The end of the Covid-19 pandemic will bring an interesting and busy time. The governments of all the countries will be keen to kick start their economies to bring employment and economic activities to their population to try to bring the economy back to where it was before the pandemic. The main approach for generating these economic activities will be capital projects because this would be a fast and efficient way to trickle down the spending to the general populations but yet done in a manner that would be non-regrettable i.e. the money is going to be spent anyway and we are just advancing that expenditure.
The governments will be trying to catch up on projects that were delayed because of the pandemic and also advancing the works on project that are planned to be implemented in the future or project that will bring benefits to the population. A clear winner in term of non-regret projects will be in sustainable energy because reducing impact to the climate and the environment is something that everybody, apart from Donald Trump, recognise as critical. We should get in early so that we develop all the scientific, technical and engineering knowledge in this field.
The common drive to reduce the greenhouse gas that gives negative impact to our climate has been agreed is the Kyoto Protocol. This has been agreed by most countries including Malaysia. The target set by the Kyoto Protocol is one I think that the Malaysian Government would want to make sure it does not slip. The aim of the Kyoto Convention is to reduce climatic changes by reducing the amount of greenhouse gas. Malaysia has voluntarily pledged to cut its emission intensity (per unit of GDP) by up to 40% by 2020 and 45% by 2030 compared to the levels in 2005, with some conditions applied.
There will be penalty if do not meet these targets. Foreign governments and consumers especially in Europe, Australia, Japan would be reluctant to buy from us. Further, many Malaysians, especially the younger and more educated crowd would put pressure on the government by voting for opposition if the government is too ungreen.
There are a number of sustainable energy source that would be relevant to Malaysia. The source of renewable energy are those that are bio-related such as biomass, biodiesel, waste to energy. The bio-related sustainable energy is not highly exciting or useful or viable as it cannot be done on a very big scale.
The driving force for these bio-related sustainable energy is more the need to minimize disposal of waste and not so much on getting sufficient energy. There are a number of such waste to energy/ biomass to energy projects being developed and undertaken now but it is contribution to the total Malaysia energy demand would be very small.
The main form of sustainable energy will therefore be from solar. Solar electricity production falls into two types: from roof tops of factories and houses and from large solar power plant. The small producers of solar electricity from rooftops has started about 15 years ago and TNB/ Suruhanjaya Tenaga mandated a certain FIT (Feed in Tariff) to make it viable for this house and factory owner to get a reasonable ROI. However, that payback can be as much as 8 years and that is not very attractive mainly because of the cost of the battery bank.
The FIT must be computed against the alternate electricity supply cost and will be effected by the prevailing supply and demand between electricity generators and electricity end user. However the FIT can obviously be used as an incentive to drive more house and factory owners to convert to this initiative if the government feel that it wants to further drive this route for solar powered electricity.
Currently the amount of solar electricity from large solar farms in Malaysia is about 850MW . It is still only about less than 2.5% of the total Malaysia energy demand of about 36,000MW. The projection of growth of renewable energy supply is very high going to as much as 22,000MW by 2050. This is equivalent to about 12-% growth CAGR.
The solar energy sector will be growing. But solar energy can be harvested into electricity only on average about 6hr in a day. That is when the sun is up, and the rain or cloud are not between the sun and the solar panel. There is no big need to store the energy as yet in Malaysia as the contribution of solar to the total electricity generated is still small at about 2% only. The balancing electricity will be from NG which is easy to be ramped up and ramped down. So high efficiency batteries to store surplus electricity or hydrogen cell that is generated in the day time will not be a common feature yet in Malaysia for the near future.
Solar cell cost is getting lower and lower. And project cost i.e., design and construction may also get lower as the solar plant community (engineers, contractors, operators) learned from previous projects . But project development effort i.e., putting in the design, choosing the site, talking to the neighbours, authority’s approval, financing, EIA etc for a 50MW solar plant.is not going to be much lower or take less much lower time than for a 1,000MW coal or NG plants as the capital expenditure for a solar plant in Malaysia right now is about MR350 million for a 50MW plant. This is about 70% higher than a NG power plant of the same capacity. However the direct cost for a solar plant is much cheaper at only MR0.03/ kWhr against about MR0.15/ kWhr fuel cost for a NG power plant.
Fuel cost for coal power plants is about half of NG plant so the economic disparity between solar and coal is not so big. Obviously, the government will be reluctant to build more coal plants as it will take them further away from meeting their Kyoto Protocol target.
At the current CAPEX and very low OPEX, the ROI of the solar plant is already comparative to a NG power plant. But if solar cell cost drop further and CAPEX drop and price of NG goes up as demand in growing economies increases, then solar will be giving better ROI than NG plant. Financing of such project will I feel be fairly easy as risks is not high.
Post Covid, everybody will be scrambling for people to run a whole spectrum of projects; oil and gas, infrastructure, industrial, power. This will likely lead to higher salary but solar project low intensity for design and project development personnel and operating personnel.
A distinct advantage will be the availability of skilled manpower to develop and operate the solar plant. In this aspect Malaysia does have an advantage with our high level of skill manpower in electrical engineers, control engineers and other required disciplines. We are however at disadvantage in term of availability of lower skill workers.
We are definitely in deficit in term of lower skilled worker, but getting these workers from neighbouring countries will I feel still be fairly easy in the next 5 years. Further, the solar power plant requires very few people to operate. The other consideration that the government will be cognizant of is the trickle-down effect to supporting industry. This especially important as it can bring many benefits to the adjacent rural economy.
The key driving force for solar projects will still be the government support, drive and attention to get this going. After Kyoto etc. most government are aware and keen to expand the contribution of sustainable energy. Obviously, the population and voters will be supportive If there is a clear selection required between reducing non-sustainable energy usage and other priorities such as poverty reduction, employment opportunities and basic facilities and basic quality of life then the voters support may not be easy. I do not think that this is the case in Malaysia in the coming few years unlike in places like Indonesia, South Asia, Philippines.
Authorities’ approval should not be a problem. DOE will obviously be supportive. Connecting to the grid if a fair distance away may be a bit of a challenge and costly. Therefore, getting land of about 400 acres close to the electricity grid is a clear advantage.
There are a number of solar power plants that are currently operating and being developed in Malaysia. TNB is involved but there are a few foreign companies that are teaming up with local partners to build and run these projects.
Tenaga National Engineering Corporation Sdn Bhd (TNEC) has completed 3 Large Scale Solar Photovoltaic (LSSPV) plants with a total capacity of 109MWac
- 50MWac LSSPV in Kuala Langat, Fully operational since November 2018
- 29MWac LSSPV in Kuala Muda, Completed in November 2018
- 30MWac LSSPV in Bukit Selambau, Operation commenced in September 2020
There are a number of companies that are actives in developing Solar Power Plants in Malaysia. Some large ones are;
- Scatec Solar Solutions Malaysia Sdn. Bhd.
- Leader Solar Energy Sdn. Bhd.
- Ditrolic Solar Sdn. Bhd.
Scatec ASA, headquartered in Oslo, Norway is a world leading renewable power producer, delivery affordable and clean energy worldwide. Scatec has developed, built, owns and operates solar, wind and hydro power plants with more than 3.5GW in operation and under construction on four continents. From 2007 to 2020, the company has specialised in the development, construction and operation of LSSPV systems in emerging markets.
Scatec’s first LSSPV project in South East Asia is the Quantum Solar Park located in Pendang, Kedah. The Quantum Solar Park is a 197 MW LSSPV which consists of three power plants that were completed in December 2018, May 2019 and July 2019, Respectively. The LSSPV produces 284 GWh per annum and reduces the CO2 emissions by 188,000 tons.
About the Author
Abdul Malik bin Tahir is a process engineer with about 40 years’ experience in the Oil and Gas and Energy Industry. He was formerly with Shell Refining Malaysia and was CEO of Kemaman Bitumen Company, which operate a 30,000bbl refinery in Terengganu. He is currently In the 27Advisory Group as Senior Advisor in Oil, Gas and Energy.
