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Energy Efficiency — Malaysia’s Future

“There can be no economy where there is no efficiency.”


The words of Benjamin Disraeli have never been truer than in the modern energy landscape. Efficiency is one of the most important tools we have for controlling the bottom line of our energy production. More than that, it is a vital element of any country’s economic progression and security.

The need for further energy development is clear, with the ASEAN region’s economy projected to grow by $735 billion by 2020, according to Accenture. The population is expected to grow from 633 million to 717 million by 2030.

According to a study from the Boston Consulting Group (BCG), ASEAN’s power sector — both in generation, transmission and distribution — will need around $500 billion of investment as regional demand increases from 656 terawatt-hours (TWh)in 2010 to 2,414 TWh by 2030. If this development is to provide positive economic growth and meet the needs of a growing population, it will also require a strong dedication to efficiency. That will be the driving force behind the low energy rates that allow businesses to thrive.

A solution for a fast-growing region?

The region’s growth has naturally resulted in a consequential increase in final energy consumption. With an assumed GDP growth rate of 5.2 percent per year from 2007 to 2030, it is estimated that consumption will increase to 427 million tons of oil equivalent (MTOE) in 2010 to 1,018 MTOE in 2030. Yet as of 2011, 160 million people in Southeast Asia were still living without access to electricity. Almost 80 percent of those live in rural and remote areas.

The spread of electrification brings with it, huge potential and great challenges especially to the ASEAN region, constituting as it does 10 countries, most of which are spread over islands. Indonesia alone is made up of 18,000 islands and sits at a 73 percent electrification rate, while Vietnam stands at 76 percent. Thailand fares better at 99 percent, but Myanmar sits at only 49 percent, according to the International Energy Agency.

There are two power generation models with which we might answer this challenge: a national power generation plan, with the backbone of a countrywide transmission grid; or the distributed power model, where power generation takes place — and is often utilized — locally.

National power generation requires an extensive transmission and distribution grid, often a costly exercise that will take years to develop. With many countries in this region being emerging economies and young democracies, developing the suitable infrastructure to meet supply and demand is truly challenging.

Energy efficiency in power generation is also heavily impacted by the choice of fuel and the efficiency of power plants; this includes, but is not limited to, operational and equipment efficiency. One of the most important factors that influence cost and performance in power generation is technology.

Currently in the ASEAN region the majority of power plants utilize a steam or gas turbine. The world’s most efficient gas turbine currently available is GE’s 9HA, which has an efficiency index of 61 percent. In addition, these gas turbines provide the lowest life cycle cost and carbon emissions. No system offers a higher rate. That is the kind of economy Disraeli would be proud of.

Aside from the generation type, the choice of fuel will also contribute to differences in tariff rates for the consumer, domestic and commercial alike. With governments, including the Malaysian, moving away from a reliance on subsidies, technological efficiency and the selection of fuel becomes an increasingly important consideration.

Reliable and flexible sources of power

Nations like Thailand, Indonesia and Malaysia in the region were once able to rely on a substantial amount of revenue from gas exports, helping to offset subsidies. As these reserves decline, so will the subsidies. Governments are then caught in a catch-22 situation; either continue fossil fuel subsidization, or phase out subsidies which will affect to the natural dismay of the people, the end consumers.

With this, comes an increased awareness of domestic fuel gas security, naturally sparking the debate for alternative options such as coal and renewables. However, it would be a few more years until parity between coal-and-gas-fired generation capacity is surpassed.

While regulators are lately trending towards large coal-fired plants, the environmental impact of burning coal proves a compelling argument against an over-reliance of it. According to an analysis by BCG, 50 percent of South East Asia’s power generation needs will be met by coal, compared to 30 percent in 2010. Currently, coal supplies 29.7 percent of energy use worldwide and is responsible for 44 percent of global CO2 emissions, posing a question mark on its efficacy.

Considering that the gas cost element can amount to 70 percent of operating expenditures, it is imperative for developers to adopt the technology which provides the most efficient generation, including best-in-class efficiency turbines available to remain competitive. One such example would be the 9HA gas turbine, billed as the most efficient in the world, reduction in CO2 output and importantly, lower operation or maintenance cost over the long term. This coupled with a strategic generation mix will ensure a sustainable and affordable cost of electricity for end users.

Distributed Power systems

While countries such as Laos, Thailand and Vietnam in the Greater Mekong Region may share a valuable sub-regional infrastructure, the practicalities of a similar shared grid over a broader regional basis are challenged by physical and political issues.

Distributed power however provides a viable answer to many of those challenges. On-site power production allows for access to electricity in rural areas with little or no power grid as well as provides flexibility to operate within stringent environmental regulations. Distributed power brings the added benefit of improving industrial and residential efficiency to ensure provision of emergency power in the event of natural disasters and other planned outages.

There is, it seems, a local and secure solution to the region’s energy needs, and one that could form the basis for further regional co-operation in future.

Where do we go from here?

As policy makers, regulators and utilities endeavor to identify an optimum generation mix, they will have to weigh the available technology that can be brought to bear in terms of greater operational efficiency and cost savings. Responsible countries have an obligation to take advantage of the most efficient technology available. More efficient turbines can provide that operational efficiency; using less fuel and reducing the demand for shrinking resources. Done correctly, this translates into cost savings, lower rates to the end user and a reduced environmental footprint. It’s our future.

A version of this story originally appeared on GE Reports Malaysia.


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