will be in the commission will be able to cross-function, regularly tracked and monitored while procurement process is becoming more efficient in their journey towards a improved to ensure timely completion better, more transparent system for Malaysia.

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Out With the Old, In With the New Welcoming Regulatory Period 2 v2.indd 11 11 /7/18 11:45 AM THE ENERGY SECTOR DURINg What rp2 happens NOW?

The industrial sector is looking forward to fully embrace the transition to further enhance the development of their respective businesses parallel to the Regulatory Period 2 (RP2).

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What Happens Now.indd 12 11 /7/18 2:31 PM Feature

nder the Incentive- The IBR mechanism has shifted the Based Regulation power utility regulatory framework (IBR) mechanism, paradigm from cost of service, U which focuses on building electricity the second phase of infrastructure at an affordable cost. the regulatory period is The first regulatory period (RP1) was a learning period to set up a better not only affecting the regulatory framework, which in turn energy sector, but also would benefit consumers in terms of other industries. Energy price and quality of service. Malaysia highlights As part of RP1, Tenaga Nasional the changes within Berhad (TNB) adopted a system to industries and how their ensure a fair rate of return, while the government developed a transparent development is parallel economic regulatory regime for TNB. to the transition of the This mechanism provides a systematic way to incentivise or penalise the power energy supply industry. utility based on a set of performance indicators. Through this, consumers are assured reliable electricity at prices that are on par to the standard and quality of service they receive.

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What Happens Now.indd 13 11 /7/18 2:32 PM Feature

“The removal of subsidies would allow the ICPT to perform as expected in RP2 as this will contribute to the development of renewable and energy efficient technology in the energy industry in Malaysia.”

– Professor Dr. Nofri Yenita Dahlan Associate Professor of Universiti Teknologi Mara

For a Better Regulatory Period

Although the implementation of RP1 consumption control solutions. Dr. Nofri ETOU pricing allows industrial was successful, there is still room noted that the role of consumers should consumers to manage their for enhancements. According to not be limited to use of energy only, but it electrical consumption efficiently Associate Professor Dr. Nofri Yenita also should be extended to also produce, by using less electricity during peak Dahlan, Senior Lecturer of Electrical sell energy and provide reserve service hours. One major infrastructure Engineering at Universiti Teknologi Mara to utility company. development initiative which will be (UiTM), hiccups in the implementation realised in RP2 is the installation of IBR in RP1 should be reviewed and Malaysia’s electricity tariffs are among of 1.5 million Smart Meters thus strategic regulatory process should be the lowest compared to other countries increasing the effectiveness of developed in RP2. in the ASEAN region. With that said, ETOU and DSM programme. efficient tariff designs could strongly One unusual scenario seen in RP1 was affect and influence consumers’ Furthermore, the IBR mechanism where a negative peak demand growth responses in using energy efficiently. in RP2 offers additional support for was recorded for the first time in the Furthermore, removing subsidies would Green Generation Project where up history although economic development allow the Imbalance Cost Pass-Through to 200 MW of Solar Photovoltaic was healthy. Dr. Nofri opined that an (ICPT) to perform as expected in RP2 (PV) generation will be traded under accurate demand forecast influences where consumers should also be the Single Buyer Operation (SBO). electricity system planning hence the sharing their commitment. Industries could benefit from this setting of the new base tariff. Therefore, support by becoming producer or it is vital to establish a mechanism to RP2 Enhancing Industries offering their rooftops for the solar accurately forecast consumer demand PV installations. integrating the impact of energy In the industrial sector, Special Industrial efficiency and renewable energy. Tariff (SiT) was gradually removed In addition to that, RM 1 billion has in RP1 and replaced with the more been allocated for awareness and Additionally, consumers are demanding effective time based Enhanced Time of education programme on Smart Meters, more control and information regarding Use (ETOU) pricing. ETOU is expected ETOU and DSM implementation, their energy consumption. Active to be improved in RP2 to offer a better energy efficiency project and the participation from consumers can be tariff structure to industry and in support Malaysian Electricity Supply Industry increased through the implementation of of Demand Side Management (DSM) (MESI) structural training for SBO and smart meters, energy storage and energy programme in Malaysia. Grid System Operator (GSO).

For the upcoming three years, the energy sector is gearing itself to fully embrace the second regulatory period. The industrial sector is eager to see the changes that they can make the most of to improve and enhance their respective businesses.

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What Happens Now.indd 14 12 /7/18 6:15 PM Feature

Keeping Up with the KPIs ey Performance Indicators (KPIs) are a great way to measure how K effectively an organisation or company achieve their goals. In this case, Energy Malaysia takes a look at Suruhanjaya Tenaga (ST) set KPIs for Tenaga Nasional Berhad (TNB) to ensure the utility company operates efficiently and effectively, and at the same time that it is ready for Regulatory Period (RP) 2.

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Keeping Up With the KPIs v4.indd 15 12 /7/18 7:07 PM A Viable Benchmark

KPIs represent an integral part in the These rewards and penalties are System Operator. There were a total of IBR framework. ST sets performances expressed as a percentage of the 14 PIs, all of them were set using the in which TNB has to meet in order Annual Revenue Requirement (ARR) symmetrical PI mechanism only. to supply a continuous and reliable for RBEs to which the KPI applies. The source of energy to the consumers. reward or penalty mechanism incurred These rewards and penalties were In order to benchmark the utility’s will rise linearly up to a cap. expressed as percentage of the ARR of Regulated Business Entities (RBEs), the RBEs to which the KPIs applied. ST had introduced the incentive and TNB would send the proposal to ST penalties mechanism. RBEs are on the RBEs’ performance indicators In Customer Services, the RBE required to report their KPIs quarterly (PIs) that will be focused on. ST will managed to consistently record a and annually to ST to ensure they are later analyse the proposal and decide below average System Average kept in check. whether the reward or penalty is fair. Interruption Duration Index (SAIDI) For example, the Single Buyer (SB) level of 55 minutes per customer Any company’s main goal is to achieve will be awarded an incentive if it is able for three years running. For the the most profit with the least amount of to achieve accuracy in the day-ahead compliance to the Minimum Service cost incurred. RBEs have incentives to generation schedule. However, failing Level (MSL) and Guaranteed Service reduce its costs. Reductions can come to do so, a penalty will then be imposed. Level (GSL), Customer Services in the form of improving efficiency but TNB agrees to the mechanism as has always managed to be in the also through lowering quality of service the performance is based on a large incentive or neutral region. This as well. KPIs can be used to ensure that automated process with generator with shows that this regulated entity is the latter incentive will be avoided. ST minimal errors. keeping up with its standards or would penalise entities for lowering the otherwise improving itself. quality for gains while at the same time KPIs in Regulatory Period reward them for improving it. Transmission was divided into three Although the review period has only parts – system minutes, system Performance indicators set by ST was been going on for 3 years, TNB has availability and project delivery index. not meant as a form of punishment but met almost all of its targets. During All of the divisions target was met. One as a framework that would encourage RP1, four RBEs were monitored highlight was the Transmission achieved RBEs to pursue efficient means for their KPIs – Customer Services, excellent performance in Project through operational performance. Transmission, Single Buyer and Grid Delivery Index in which the score was

KPIs set for TNB by the Energy Commission ensure the steady supply of electricity to end users in Malaysia.

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Keeping Up With the KPIs v4.indd 16 12 /7/18 7:08 PM Feature

Key Performance indicators (KPIs) achieved in Regulatory Period 1 (2015–2017)

SAIDI Customer Average of MSL Compliance Performance Services Weighted Average GSL (3, 4, and 5)

CS managed to For the compliance to the Overall, this achievement consistently record a Minimum Service Level (MSL) translates into a sustained SAIDI level of below 55 and Guaranteed Service Level reliability standard and minutes/customer/year for (GSL), CS has always improved customer services. three (3) years in a row. managed to be in the incentive or neutral region.

System Minutes Transmission System Availability Project Delivery Index

System Minutes was Transmission also achieved The past investments in the kept lower than the 1.5 excellent performance in transmission grid have paid minutes target. Project Delivery Index off in terms of benefitting (PDI) in which the score the customers through System Availability improved was always in the incentive increased system reliability from 99.11% in 2014 region for each year of and availability. (neutral band) to 99.77% in assessment. 2016 (incentive band).

System Average Cost Grid System Compliance to Timely Settlement of Generators' Invoices Operator Non-Compliance to Malaysian Grid Code (MGC) Non-Compliance to Single Buyer Rules (SBR)

For the 3-year period Likewise, GSO scored In line with the least cost under review, there was 100% for both Voltage Limit dispatch principle, the no occurrence of Wide Compliance and Frequency percentage Dispatch Adjustment Area Loss of Supply Limit Compliance. had been minimal, below the Event recorded. approved upper bound cap.

Wide Area Loss of Supply Event Single Buyer Security Limit Compliance: Voltage Limit Compliance (VLC) Security Limit Compliance: Frequency Limit Compliance (FLC) Dispatch Adjustment

The System Average Cost SB also recorded 100% was in the incentive region compliance to Timely Settlement for the entire 3-year period. of Generators’ Invoices as well as zero Non-Compliance to MGC.

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Keeping Up With the KPIs v2.indd 17 11 /7/18 2:37 PM Feature

Target Key Performance indicators for Regulatory Period 2 (2018–2020)

System System Project Delivery Lost Time Injury Minutes Availability Index Frequency

Transmission

SAIDI MSL 3B Lost Time Injury Special Project Urban Compliance Frequency Delivery Index

Distribution Networks

Customer Average Renewable Customer Satisfaction Delivery of Satisfaction Energy Connection Index on Energy Energy Efficiency Index Time Efficiency Programme Programme

Customer Service

System Average Load Forecast NEDA Cost NEDA Cost Deviation Accuracy Savings Participation

Single Buyer

Wide Area Loss Voltage Limit Frequency Limit Least Cost System Minutes of Supply Event Compliance Compliance Operation Lost

Grid System Operator

always in the incentive region for each is effective in measuring the separation of Customer Services year of assessment. performance of these RBEs. RBEs and Distribution Network. will strive for efficiencies in terms of For the Grid System Operator, there operational performance, as RBEs The usual default mechanism used was no occurrence of wide area loss of retain efficiency gains for the current are usually asymmetrical by default. supply event ever in the nation which regulatory terms and carry forward the However for RP2, there are some was a huge achievement. Reports also efficiency gains going into RP2. instances where an asymmetrical shown that in line with the least cost mechanism is more appropriate. dispatch principal, the percentage Going into RP2 For example, consumers are dispatch adjustment had been minimal, already paying for tariff regardless below the approved upper bound cap. Despite the RBEs meeting in the improvement made through Single Buyer also improved as well, almost all of their targets, ST is performance, therefore a penalty- recording 100% compliance to Timely implementing a more stringent only mechanism should be Settlement of Generators Invoices. standards of measurements to appropriate. This signifies that, further improve their performances. consumers expect a certain level of This goes to show that the For RP2, 5 RBEs will be operating performance that is in line with what performance indicator framework under IBR framework with the is paid for by consumers.

KPI remains a key aspect to any organisation towards furthering their objectives. For ST, it is paramount that KPIs is used not only to keep the utility company in check but also to ensure a sustainable and continuous supply of electricity is delivered to its consumers.

18

Keeping Up With the KPIs v3.indd 18 12 /7/18 6:20 PM Blackout? Know your rights What Is GSL? Guaranteed Service Levels or GSL are the required levels determined by ST to ensure the quality of TNB’s delivery services. Upon failure to comply, penalty will be imposed on TNB in the form of rebate to consumers for: GSL 1: Number of unplanned interruptions experienced by a consumer. GSL 2: Time taken to restore electricity supply following: Outage Caused by minor distribution network fault Major Incident on distribution supply network except natural disaster or weather-related incident. Major incident on grid or transmission system except natural disaster

For further information, go to: www.st.gov.my Suruhanjaya Tenaga (Energy Commission of Malaysia) ENERGY BE SMART 40

Ads v2.indd 40 12/07/2018 11:01 AM A Technolo gical Change Artificial Intelligence

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Innovation - Artificial Intellegence.indd 20 12 /7/18 7:13 PM Innovation

rtificial Intelligence, The Game Changer or more commonly known as AI has been The use of AI in the energy sector A has made rapid headway, especially in taking over the world one developed countries. technological upgrade at a In the United States, Stem, a leading time. The AI is a branch of energy storage company that computer science that deals provides technologically innovative with the ability of machines solutions for energy consumption, has newly developed an energy to learn, adapt and function storage network called Athena, which like humans. This was, in harnesses the power of AI to chart customers’ energy consumption. In fact, a bit of an incredible Source: AFP PHOTO / GEORGE FREY addition, it can also aid in determining non-possibility before the constant shift in energy rate The Alphabet ‘Nest’, a smart thermostat that the advent of the Fourth which is the price paid for energy adjusts temperatures by analysing the daily consumption. This, in turn, ensures a habits of occupants at home to reduce Industrial Revolution. In much efficient use of energy. energy consumption. relation to this, the energy sector is no stranger to the Over in the UK, the software called Grid Edge uses AI to help with energy AI approach. Due to soaring management. Once connected to Apart from energy storage and competition and advancing a building, Grid Edge manages a management, AI is also gaining technology, the energy system that analyses its energy the interest of energy giants in data. The information collected is terms of failure management. Due sector is quite acquainted then transferred to a connected grid, to lax regulations and inconsistent to quick changes in the which in turn plans out a strategy checking of equipment, accidents - many angles of this industry, catered towards saving energy in sometimes fatal - in energy power that building. This approach allows plants are not unusual occurrences. especially in its efforts to consumers to be more in control of A recent example would be the stay on track. their energy consumption. explosion that took place at the A Technolo gical Change

21

Innovation - Artificial Intellegence.indd 21 12 /7/18 7:13 PM 1 5 End-to-end VPN securely SaaS model ensures100% of communicates with your building, energy the financial savings, reduced and environmental data via the cloud. emissions and access to high-value demand-side How It Grid Edge flexibility payments. Works 2 3 4 Using Creating Optimise Control Communicating Predict unique load forecasts, optimised value from this data, hybrid securely via the cloud, optimised dispatch strategies for building deep learning algorithms and control strategies can intergrate management system are created neural networks are deployed directly with the BMS or be provided to maximise financial and to create precise load as an alternative strategy for review environmental performance. forecasts for buildings. and implement.

coal-fired power plant in India power plants. With a combination doing so, energy consumption is able to in November 2017. Unchecked of applications, it is able to collect be reduced as unnecessary electricity blockages in a gas pipe caused information to predict the high usage plays no part anymore. Nest about 32 lives. Experts believe probability of equipment failures. The reports that this technology has helped that mishaps like this can easily data collected will then be passed on reduce heating bills by up to 12%. be avoided by using AI to do the to the right sources, ensuring problem work that may be difficult or even rectification without due delays. On a larger scale, Nnergix is a company dangerous for us. in Spain that does energy forecasting. Energy consumption can also be It is especially catered to weather- By using AI, equipment faults can be optimised by utilising solutions offered dependent renewable energy like wind detected in real time and fixed before by artificial intelligence companies. The and solar. Considering that weather is any untoward incidents take place, smart thermostat, Alphabet’s ‘Nest’ most often unpredictable, Nnergix has thus saving time, expenses and, most – a Google-affiliated AI initiative – is incorporated artificial intelligence for importantly, lives. SparkCognition, a home-level equipment that adjusts better forecasting accuracy. This will, a company based in Austin, Texas, temperatures automatically by analysing in turn, help with efficiently balancing provides such a service to coal-fired the daily habits of home dwellers. By between supply and demand.

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Innovation - Artificial Intellegence.indd 22 11 /7/18 12:42 PM Innovation

1 5 End-to-end VPN securely SaaS model ensures100% of communicates with your building, energy the financial savings, reduced and environmental data via the cloud. emissions and access to high-value demand-side Grid Edge flexibility payments.

2 3 4

Using Creating Optimise Control Communicating Predict unique load forecasts, optimised value from this data, hybrid securely via the cloud, optimised dispatch strategies for building deep learning algorithms and control strategies can intergrate management system are created neural networks are deployed directly with the BMS or be provided to maximise financial and to create precise load as an alternative strategy for review environmental performance. forecasts for buildings. and implement.

Source: http://www.gridedge.co.uk

Doing It the Malaysian Way

While Malaysia may not be on the fast As digitalisation and artificial intelligence go track of AI development, it is certainly hand in hand, Cheah Wai Seng, Accenture’s making its way along this path, at a slow but steady pace. For instance, the Managing Director of Resources who strongly smart meters which will be implemented supports the incorporation of digitalisation in the nationwide by 2021. Meter reading as a energy sector, reports that players in the energy job will then be redundant as physically travelling to each house would not be industry such as Tenaga Nasional Berhad (TNB) necessary. Accurate reading will also – to name the largest energy corporation – are be guaranteed, avoiding any human investing in technologies that will be able to step tampering. Smart grids are also being up the game. Artificial intelligence also spells experimented, and are now in an initial- stage project. These grids will be able operational efficiency, definitely a profitable to control energy consumption in the prospect in the Malaysia energy sector. nation, reducing energy usage and wastage dramatically.

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Innovation - Artificial Intellegence.indd 23 11 /7/18 12:42 PM SAIDI 100 Lab: Powering Up sabah

Breaking Down the Crisis

or years, the Sabah Electricity Supply Industry The System Average Interruption Duration Index (SAIDI) is an index has been facing various challenges that impede utilised to measure the reliability its reliable supply of electricity to end consumers. of the electricity supply in a certain F state, territory or nation. This is done The government alongside the Energy Commission by calculating the average number have been lending a helping hand with numerous of minutes of interruptions that each initiatives such as SAIDI 100 Lab. Energy Malaysia customer faces with the use of data shines the spotlight on SAIDI 100 Lab, which is such as time, duration per customer, extent and cause of supply disruption. powering up Sabah electricity supply industry. In Sabah, the Sabah Electricity Sdn Bhd (SESB) is responsible for its electricity supply. Although its SAIDI has been showing improvements over the past few years, it is still relatively high in comparison to Sarawak and Peninsular Malaysia, at 311 minutes per customer in 2016.

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SAIDI 100 Lab- Saving Sabah.indd 24 12/07/2018 6:37 PM Feature

The Sabah Electricity Supply Industry has been facing various challenges and ST alongside SESB are determined to improve the SAIDI in Sabah through the SAIDI Sabah 100 Lab and TaskForce 150 (TF150).

As the electricity supply and demand continue to rise, the process of electricity being generated and distributed to end users will require ∑ Customer Interruption Durations continuous improvement, to ensure The formula = that the supply being delivered to Total number of customers served the end users is reliable and of an used for SAIDI acceptable quality. ∑ Ui Ni Sabah Electricity Supply Industry (SESI) SAIDI = is also dealing with a lot of challenges NT that needs to be addressed to ensure the sustainability of the industry. Other than tariff not being cost-reflective, where Ni is the number of customers and Ui is the annual outage time generation cost is also high with for location i and NT is the total number of customers served. imbalanced and undiversified fuel mix. The current planned fuel mix for Sabah, which is not economically efficient, will Source: Suruhanjaya Tenaga continue to burden the industry.

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SAIDI 100 Lab- Saving Sabah.indd 25 12/07/2018 6:38 PM Sabah Electricity Kementerian Kemajuan Sdn Bhd (SESB) Luar Bandar dan Wilayah (KKLW) Utilising the Big Fast Results (BFR) Methodology © developed by PEMANDU, the Lab has produced a report of more than 600 pages which covers 41 initiatives with more than 4Main 500 projects – in terms of generation, transmission, distribution and Sabah Sabah Special Implementers Electricity Supply Industry. Further, Taskforce they have also identified 139 Key Project and 150 Performance Indicators (KPIs) which is Delivery Unit (TF150) to be achieved by 2020. (SAPADU) From 2010 to 2017, Sabah’s SAIDI dropped by 64.95%, with the figure Source: Suruhanjaya Tenaga in 2017 standing at 240.9 minutes/ consumer. While there is still room for Enter the SAIDI 100 Lab improvement, it should be noted that Having difficult financial status, SESB the SAIDI is well under the threshold of is largely reliant on subsidies and SAIDI 100 Lab was incepted to 250 minutes/consumer which has been government grants to keep them afloat. address the dire issues at hand. set for Sabah. Long term, the target A significant of funding has been It is a multi-disciplinary team with set out by the Lab is to achieve 100 provided to them by the government members comprising from both the minutes per consumer by 2020. since their privatisation. public and private sector. For a period of 4 weeks, this elite team develop A Game Plan for the State Another key issue for SESI is that there strategies and then, the strategies is no comprehensible electricity industry are translated into a detailed 3 phase To achieve that, it is vital to introduce policy. As a result, there is no clear implementation. This implementation a structured pricing mechanism for direction and moving forward of the allows the service provider to execute electricity tariff setting in the form of industry which stalls the development of the plans and ultimately provides the Incentive-based Regulation (IBR) SESI as a whole. quality to the consumers. mechanism. Under IBR, SESB will be

Sabah’s electricity area is divided into three different sectors namely, Sector 1, Sector 2 and Sector 3. Of all these sectors, only Sector 2 achieved their SAIDI target for 2016.

SAIDI SAIDI Sector Location Target Achieved 1 Kota Kinabalu, Labuan, Tawau, Sandakan 150 236.56

Tuaran, Ranau, Beaufort, Papar, Keningau, Kota Belud, 2 Kudat, Kota Marudu, Semporna, Lahad Datu 400 380.48

Sipitang, Kuala Penyu, Tambunan, Tenom, 3 Pitas, Kunak, Beluran, K. Kinabatangan, Telupid 230 436.05

Total 250 311.01

Source: Suruhanjaya Tenaga

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SAIDI 100 Lab- Saving Sabah.indd 26 12/07/2018 6:38 PM Feature

3500 SAIDI in Sabah

3000

2500

2500

1500

1000

500

SAIDI (Minute/Customer/Year) 0 YEAR 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 SAIDI 2868 687.39 494.64 556.86 423.99 777.26 379.26 311.01 240.9 Target 650 450 350 280 250 250 200 150 100 Source: Suruhanjaya Tenaga

able to recover its operating costs in namely Kota Kinabalu, Labuan, Tawau, parties operating in silos without input addition to attracting capital to fund Sandakan, Kota Marudu, Kota Belud, from other parties. the future expansion of electricity Tuaran, Papar with a reduction of SAIDI supply. The right tariff rates for by 100 minutes per customer at each Between these four parties, there SESB must also be planned in order area by June 2018. are more than 300 electricity to reflect the cost of supply based projects that are currently on embedded and marginal cost of TF150 was set up on Oct 17 with 45 being implemented in Sabah. supplying electricity in Sabah. experts from TNB and 15 from SESB However, these projects fall under despatched to the focus areas to the purview of more than 40 As such, the government has execute and fast track the upgrading stakeholders from both the State announced the IBR implementation projects. The program will be and Federal Government which in Sabah and the Federal Territory of carried out in three phases. The first includes the likes of Jabatan Tanah Labuan for the setting of tariff. The being the planning and preparation dan Ukur, Kementerian Kerajaan implementation will commence by 1 phase, followed by Phase 2 – Tempatan dan Perumahan and July 2019 till 31 December 2020, implementation and execution, which Dewan Bandaraya Kota Kinabalu. inclusive of 6 months of trial period and is expected to be completed in within 2 years as the first regulatory period. six months; and Phase 3 – monitoring and sustainability which would begin Ultimately, the main goal Additionally, the TaskForce 150 (TF150) work from June 2017 to May 2018. is to ensure that there is a programme undertaken by Tenaga reliable supply of electricity Nasional Berhad (TNB) and SESB To continue improving Sabah’s through their joint task force aims to electricity supply, reliability, quality and to consumers. To realise that reduce the SAIDI to 150 minutes per coverage, there are many entities, goal, the Energy Commission customer in the state by year 2018. both from the private and public sector is working hand in hand This is part of the Federal Government’s involved. With many parties involved, commitment to improve quality and effective coordination is key in ensuring with SESB to ensure that sustainability of power supply in Sabah. that the objective is communicated the Sabah electricity supply well and partnership among parties industry is moving towards a It is also hoped through this joint can be established. However, effective effort, they would be able to achieve coordination has proven to be very better future for the benefit of the target by focusing on areas difficult which has resulted in many the people.

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SAIDI 100 Lab- Saving Sabah.indd 27 11 /7/18 2:40 PM Processes and Operations

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Leading RP2 to Success v4.indd 28 11 /7/18 2:07 PM Views

he Energy Commission is undergoing a T transition parallel to the second Regulatory Period and as such, many changes can be expected. Energy Malaysia interviews Abdul Razib Dawood, the newly appointed Chief Operating Officer (COO). Processes and Operations

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Leading RP2 to Success v4.indd 29 11 /7/18 2:08 PM Having had experience with ST as the Head of Electricity Market Operation Q: Unit in the past, how do you see your experience in this organisation helping in your new role as Chief Operating Officer?

I report to the Chief Executive Officer (CEO). The COO is entrusted to oversee the day-to-day operations A: and focusing on the internal activities of ST’s business if you like. This will free some of CEO’s time to spend more in the strategic and longer-term challenges face by the organisation.

If you like, CEO has his “head up” to achieve success in the future, whereas COO has his “head down,” focusing on the operational details necessary for success today.

My previous experience as the Head of Electricity Market Operations Unit is certainly helping me as I was tasked to monitor and ensure security and reliability of electricity generation and supply to consumers.

MESI (Malaysia Electricity Supply Industry) and gas supply industry Q: are currently going through a transition, in your opinion what should consumers expect from this transition?

As you are probably aware, ST always promotes reliable supply, competition and efficient operations for the A: long-term benefit of consumers. We balance that with industry viability and sustainability to continuously give quality of service. This transition would definitely benefit the consumers as their demand for more transparent and highly efficient industry will be met as we journey together through the transition period.

Do you see today’s consumers are becoming more sophisticated Q: and how ST as regulator response to it?

Since 2014, the Government via ST has been practising transparency with regards to electricity tariff A: determination. Consumers could see the breakdown of the costs of electricity and fuel in the monthly electricity bill that they pay. However, I do agree that today’s consumers demand more than that. Consumers want to take control of their electricity usage, the types of energy resources they buy, as well as the ability to co-generate their own electricity and sell the power back to the grid. Big corporations have pledged their energy sustainability as part of their business objectives. We, at ST see this consumer empowerment as part of our evolution in the regulatory framework. We encourage utilities to adapt and be agile in responding to this increasing demand from consumers and minimise risk of losing significant load. Going forward, we will have appropriate frameworks to address the changing energy landscape.

Q: What are other challenges that you could foresee?

Environment sustainability is a big challenge for energy sector. With the commitment on COP21 A: signed in Paris, various programmes have been initiated towards meeting the carbon emission reduction target. The response to our solar energy biddings so far has been very encouraging. We can see a clear alignment in sustainability objectives and its journey between the Government, policymaker, regulator, utilities and consumers.

About 15 years ago, we predicted that the Distributed Energy Generation (DER) would slowly displace the centralised generation. Now it is happening. And fast too. Together with RE, it will continue to grow exponentially driven by rapidly changing technology and expanding consumers’ choices. No doubt that this has a dramatic impact to traditional utilities to consumers’ relationships. Technically and operationally, we are fully aware of the increased complexity of the two-way flow of distributed system, intermittency, RE resources spread and digitised grid network. New technology comes with new innovative solution which we will use to modernise our grid system.

As we embrace these challenges, we are very well aware of it profound impact on regulatory policy. The utility industry is vital for the nation economic growth. Ultimately, the fundamental objectives are to provide a safe, reliable and affordable service to consumers.

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Leading RP2 to Success v4.indd 30 11 /7/18 2:08 PM Views

“The Energy Commission advocates for digitalisation within the energy supply industry. We can’t stop technology from taking over. So, we must embrace it and as a regulator, we will have to manage it well.”

– Abdul Razib Dawood Chief Operating Officer (COO), Energy Commission

We have seen industries merged in other parts of the world, for example, Q: oil and gas company to become new entrant of power industry. Do you see this happening in our country?

It has happened here in a significant way when PETRONAS Gas commissioned the 300MW gas combined A: cycle IPP in Kimanis Sabah in 2014. Recently, another PETRONAS RAPID Pengerang Power Plant commissioned 600MW co-generation plant in Johor.

When the Government introduced the Third Party Access (TPA) on gas facilities and pipeline transmission, we welcome utilities like TNB to study possibility of bringing in imported LNG from overseas to local gas market. We hope this cross-industry movements and increased crossover investments between the electricity utility and O&G industries will bring positive competition and benefit to consumers in the long run. As an organisation, ST is equipped and well prepared in our role as the industry regulator for both electricity and piped gas to this newly evolved merged industry.

Q: How would you like to conclude this conversation?

Everyone in the “eco-system” of the energy sector has a role to play, be it policymaker, regulator, industry A: players and even consumers. We have proven ourselves when we dealt with balancing act between three competing objectives in energy trilemma of energy security, affordability and sustainability. Now we are facing with additional set of challenges which are de-carbonisation, de-centralisation and digitisation (3D). But nothing is insurmountable.

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Leading RP2 to Success v4.indd 31 11 /7/18 2:09 PM Forecasting the Energy Industry

he profession of economist is commonly heard of. But what about energy economist? One may ask what are energy economists and what do they do? In this section, Energy T Malaysia takes a closer look at the roles and functions of an energy economist, the unsung hero of the energy industry. Wan Zaini Zakaria, Universiti Tenaga Nasional’s (UNITEN) own energy economist gives insights on what it takes to be one.

Energy economist falls under carries out analysis on environmental interested candidate can pursue their the broader career category of protection and use of the natural degree from a Foundation level in economists. An energy economist’s environment such as water, air, land the Arts or Science stream or even a job scope includes conducting and renewable energy resources. Diploma level in either Business Studies economic analysis related to energy or Engineering. He or she must be demand and supply, energy market To be an energy economist, one equipped with critical thinking, good analysis, energy price and energy must possess a Bachelor’s Degree analytical skills and an understanding of policy analysis. He or she also of Economics (Energy) (Hons.). An the energy markets.

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Power Path v1.indd 32 12 /7/18 6:44 PM Power Path Forecasting the Energy Industry

Role and Function As an example, energy economists information to energy agencies According to Wan Zaini, there are at the Institute of Energy Policy whilst also working together with three principle roles of an energy & Research (IEPRe), UNITEN in various energy agencies like Tenaga economist. First, energy economist collaboration with several local and Nasional Berhad (TNB), Energy acts as an analyst in the area of international energy agencies have Commission and Ministry of Energy, energy-economy-environment conducted studies on Energy Efficiency Green Technology and Water (3E) studies. The person examines Implementation in Malaysia: Impacts of (KeTTHA). He or she advises these on topical issues in the area of 2013 MEPS Appliances Regulation and agencies to ensure that they can sustainable energy development, Establishment of Standard Operating work effectively towards meeting climate change and nuclear power. Procedures (SOP) for Energy Data their national energy development Not only that, an energy economist Collection and Dissemination. goals and objectives. also acts as a team member by working side by side on studies and Additionally, an energy economist Local energy economists work closely analyses projects like energy reports. functions as an advisor by providing with TNB, the Energy Commission and

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Power Path v1.indd 33 12 /7/18 6:44 PM Power Path

“Should energy sources become completely renewable, as with solar, wind or geothermal power, energy economists may no longer be needed or may move into another type of role.”

– Wan Zaini Zakaria, Energy Economist, Universiti Tenaga Nasional’s (UNITEN)

KeTTHA on capacity building efforts she has to determine the availability As there is continuous transition within in energy-economy modelling and of supply which is correlated to the the energy industry, the need for techno-economic assessments. The nation’s economic health. If supply gets renewable energy sources arises. Non- staff at College of Energy Business harder to obtain, energy costs will go renewable energy sources then would and Economics (CEE), UNITEN works up. This in turn significantly impacts the become secondary and with this would with counterparts from energy planning economy with a ripple effect whereby alter the role of an energy economist. institutions involved in national energy every other segment of the economy As such, the energy economist will help and electricity planning studies such as is influenced negatively as well. The foretell the most efficient way of using studies of various energy report, world energy economist assists in studying a limited energy supply. In some cases, energy report and world bank, just to these trends and foretells whether or he or she will also control the way it’s name a few. not the trends will continue while also used so as to protect the environment providing solutions. as much as possible. The Problem Solvers

However, this profession comes with its own set of challenges. As an energy Nonetheless, energy economists today have a very important economist, Wan Zaini stated that it job to do economically, politically, socially and environmentally. always comes down to the supply and They have the responsibility to forecast, study, analyse and demand of energy pertaining to the risk of a given supply source and the provide viable solutions for an energy problem. It is a need that security of the supply source. He or no doubt will not go away for at least the foreseeable future.

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Power Path v1.indd 34 12 /7/18 6:44 PM Power Practice

The Bachelor of Economics (Energy) (Hons.) Paving the Future of Energy Industry

s energy resources fluctuate unpredictably in the industry, it is absolutely vital to have energy economists to analyse, foretell and solve problems within the energy A industry. Energy Malaysia delves into the makings of an energy economist with insights from Dr. Nora Yusma Mohamed Yusoff, Head of Department and Senior Lecturer at Universiti Tenaga Nasional (UNITEN).

Recently introduced at UNITEN, the Bachelor of Economics (Energy) (Hons.) is a pioneering tertiary programme that has garnered the attention from students all over the nation and even on an international scale. It is the first university in Malaysia to offer this Bachelor course to cater to the demanding growth of energy economists in Malaysia.

Dr. Nora Yusma Mohamed Yusoff, Head of Department and Senior Lecturer at UNITEN explains requirements for potential students and the career prospects for students enrolled in this degree programme.

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Paving Youth's Future v1.indd 35 10 /7/18 9:15 PM Power Practice

Programme Structure

PROGRAMME DURATION

3 years (9 semesters)

AMONG THE COURSES INCLUDED JOB PROSPECTS IN THE PROGRAMME ARE:

Energy Economics Energy Economist Energy Management Energy Auditor Energy Security Environmental Consultant Renewable Energy and Sustainability Environmental Auditor Energy Regulations and Policies Green Industry Auditor Energy and Society Economic Specialist Officer Economics of International Oil & Gas Economic Researcher and Consultant Energy Audit & Reporting Business Analyst Green Energy and Environmental Corporate Executive Low Carbon Economics Lecturer International Energy Trade and Market Managerial Economics

Source: UNITEN

The launch of this tertiary programme member of the consultative council of wish to focus on the enforcement is in line with UNITEN’s vision and the curriculum development. aspect, they can pursue taking special mission which is to achieve its status training courses to hold positions as as an energy university. This 3-year This Bachelor of Economics (Energy) an energy manager, energy auditor or Bachelor’s degree programme is (Hons.) course is specifically structured environmental auditor. designed to expose students to to equip students with a strong the specific aspects in economics theoretical and practical knowledge in discipline and energy sector. In doing economics and energy. These qualities so, it offers specialisation courses are prerequisites to students before With this newly offered including energy economics, energy they can embark on the real world of course, it promises top notch security, energy regulations and energy service sectors. Additionally, graduates specialised in policies and renewable energy and students can also continue to pursue sustainability, just to name a few. their studies to obtain the Master’s energy economics with a Degree in Energy Management or in wide array of job prospects According to Dr. Nora, prior to the other Master’s Degree in Business awaiting them. These establishment of this programme, Administration (MBA) programmes. UNITEN conducted various studies specialised graduates would by referencing other countries to A graduate of this programme can start be a valuable asset in the establish a benchmark for it. Further, their career as an energy economist, industry by greatly enhancing Professor Ken Koyama, the Chair economic researcher and consultant or the industry knowledge and in Energy Economics of Energy even a lecturer if they wish to dabble Commission at UNITEN is the in the academia field. For those who know-how.

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Paving Youth's Future v1.indd 36 10 /7/18 9:15 PM Country Focus

hough it’s still in its infancy stage, the Incentive-Based Regulation (IBR) system proved to be successful for Malaysia. The system has improved transparency, efficiency and a T continuous supply of electricity to its consumers. Energy Malaysia takes a look at some of the European countries that has adopted IBR and the state of their energy industries.

Germany

One of Europe’s powerhouses, 900 Distribution System Operators System Operator (ISO) and Germany is the strongest economy (DSO) operating in Germany, all of Independent Transmission Operator on the continent, and the same can them mostly run by the vertically (ITO). Unbundling means there will be said about its energy industry. integrated utilities. be a separation of energy supply The nation is the largest electricity and generation from the operation market, with over 180GW of installed In 2013, Germany switched from a of transmission networks. If there capacity. This was largely driven cost-based to an incentive-based is a monopoly on transmission or by the continuous expansion of regulation system to enhance its distribution, it is highly likely that renewables which has become one energy supply. that particular company would of the cornerstones of Germany’s obstruct competitors’ access to energy market turnaround. Another There are three unbundling models the infrastructure. Therefore, these unique aspect of Germany’s energy within the system which are full models are used to discourage industry is that there are more than ownership unbundling, Independent vertically integrated utilities from views FROM THE WEST

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EM 15 Country Focus v3.indd 37 10/07/2018 9:04 PM The UK, Germany and France have adopted the Incentive-Based Regulation (IBR) mechanism with the aim to promote transparency, efficiency and also in ensuring a security of supply.

discriminating against competitors in developments and proposes changes amount of time to innovate and terms of access to, and investment to the framework. deliver the desired outcomes which in the grid. is reliable and efficient supply of electricity generation at an Within the regulatory framework, United Kingdom affordable price. electricity grid operators are not allowed to be involved in the The United Kingdom (UK) has also RIIO also has an incentive and electricity production. These grids implemented a similar version of performance mechanism for six of are operated through separate Malaysia’s IBR. The mechanism its outcome categories – safety, entities. Through the unbundling, was introduced to keep costs low environment, customer satisfaction, transparency is prioritised to for customers while at the same connections, social obligations guarantee the independence of time encourage innovation within and reliability. This design feature companies responsible for operating the energy sector such as gas is intended to motivate utilities to said electricity grids. distribution, electricity transmission innovate to deliver what customers and electricity distribution. want from the utility system. However, the IBR mechanism used may be effective but it is still far from The new system that was There is still much to learn for the perfect. For one, there are too many implemented is called “Revenue UK to improve its performance- DSOs to keep in check. This is why set to deliver strong Incentives, based regulation to meet the the German Energy Commission is Innovation and Outputs (RIIO)” and demands of its consumers. Take continuously evaluating the incentive came into effect four years ago. for example, that even though UK’s regulation together with the RIIO has a regulatory period of Energy Commission has worked with industry associations, the network eight years, with a review taking industry players and stakeholders operators, network users and political place every four years. to define the outcome metrics, representatives involved. Additionally, there were still some instances the German regulators adapt the The lengthy timeframe is to ensure of ambiguity arising. As such, the administrative procedures to new that utilities would have sufficient Commission would ensure the

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EM 15 Country Focus v3.indd 38 10/07/2018 9:04 PM Country Focus

RIIO: performance-based

regulation at work Current View of RoRE Opening Position Return on Regulatory Equity IQI Ex-ante Reward/Penalty (real, post-tax) Cost of Equity 14% WPD Cost of Wquity = 6.4% All Others Cost of Equity = 6.0% 12% Performance +ive -ive 10% Tax Allowance Retained 8% Within Deadband Payments Under Guaranteed 6% Standards (GSoP) Losses Discretionary Reward 4% Time to Connect Incentive

2% Incentive on Connections Engagement (ICE) 0% Interruptions Related Quality of Service (IIS) -2% Broad Measure of Customer -4% Service (BMCS) ENWL NPgN NPgY WMID EMID SWALES SWEST LPN SPN EPN SPD SPMW SSEH SSES Totex Incentive Mechanism RoRE 9.22% 7.59% 8.48% 7.85% 8.57% 8.58% 7.46% 11.63% 11.55% 11.38% 7.32% 7.21% 8.85% 9.68% Reg. Equity 541 409 463 729 723 335 493 500 514 790 543 580 336 709 Fines & Redress Payments Group RoRE 9.22% 8.06% 8.10% 11.50% 7.26% 9.42%

Measures in £m 2012/13 Prices At present, utilities in the nation are performing well rather than poorly Using a RAV Weighted Average on their outcomes. The figure indicate that more and higher performance targets that could be set to benefit the utility and its consumers. Source: www.greentechmedia.com

outcome-based performance is energy regulators. CRE’s main were created. The Regulations measured clearly and precisely to function is to guarantee non- Committee of Disputes and Penalties solve such issues. discriminatory access to the grids for settles disputes between grid users all plants, suppliers and producers and distribution and transmission Though the nation differs in its through the IBR mechanism. That operators. It can also impose policies and priorities than many of way, suppliers are able to purchase penalties in case there was any the countries that implement it, its electricity at a fair price which would breach of agreement between them. experience already provide some then be sold to the consumers. much needed lessons. The system has improved the The IBR mechanism used is nation’s industry by a long mile. characterised by a penalty/reward Transmission companies will be kept France based system. This system was used in check which in turn, would not because the French Transmission lead them from earning excessive The electricity market in France System Operators (TSO) benefited rents while at the same time ensure mirrors that of the European Union from a high allowed level of that there is transparency and although they differ through the IBR Weighted Average Cost of Capital financial sustainability. Consumers mechanism. The Energy Regulatory (WACC). To keep the TSO in check, too would enjoy these services at a Commission (CRE) is the nation’s two regulatory independent bodies low cost.

Much can be learned from nations that implement the IBR mechanism. Malaysia could implement some of them in the upcoming RP2. Though there is only one utility company, the Energy Commission can explore prolonging the regulatory period so as to ascertain and review the proposed targets and work on improving it. In conclusion, it is hope that this can boost the reliability and sustainability of the energy supply generation to its consumers.

39

EM 15 Country Focus v3.indd 39 10/07/2018 9:04 PM s the nation undergoes Regulatory Period (RP) 2, Energy Malaysia takes a look at the takeaways from RP1 and how it will help enhance A the nation’s energy security for the next regulatory period.

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An In-Depth View of RP1 v2.indd 40 10/07/2018 8:41 PM Analysis

Performance of TNB During RP1

RP1 CAPEX RM 18.5 RM 15.7 Billion Billion

APPROVE ACTUAL

RP1 OPEX RM 16.4 RM 16.9 (excl. Depreciation) Billion Billion

Source: Suruhanjaya Tenaga

A System that Works

The Incentive-Based Regulation (IBR) ST will also set performance targets were passed through to the end- system was introduced in 2014 among with incentive/penalty mechanism for customers. It was mainly due to others to strengthen regulatory process the utility company. In general, if TNB the savings from the lower actual of electricity tariff determination as well provides a continuous and reliable fuel prices as compared to the as to drive cost-efficiency in electricity supply of electricity generation to assumptions used during the base generation, transmission and distribution, its consumers, it would be given an tariff setting that must be pass- aiming to bring about long-term incentive. However, failure to do so through to consumers. At a certain energy security and reliability of supply would lead to a fine. point, the Government decided at affordable prices to consumers. to provide subsidies by absorbing Along the way, it also aims for better Key Component the surcharge costs by using the transparency from Tenaga Nasional Electricity Industry Fund. This move Berhad (TNB), the utility company. It was Another significant feature of the IBR was to ensure that consumers, given a trial run for year before being system is the Imbalance Cost Pass- especially those that are not well successfully implemented in the first Through (ICPT) mechanism. This off are not burdened by the price of regulatory period (2015-2017). mechanism takes into account costs electricity. that are uncontrollable, for example, the Some of the key features include price fluctuation of coal and liquified Performance of TNB a projected Capital Expenditure natural gas. This mechanism will then (CAPEX) and Operational Expenditure be reviewed every 6 months through The success of RP 1 can also be (OPEX). This would enable the Energy the regulatory period, so that the attributed by the performance of the Commission to ensure that the base government can impose a surcharge or utility company, TNB. During the three tariff, set at 38.53 sen/kWh would not a rebate to the consumers. year period, TNB has successfully be a burden to its consumers while at met most of its KPIs. One highlight the same time allows TNB to achieve a Throughout RP1, a total of RM 6.3 being the System Average Interruption reasonable profit. billion of rebates and subsidies Duration Index (SAIDI). The utility

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An In-Depth View of RP1 v2.indd 41 12 /7/18 6:55 PM Analysis

Rebates and Subsidies Passed Through

Interim First Second Regulatory Regulatory Regulatory Period Period (R1) Period (R2)

2014 2015 2016 2017 2018

Jan Jul Dec Jan Mar Jun Jul Dec Jan Jun Jul Dec Jan Jun Jul Dec Jan Jun P1 P2 P3 P4 P5 P6 P7 P8 P9

2.25 2.25 1.52 1.52 1.52 1.52 1.52 sen/kWh sen/kWh sen/kWh sen/kWh sen/kWh sen/kWh sen/kWh RP1 Base Tariff rebate rebate rebate rebate rebate rebate rebate 38.53 sen/kWh (726.99) (1,085.67) (762.03) (758.03) (766.33) (1,303.23) (929.37) Base Fuel Price RM mn RM mn RM mn RM mn RM mn RM mn RM mn

Imported LNG RM 41.68/mmBTU > RM 6.3 Billion Total ICPT rebate approved as at Dec 2017 Imported Coal RM 271.25/MT

Domestic ICPT review every 6 months: Piped Gas The rebates from March 2015 until June 2017 (P3-P7) were made possible largely due to the saving RM 15.20/mmBTU derives from lower actual fuel price (i.e. Coal and LNG) as compared to benchmark price

Source: Suruhanjaya Tenaga

company have kept an average of 50 will be treated under efficiency carry- and cost, then tariff would be lessened minutes/customer in 2017 which is over scheme for consumers benefit by as well. This would also be beneficial to well below the target set for them. returning half portion of it to consumers. ST as it would enable the gauging of the necessary spending come RP 2. The CAPEX and OPEX spent was Single Buyer (SB) component makes also well below the approved spending. up about 69.5% out of the base tariff TNB also managed to increase its Under the Regulatory Implementation which translates to 26.76 sen/kWh. If consumer growth. It has increased from Guidelines, these underspent expenses SB could be enhanced for efficiency 7.9 million (2012) to 8.5 million (2017). Most of the increase comes from the commercial sector where TNB derive most of their revenue from.

The analysis shows that the electricity industry in Malaysia is a work in progress. There are more features being implemented in the electricity tariff for RP2. With that, electricity supply could be more reliable and efficient and this would lead to the success of the aspirations of the industry and the nation as a whole.

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An In-Depth View of RP1 v2.indd 42 12 /7/18 6:56 PM On-Site

The Outlook For Energy: A View to 2040 he energy sector is in a constant state of flux as changing trends, innovations and geopolitical events shape its direction. It is therefore vital for stakeholders T – who range from national entities to energy industry players – to keep their fingers on the pulse of things so as to keep track of where the sector is heading.

ExxonMobil Malaysia President Edward E. ExxonMobil USA Energy Advisor Lynne D. Taschner Graham presented the first part of the Outlook. presented the second part of the Outlook.

This task is made easier through the While the report is used mainly by As such, the Malaysian Gas Association publication of “The Outlook for Energy: ExxonMobil to calculate its investment (MGA), in association with the Energy A View to 2040” report. An annual strategies, it is also a very useful tool Commission, organised a talk on 14 initiative of ExxonMobil, the report for the energy industry as a whole. March, where the report was presented showcases the energy giant’s analyses This is because the level and detail to invited guests comprising Malaysian of worldwide energy demand and supply, of research it contains helps enhance energy industry stakeholders. The which it has formulated through the use understanding of the issues affecting welcome address was given by MGA of various data and studies. the global energy sector. President Hazli Shah Kassim, while

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Onsite - Safeguarding the future.indd 43 10 /7/18 9:08 PM On-Site

ExxonMobil Malaysia President Edward 2030, oil will continue to be a major At the same time, natural gas usage is E. Graham and ExxonMobil USA component of fuel for commercial expected to increase at a faster rate Energy Advisor Lynne D. Taschner transportation and the chemicals than any other energy source. This is respectively presented parts 1 and 2 industry. As such, its place in the mainly due to its versatility and use of the Outlook. global energy mix will not be reduced as a reliable feedstock for electricity too much despite an increase in the generation, which is less carbon- Among the trends discussed during use of electric cars and more fuel- intensive than other conventional the presentation was how electricity efficient options. methods such as coal. from renewable energy, in particular wind and solar power, will enjoy a 400 percent increase by 2040. This rapidly expanding source of energy Malaysia is a net energy exporting nation with significant is likely to triple by 2040 and at the same time reduce carbon emissions reserves of oil and natural gas, and which is looking to increase by 30 percent. its use of renewable energy. As such, the information provided in “The Outlook for Energy: A View to 2040” are vital for the The Outlook also forecast that while use of liquid fuels in light or personal nation’s energy sector stakeholders – in both the public and transportation will likely peak by private sectors – to better plan for the future.

Malaysian Gas Association President The presentation of “The Outlook for Energy: A View to 2040” was attended by policy makers, Hazli Sham Kassim giving the welcome energy industry representatives, academics and other key players in the sector. Among the address at the presentation of “The attendees were then Energy Commission Chairman Dato’ Abdul Razak Abdul Majid (third from Outlook for Energy: A View to 2040”. the left) and the Deputy Director-General (Sectoral) of the Economic Planning Unit/Energy Commission member Datuk Alauddin Anuar (second from the left).

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Onsite - The Outlook for Energy.indd 44 12 /7/18 7:02 PM On-Site

One Step Closer to Energy Reforms

aunched in October 2017, the governance reform of the Single Buyer (SB) and Grid System Operator (GSO), is an initiative by the Energy Commission L to hive the two bodies from Tenaga Nasional Berhad (TNB). Presently, both entities are ring-fenced inside the wider TNB corporate structure, and while that ensures their autonomy, there is still a perceived conflict of interest.

Baevin Thiagarajah, a consultant from KPMG Deals Advisory presents the features of the governance reform of Single Buyer and Grid System Operator model.

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Onsite - One Step Closer to Power Sector Reforms.indd 45 10 /7/18 8:57 PM On-Site

Energy Commission Chairman Datuk Ir Ahmad Fauzi Hasan and CEO Ir Azhar Omar were among the stakeholders in attendance at the “MESI Governance Reform: Single Buyer and Grid System Operator” seminar held on 15 May.

Just like how Caesar’s wife must be invited views from various stakeholders. These views, proposed action plans, and seen to be above suspicion, the Energy These included the Ministry of Energy, KPMG’s recommendations were then Commission is seeking to eliminate Green Technology and Water, the compiled and presented to stakeholders any notion that SB and/or GSO are Ministry of Finance, the Economic at the “MESI Governance Reform: biased towards their nominal parent Planning Unit, TNB, SB, GSO, investors Single Buyer and Grid System Operator” company. The respond is to create an including Khazanah Nasional, KWSP seminar held on 15 May 2018. Independent Single Buyer (ISB) and and KWAP, independent power Independent Grid System Operator producers, banks, insurance company Among the topics discussed was (IGSO), so as to enable them to and credit rating agencies. on how disruptive forces such as perform their duties more effectively. electrification, decentralisation and This is also part of the wider industry In addition, a workshop was held digitalisation are shaping the industry, reform roadmap undertaken under the in November 2017 where the thus necessitating changes in the 9+1 initiatives in 2012. aforementioned stakeholders electricity supply industry. Other discussed the factors driving the need highlights included exploring the various Working together with KPMG Deals for reforms and how to align them governance models for the ISB and Advisory, who is also the consultant for with the Malaysian Electricity Supply IGSO, and the ownership structure of the project, the Energy Commission Industry’s (MESI) objectives. such entities.

The “MESI Governance Reform: Single Buyer and Grid System Operator” seminar is a key highlight in the movement to create the ISB and IGSO. These in turn are critical parts in the reform of MESI, which will lead to a more competitive, effective and efficient electricity supply industry, bringing benefits to all.

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Onsite - One Step Closer to Power Sector Reforms.indd 46 10 /7/18 8:57 PM On-Site IFGE 2018 Restructuring The Global Energy Landscape

Then Chairman of ST, Dato’ Abdul Razak Abdul Majid and Ir. Azhar Omar, CEO of ST alongside the panel of international speakers and industry leaders during the closing ceremony of the successful IFGE 2018 forum.

lectricity and gas have played vital roles in providing the growing energy needs for almost every economic activity within the nation. This would raise important choices and E opportunities for the energy industry to adapt to any change that might occur within the global energy landscape. In an attempt to address this issue, a forum was created in order to provide a platform for international experts and Malaysian industry players to discuss the state of the energy industry and it’s implication towards the economy.

On 13 February 2018, the International Forum on Global Energy Landscape: Electricity and Gas Market Liberalisation and It’s Implication to Malaysian Economy (IFGE 2018) was jointly organised by the Energy Commission and the Institute of Energy Policy and Research (IEPRe), University Tenaga Nasional. The forum was conducted after a rousing success from the first IFGE 2016 which was held two years ago.

IFGE had invited several international speakers and industry leaders to Ir. Azhar Omar, the CEO of ST highlighting the discuss the state of the electricity evolution and reform and gas industry on the implication initiatives carried out to towards the Malaysian economy. liberalise the industry.

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Onsite - IFGE 2018 Restructuring The Global Energy Landscape.indd 47 10 /7/18 8:43 PM On-Site

Notable speakers included Professor regulation so that industry players will trends and forces that are likely to Dr. Ken Koyama, Chair in Energy operate on a level and competitive shape the energy markets over the Economics of Energy Commission field which will allow consumers to next thirty years. There would also UNITEN, Mr. James Allan, Director enjoy secure and affordable supply be discussions on the gas market. of Frontier Economics Pty Ltd, Mr. of electricity. At present, the gas market would Rosman Hamzah, Secretary-General undergo the prospect of third party of Malaysian Gas Association and As for Malaysia, Ir. Azhar said reforms access in the near future, and other many more. have been made to encourage uncertain cross-border forces that transparency, efficiency, affordability emerged in resources as well as the IFGE 2018 kicked off with an and reliability of the energy supply. energy supply chain. opening speech by Ir. Azhar Omar, Since 2016, the competitive bidding the Chief Executive Officer of the programme was introduced to develop Lively discussions and insightful Energy Commission. In his speech, the Large Scale Solar Photovoltaic presentations were made during he noted how the energy industry is Programme. These exercises were the one-day event. The topics evolving. There have been initiatives implemented in the government’s efforts covered ranged from Sustainability in liberalising the industry by creating to lower the solar tariff rate which has and Technology Disruptions to more competitive markets, with the been too dependent on the Feed in European Experiences in Gas Market intention of managing the price. Tariff (FiT) rates, and unsustainable in Liberalisation and Its Impact on the However, in most countries, the the long run. Market. The opinions and views from supply of electricity is a natural the invited speakers have opened doors monopoly. This in turn, would require This year, the forum attempts to to further research opportunities and complex and costly systems of shine a light on the key global partnerships with interested parties.

The forum provided the perfect platform to discuss the way forward for the nation in dealing with issues and the future of the energy industry. By bringing together heads of governments, policy makers, international speakers, regulators and industry players, the forum will raise awareness on the challenges faced by the global energy landscape.

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Onsite - IFGE 2018 Restructuring The Global Energy Landscape.indd 48 10 /7/18 8:46 PM Do not use a mobile phone  while it is charging.     Use only genuine mobile phone    chargers and batteries.

Using your mobile phone while it is charging is DANGEROUS! BE ENERGY SMART 41 ORDERLY SUPPLY and USE OF ENERGY

Suruhanjaya Tenaga (ST), a statutory body established under the Energy Commission Act 2001, is responsible for regulating the energy sector, specifically the electricity supply and piped gas supply industries in Peninsular Malaysia and Sabah.

The Energy Commission...

Advises Ministers on all matters concerning the national policy objectives for energy supply activities, the supply and Licenses and certifies use of electricity, the supply of gas through pipelines and the use of gas. electricity and piped gas suppliers, competent electricity and Regulates gas personnel, training providers, contractors, equipment and installations, energy service companies and energy managers. electricity and piped gas tariffs and the quality of supply services, as well as promote competition and prevent misuse of monopoly power. Monitors and audits performance and compliance of licensed and certified suppliers, Promotes service providers, installations, equipment importers, manufacturers and retailers. good practices, as well as research, development and innovation in the electricity and piped gas industries. Investigates Plans and develops complaints, accidents, offences and industry issues; arbitrates and enforces compliance. laws, regulations, rules, codes, guidelines, programmes for the orderly development and functioning of the electricity and piped gas industries.

Energy Commission No. 12, Jalan Tun Hussein, Precinct 2, 62100, Putrajaya Toll Free Number: 1 800 2222 78 Telephone: 03 8870 8500 Fax: 03 8870 8637 Website: www.st.gov.my

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