Malaysia stands to save over US$700 million annually and reduce carbon emissions by up to 1.8 million tonnes through adopting real-time clean electricity, according to a new study by climate tech non-profit TransitionZero.
The current system, which relies on annual renewable energy certificates (RECs) to claim the use of clean energy, obscures the actual fossil fuel consumption on the grid, argued researchers.
The Malaysian government and utilities firm,Tenaga Nasional Berhad (TNB), launched the Malaysia Renewable Energy Certificate in 2021, which certifies that 1 megawatt-hour (MWh) of electricity is sourced from renewable sources like solar or hydropower.
RECs only guarantee that renewable energy was produced at some point during the year, but they do not ensure that it was generated and consumed simultaneously with electricity use. This means companies can claim “clean energy” based on these annual certificates while the grid might still be heavily powered by fossil fuels at the exact time electricity is consumed, the analysis suggested.
“Hourly matching is especially relevant for Malaysia’s corporate procurement schemes, which have been met with much interest but require refinement still, particularly in relation to high wheeling charges,” said Matt Gray, co-founder and chief executive officer of TransitionZero.
“For system planners, real-time procurement would be new but it would support long-term system optimisation [such as] reducing peak fossil use, guiding storage investments, and ensuring that clean supply grows in step with demand,” said Gray.
The net system cost of 80 per cent carbon-free electricity (CFE) for the whole of Malaysia is 15 per cent cheaper than annual matching. Image: TransitionZero
The analysis shows that if Peninsular Malaysia achieves 80 per cent hourly clean power by 2030, it would save about US$600 million in liquified natural gas imports each year, while running the system US$20 million cheaper than the current annual matching system.
In Sarawak, 90 per cent hourly clean power could be reached with just 1 GW of solar and 350 MW of batteries, saving another US$44 million annually in fuel costs.
The net system cost of 80 per cent renewable energy-sourced electricity for the whole of Malaysia is also 15 per cent cheaper than annual matching. These cleaner procurement pathways could save the country up to US$710 million annually, six per cent higher than those achieved under conventional annual matching approaches, said the report.
The study recommends that Malaysia significantly increase its solar energy ambitions by tripling the current 7 GW solar capacity target.
Under the country’s National Energy Transition Roadmap (NETR), the government seeks to decarbonise the power sector by increasing renewable energy penetration to 40 per cent by 2040 and 70 per cent by 2050, while phasing out coal power by 2045.
Efforts to reach the solar target include two large-scale solar auction rounds, expected to add 4 GW of solar capacity by 202. Additional auctions are planned to sustain the growth required to hit the 7 GW milestone by 2030. The country has also initiated a residential rooftop solar leasing scheme to harness distributed solar potential in Peninsular Malaysia.
The report also calls for removing the existing 15 per cent cap on power sell-backs, which limits the amount of excess electricity that consumers can feed back into the grid. The scheme allows consumers who generate renewable energy, mainly solar from rooftop panels, to feed excess electricity back into the grid.
