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PENINSULAR MALAYSIA ELECTRICITY SUPPLY INDUSTRY OUTLOOK 2 0 13 Suruhanjaya Tenaga (Energy Commission) No. 12, Jalan Tun Hussein, Precinct 2, 62100 Putrajaya IN SUPPLY ELECTRICITY PENINSULAR MALAYSIA Tel: (03)8870 8500 Fax: (03)8888 8637 Toll Free Number: 1-800-2222-78 (ST) DUSTRY OUTLOOK 2 013 OUTLOOK DUSTRY www.st.gov.mywww.st.gov.my i FIRST PUBLISHED [2013] © All rights reserved. Reproduction of all or any part of this publication via electronic, mechanical, recording or other medium is strictly prohibited without written consent from the Energy Commission. PUBLISHED BY: SURUHANJAYA TENAGA (ENERGY COMMISSION) No. 12, Jalan Tun Hussein, Precinct 2, 62100 Putrajaya, Malaysia Tel: (03)8870 8500 Fax: (03)8888 8637 Toll Free Number: 1-800-2222-78 (ST) Email: [email protected] www.st.gov.my ISBN: 978-967-12023-0-2 ST(P)06/07/2013 PRINTED IN MALAYSIA ii Peninsular Malaysia Electricity Supply Industry Outlook 2013 DISCLAIMER The data and information contained in this publication is prepared and provided for general information purposes only. While Suruhanjaya Tenaga (ST) made reasonable efforts to ensure that the information contained in this publication is accurate, ST shall not have any liability (whether arising from negligence, negligent misstatement, or otherwise) for any statements, opinions, information or matter (expressed or implied) arising out of, contained in or derived from, or for any omissions from, the information in this publication, or in respect of a person’s use of the information (including any reliance on its currency, accuracy, reliability or completeness) contained in this publication. As such, anyone proposing to rely on or use the information in this publication should independently verify and check the accuracy, completeness, reliability, and suitability of that information (including information and reports provided by third parties) and should obtain independent and specific advice from appropriate experts. This publication shall not be reproduced, transmitted or distributed in parts without written permission from ST. If you have any specific queries about this publication or its contents, contact us at [email protected]. iii Industry Overview Transmission Network Outlook • Malaysia’s Economic Review • Transmission Development Plan 1 • Malaysia’s Energy Policy 45 • Electricity Supply Industry in Peninsular Malaysia Competitive Bidding • Energy Efficiency • Restricted Bidding for the 1,000MW Coal 51 Fired Capacity • International Competitive Bidding for the Demand Forecast New Combined Cycle Gas Turbine Power • Introduction Plant in Prai, Pulau Pinang (Track 1) 13 • Forecast Methodology • Restricted tender Among Pre-Qualified • Historical Trending First Generation Independent Power • GDP Forecast Producers and Tenaga Nasional Berhad • Long Term Load Forecast (Track 2) • Electricity Demand Forecast by Sector Electricity Tariff Setting Mechanism Generation Capacities • Generation Capacities 57 21 • New Generation Projects • Extension of Existing Plants Incentive Based Regulation Mechanism Generation Outlook • A New Policy for Electricity Tariff • Generation Planning Criteria 61 Determination 27 • Generation Development Plan • Generation Mix • Fuel Consumption Industry Reform Initiatives • Governance/Policy 63 • Tariff Fuel for Power Generation • Industry Structure • Fuel Sources for Power Sector in Peninsular • Fuel Supply and Security 31 Malaysia • Fuel Pricing for Power Sector in Peninsular Malaysia Closure • Fuel Mix Study • Natural Gas Supply Management 71 Transmission Network Capability • Introduction 37 • Malaysian Grid Code (MGC) • Malaysian Distribution Code (MDC) • Existing Network • Major Transmission Projects Under Construction Contents iv Peninsular Malaysia Electricity Supply Industry Outlook 2013 Preface The Malaysian Electricity Supply Industry, or in short, MESI, is at a crossroad. The global trend has put pressure for Malaysia to restructure the industry to be more transparent and efficient. While we made progress in transforming the industry to be more responsive to the needs of the people, keeping the price to be affordable and competitive pose a major challenge. Under such circumstance, Malaysia is currently gearing towards a new era of electricity supply industry known as the managed market regulation. It refers to a form of government intervention designed to ensure efficient and reasonable pricing of electricity to consumers in the absence of competition. The new MESI, with managed market regulation as its platform, is gradually evolved through a major industry reform process which started in year 2010 - after the last one in the 1990s which witnessed the introduction of independent power producers and privatisation of the national utility. Having a more transparent, efficient and credible market under the new MESI is a pre-requisite for a better management of the current and future industry infrastructure and resources. This includes the generation capacity and plant-up as well as transmission network capability and expansion. Under the new MESI, the upgrading of these infrastructures will be well publicised so as to create the openness and transparency of the industry development. With the above objectives in mind, ST would like to introduce the Electricity Supply Industry Outlook – an annual publication of the electricity supply infrastructure requirement and development prospect for the next 10 years. The publication, ESI Outlook in short, presents the current and future development of generation and transmission capacity in meeting the future growth. However, ESI Outlook will be subjected to periodic review to reflect the changes in the industry from time to time. The theme for this first edition is “Reform Initiatives for the New MESI”, highlighting the activities undertaken in reforming the industry towards a more transparent and efficient structure. However, this publication does not offer any outlook on Renewable Energy (RE) since the promotion and development of RE projects is now under the purview of Sustainable Energy Development Authority of Malaysia (SEDA Malaysia), a statutory body mandated under the Renewable Energy Act 2011 (Act 725) to administer and manage the RE fund and the implementation of the feed-in tariff mechanism. All the information on RE can be found on their website at www.seda.gov.my. This publication is prepared by ST using available information as at 31st December 2012 and consists of the following:- • Industry Overview • Demand Forecast • Generation Capacities and Generation Outlook • Fuel for Power Generation • Transmission Network Capability and Transmission Network Outlook • Competitive Bidding • Electricity Tariff Setting Mechanism • Incentive Based Regulation Mechanism • Industry Reform Initiatives v Industry Overview INDUSTRY OVERVIEW Malaysia’s Economic Review Malaysia is one of Southeast Asia’s successful economies and well developing country in the world. Its economic growth propelled from an agricultural and commodity-based to manufacturing and service-based economy. Over the last 20 years, Malaysia Gross Domestic Product (GDP) grew steadily at an average of 5.8% per year from 1990 to 2011, except for a sluggish growth in 1998 due to Asian Financial Crisis, slow growth of export demand for electronic products in 2001 and the economic downturn due to the slow growth in manufacturing industry in 2009. Figure1: Country GDP (1990-2012) 10.00 8.00 Slow growth of export demand for electronic products (2001) 52% growth as 6.00 of Oct 2012 4.00 2.00 0.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -2.00 Economic downturn due to slow growth in manufacturing industry (2009) -4.00 -6.00 Asian Financial Crisis (1998) -8.00 * Source” Economic Planning Unit (EPU) In 2010, the New Economic Model (NEM) was launched to transform the economy and propel Malaysia to being high income nation. Several economic transformation programme under NEM was introduced. Under such circumstances, the country GDP outlook is forecasted to grow at an average of 4.5% – 5.5% for the year 2013. 2 Peninsular Malaysia Electricity Supply Industry Outlook 2013 Figure 2: Historical data for energy intensity, demand and elasticity Energy Indicators 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 Primary Energy Intensity 99 99 118 122 118 119 118 118 114 112 (toe/GDP at 2005 Prices (RM Million)) Final Energy Intensity 61 65 69 70 70 73 70 65 61 61 (toe/GDP at 2005 Prices (RM Million)) Final Energy Demand per 0.73 1.07 1.26 1.45 1.5 1.63 1.63 1.46 1.47 1.5 Capita (toe Per Capita) Electricity Demand 0.092 0.115 0.142 0.148 0.147 0.146 0.145 0.153 0.155 0.151 Intensity (GWh/GDP at 2005 Prices (RM Million)) Electricity Demand (kWh) 1,101 1,902 2,603 3,048 3,152 3,285 3,370 3,452 3,700 3,708 Per Capita Elasticity (of Final Energy 0.97 1.52 1.02 0.48 0.95 1.55 0.3 5.97 0.22 0.97 Demand to GDP) Elasticity (of Final 1.08 1.54 1.05 0.85 0.86 0.89 0.82 -2.48 1.19 0.54 Electricity Demand to GDP) The primary energy intensity was at a lower level, albeit at increasing rate, from 99 toe/RM Million in 1990 to 118 toe/RM Million in 2000. This increase is mainly due to a shift in the economic structure; from an agriculture-based economy to manufacturing and service-based economy. Primary energy intensity remained at almost the same level from 2000 to 2011, between 112 toe/RM Million to 122 toe/RM Million which is an indication of the strong economic growth in the manufacturing and service-based economy. The elasticity of primary energy supply to GDP gradually improved in the span of 20 years. Elasticity reduced from a high of 1.08 in 1990 to a more reasonable level of 0.54 percent in 2011; this development reflects an improvement of energy efficiency especially in the industrial sector. In addition, fuel switching from oil based to gas based in the industrial sector due to subsidised gas price reduced the electricity elasticity in the country.