Malaysia is witnessing a significant transformation in its power sector. Faced with rising energy demand, the country had to choose between continuing its reliance on depleting oil and gas resources, thereby becoming a net importer, or embracing renewable energy sources (RES). The transition to RES could save Malaysia $9 billion and $13 billion annually, in terms of energy, climate and health costs. Recognising this, in May 2023, the government committed to accelerate RES deployment to reach 70 per cent by 2050 (a significant increase from the current 24 per cent, including hydropower), lift the ban on RES exports and stop the development of new coal power plants. In the near term, the country aims to increase its RES share to 31 per cent by 2025.
In line with this, to address the energy trilemma of security, affordability and sustainability, as well as accelerate the country’s energy transition efforts, the government released the National Energy Transition Roadmap (NETR) in August 2023. This will help Malaysia shift from a traditional fossil fuel-based economy to a high-value green economy. Further, Malaysia’s Ministry of Natural Resources, Environment and Climate Change unveiled the Sustainable Energy Development prospectus at COP28 in Dubai in December 2023. This reflects its commitment to an equitable energy transition, outlining plans to accelerate the decarbonisation of energy generation, develop a modern and flexible grid, embrace innovation and empower consumers.
Malaysia’s ambitious goals require a substantial investment of MYR 637 billion for RES addition, grid infrastructure, energy storage systems and network system operating costs between 2023 and 2050. The country has planned investments to strengthen the interconnections among its three regions – Peninsular Malaysia in the west and Sarawak and Sabah in the east – as well as with its neighbours, including Indonesia, Singapore, Thailand and the Philippines. The objective is to establish Malaysia as the Association of Southeast Asian Nations (ASEAN) RES hub for multilateral power trading.
Existing infrastructure
Malaysia’s electricity sector is structured around three vertically integrated state-owned utilities – Tenaga Nasional Berhad (TNB), which operates in Peninsular Malaysia; Sabah Electricity Sendirian Berhad (SESB) in Sabah; and Sarawak Energy Berhad (SEB) in Sarawak. TNB also owns an 83 per cent stake in SESB. The Sabah government, which owns the remaining stake, recently announced plans to take over TNB’s stake in SESB by 2030. In Sarawak, SEB’s subsidiary Syarikat SESCO Berhad is responsible for power transmission in the state. Apart from TNB, independent power producers account for nearly half of Peninsular Malaysia’s installed capacity. As of 2022, Malaysia had a generation capacity of 40,211 MW, of which more than three quarters was based on thermal sources while the remaining 24 per cent was RES-based, including hydropower.
As of end 2022, Malaysia’s transmission network stood at 34,125 km of lines and 550 substations across the 132 kV, 275 kV and 500 kV voltage levels. Both lines and substations recorded a compound annual growth rate of over 3 per cent. The majority (76 per cent) of the transmission network is owned by TNB, followed by SEB (15 per cent) and SESB (9 per cent). Among the recently completed domestic projects is the 275 kV Murum Samalaju transmission line, completed in February 2023 as part of the Sarawak Corridor of Renewable Energy (SCORE), which serves as a crucial second power evacuation source from the Murum hydroelectric plant (HEP).
Malaysia is interconnected with Thailand, Singapore and Indonesia. TNB and the Electricity Generating Authority of Thailand (EGAT) operate a 300 MW high voltage direct current link (110 km Khlong Ngae Gurun) and a 132 kV alternating current interconnection with a peak transfer capacity of 80 MW. With Singapore, TNB and Singapore Power Limited operate two 230 kV submarine cables (Plentong-Woodland Avenue), which were upgraded to 2 × 550 MVA in 2022 after 40 years of operation. It is an important part of the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project, facilitating cross-border power trade and contributing to the broader ASEAN Power Grid (APG) objective. Meanwhile, SEB and Indonesia’s PT Perusahaan Listrik Negara (PLN) operate the 230 MW, 275 kV Mambong (Sarawak)-Bengkayang (West Kalimantan) line. Sarawak has been exporting electricity to West Kalimantan through this line under the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) since 2016.
Future plans
NETR, which spearheads Malaysia’s low-carbon development, has outlined 50 initiatives, 10 flagship projects and financing mechanisms to support the whole-of-nation approach. Its Responsible Transition [RT] Pathway 2050 aims for increased RES dominated by solar PV (accounting for 50 per cent of the total installed capacity), a phase-out of coal, comprehensive energy efficiency initiatives, and an expedited shift to electrification and biofuels in the transport sector. Natural gas will act as a lower-carbon transition fuel, becoming the dominant source of baseload power.
Integrating intermittent RES at such a massive scale requires commensurate investments, estimated at MYR 420 billion up to 2050, in the transmission and distribution (T&D) network as well as energy storage facilities to enhance system flexibility and mitigate issues related to RES intermittency. For transmission alone, NETR envisages an investment of MYR 120 billion. Notably, the Grid of the Future strategy, embedded in TNB’s Energy Transition Plan, seeks to modernise and digitise the T&D infrastructure, facilitate increased RES integration and optimise interconnections with other countries.
Key transmission projects
Malaysia is strengthening its internal grids as well as working on optimising regional and international grid connectivity.
In Sarawak, SEB is implementing key internal projects as well as an interconnection with Sabah. SEB’s second backbone project will facilitate transmission from its major generation power plants in central Sarawak and enhance the power supply in Kuching city. In December 2022, SEB announced the commencement of work to interconnect the Mapai and Tondong substations, marking a crucial phase in its implementation. The 500 kV Baleh-Mapai line will help evacuate power from the Baleh HEP as part of SCORE by 2027. The northern grid extension project, which extends from Similajau to Lawas via Tudan, Marudi Junction, Bunut and Limbang, will help connect Lawas and Limbang to the national grid and create injection points for export to Sabah.
In Sabah, to facilitate the interconnection with Sarawak and North Kalimantan, SESB is implementing the 275 kV Southern Link project from Mengalong Sipitang to the Tawau Pencawang Masuk Utama (PMU) via Upper Padas. It will form the backbone for Sabah’s grid system to complete the loop connecting the east and west coasts, optimising generation costs by leveraging cheaper energy sources from the west coast to the east coast, including natural gas, hydro and imports from Sarawak.
In Peninsular Malaysia, TNB is constructing the innovative 275 kV monopole transmission line between the Prai PMU or main inlet substation and the Light PMU to ensure a sufficient and secure power supply to Penang Island.
Malaysia is also augmenting its interconnections with its ASEAN neighbours to enable clean energy trade and contribute to the advancement of the ASEAN APG. To facilitate cross-border RES trading, the government plans to establish a dedicated RES exchange hub by setting up a physical enabler to act as the market aggregator and putting in place the requisite regulations.
Further steps include establishing new or upgrading existing interconnections and fostering collaboration through bilateral or multilateral power trading arrangements with its ASEAN partners. During the 41st ASEAN Ministers on Energy Meeting held in Bali, Indonesia, in August 2023, Malaysia’s TNB formalised two MoUs. Under the first, TNB, along with Indonesia’s PLN and the ASEAN Centre for Energy, agreed to conduct a joint feasibility study to connect Sumatra, Indonesia and Peninsular Malaysia. Under the second MoU, TNB and Singapore’s SP Power Assets Limited will undertake the technical feasibility study of a second power interconnection linking Peninsular Malaysia and Singapore. Earlier in 2023, TNB also collaborated with EGAT to jointly advance the transmission network connecting Thailand and Malaysia.
In the east, Sarawak plans to increase its share of clean energy exports in terms of MW to Singapore and Indonesia, as well as internally to Sabah, to 12 per cent by 2032 from the current 2 per cent. Further, under its Post Covid-19 Development Strategy 2030, it aims to obtain 15 per cent of Sarawak’s electricity sector income from the international market. For this, Malaysia’s SEB, and Singapore’s Sembcorp Industries and the Singapore Power Group are implementing an interconnection between Sarawak and Singapore to facilitate the export of up to 1 GW of clean electricity from Sarawak to Singapore by 2032.
Sarawak’s interconnection with Sabah, which is in turn planning interconnections with North Kalimantan (Indonesia) and Palawan (the Philippines), will open up opportunities for both Sabah and Sarawak to leverage its strategic location within BIMP-EAGA to become a regional trading hub for electricity among the ASEAN countries. Furthermore, Sabah is exploring the potential for establishing connections to other remote regions in the Philippines, such as Mindanao, Tawi-Tawi and Lanao del Sur, to supply electricity to these areas.
Conclusion
As Malaysia embraces RES and modernises its grid infrastructure, it emerges as a key player in shaping the future of Southeast Asia’s energy landscape. Focused on transitioning towards a low-carbon future, Malaysia’s initiatives align with global climate objectives. The recently released prospectus and NETR outline ambitious goals and strategic collaborations with neighbouring nations underscoring a shared commitment to regional energy security. Through cross-border partnerships and a commitment to decarbonisation, Malaysia aims to position itself as an energy hub in the ASEAN region.
