Assignment Power System:

Malaysia Electricity Supply

Industry (MESI 2.0): Current
State and Way Forward

Group Member Vignesh Naidu A/L Nokainaidu EP0104464

Afiq bin Abdul Baser EP0104284
Mohamad Amirul Adli bin Abd Wahab EP0104429
Tan Xi Yu EP0104463
Lecturer Dr Fadilah binti Abd Aziz
Section 1

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Introduction

Electricity is a form of energy that’s being consumed globally by people all over the world. The
main source of producing electricity in Malaysia is via the burning of natural gases and crude oils.
In the Malaysia Energy Statistics Handbook 2015 released by Energy Commission, it’s stated that
65.5% of Malaysia electricity is generated by natural gases, 29.1% is generated by using crude oils
and the remaining are from coal, biodiesel, hydropower, biomass, biogas and solar [1]. Over the
years, the country’s resources are depleting as the demand for electricity in Malaysia is increasing
rapidly parallel to the population. In the same handbook, Energy Commission stated that in 2009
the total number of consumers for TNB are 7,431,635 and in 2014, the numbers soared up to
8.204,328 [1]. This shows the significance of electricity in today’s world.
Hence, Malaysia has introduced Malaysia Electricity Supply Industry (MESI) to help them attain
their goal. MESI’s prime function is to develop Malaysia’s electricity supply to make it more
sustainable. MESI 1.0 was introduced back in 2010 till 2014 with the aim; to secure supply of coal
and gas, forming a reliable and secure gird, and having a low tariff. Now Malaysia has the lowest
domestic tariff in Southeast Asia and ranked 4th in ease of ‘Getting Electricity’ [2]. This year (2019) ,
MESI 2.0 has been launched with the aim to accomplish three goals - to heighten the industry’s
efficiency, future-proof the industry’s constitution and regulations as well as empower consumers,
democratize and decentralize the electricity supply industry [3].
In order to accomplish MESI 2.0’s targets, the government specifically reactivated Malaysia
Programme Office for Power Electricity Reform or called MyPOWER Corp for three years as part of
MESI 2.0 plans. MyPower Corp is an independent company with 12 to 20 employees which their
prime aim is to aid government to design and drive the implementation of this reform program.
This essay will focus mainly on the challenges faced by MESI 2.0 together with the solutions.
The two prime challenges faced currently by MESI 2.0 - Over dependency on coal and fuel as the
country’s main energy resources and also fulfilling the increasing customers’ demand for electricity.
This paper will discuss these challenges even further and also the solutions for these.
Discussion

Energy is known as one of the essential ingredients for economic development and security of
energy supply is crucial in making sure continuous economic development of any particular country.
Malaysia’s energy supply security has been brought into the attention of energy industry players
and policy makers in the recent years due to implacable energy demand and diminishing indigenous
energy sources.
This research will attempt to discuss on the energy security concerns of the country, also
explore the possible options and challenges in enhancing the energy supply security towards
sustainable environment, development and not to forget the future challenges of MESI 2.0.
Malaysia is rich with conventional energy sources as well renewable energy sources. Malaysia
has the 14th largest gas reserved and 27th largest proven crude oil reserved in the world. The share
of fossil fuels in the primary energy supply has remained around 90% from 1990 through to 2010.
This highly dependency of fossil fuels coupled with the reduced of domestic fossil fuel reserves
constraint will force Malaysia to buy in more fossil fuel at high market price. For power generation
sector, the concerns are towards energy supply security for the fuels of the power plants. As stated
in section above, more than 80% of electricity is produced using coal and natural gas with almost
equally share among the two fuels. The prices of coals even though have been stable for decades
have surged beyond 2003 and increased to a new level due to the increase of global demand of the
fuel source.
The amount of carbon emissions never stop rising ever since the Industrial Revolution due to
the human activities. The technology to lower the global carbon emissions and make coal and gas
more organized is available now and the renewable energy should be implemented to decrease it.
For gas-fired power plants, cutting edge technology is now allowing large heavy-duty turbines to
deliver efficiencies up to 62%. Thermal power plants can be upgraded to provide an improvement
in efficiencies from 34%-38% through turbine and boiler upgrades or software solutions and data
analytics.
Tariff structures and the lack of incentives should not be barriers for the country to move
towards creating a well-organized power generating industry. It will be a hard-balancing act but an
act that is needed for the country’s future.
As mentioned in the introduction part, the government will reactivate special purpose agency
which is MyPOWER Corporation. MyPOWER Corporation, with a 3-year mandate, plans and

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programmed successfully the delivery of the second phase of the Malaysian Electricity Supply
Industry (MESI 2.0). The aim or in other words, main agendas are to increase the industry efficiency.
Other than increasing the industry efficiency, the targets are to future-proof the industry structure,
regulations and key processes; as well as empowering the consumers.
The following section expounds some suggestions for the government, Energy Commission as
the regulator, utility such as Tenaga Nasional Berhad (TNB), as well as energy supply customers to
resolve some challenges in MESI 2.0.
First of all, the market structure needs to be restructured to be more transparent. For instance,
the government and regulator should review existing Incentive-Based Regulation (IBR) and
Imbalance-Cost Pass-Through (ICPT) mechanisms [4]. The utility should also revise existing power
plant projects and explore alternatives to procure fuel at lower prices to reduce the overall system
costs. Furthermore, Single Buyer (SB) and Grid System Operator (GSO), which are now ring-fenced,
are suggested to become fully independent entities to ensure neutrality and accountability [5].
Enhanced Time-of-Use (EToU) system, which suggests lower tariffs during non-peak hours, should
be extended to domestic consumers [6].
Apart from that, renewable energy (RE) capacity should be boosted to minimize the
dependency on fossil fuels and future-proof the electricity supply industry. Solar energy has
limitations due to the intermittency of sunlight and the existing transmission grid system is capable
to accommodate solar photovoltaic penetration level up to only 30% of the peak demand [7].
Therefore, RE supply is suggested to be run in parallel with conventional power plants, which have
11% of its capacity, to stabilize the power system during adverse weather conditions [8]. Moreover,
the RE penetration into grid system needs to be carefully designed to avoid underperformance of
thermal plants and load-shedding [7]. For instance, the flexibility of existing baseload generators
and transmission grid should be improved to allow higher RE penetration in the future. Furthermore,
the government and regulator should refine the current RE friendly schemes such as Net Energy
Metering (NEM) and introduce Green Tax rebates to encourage more consumers to produce
electricity via solar panels.
Finally, the significance of research and development (R & D) should not be undervalued. The
government could allocate more R & D funds for experimental research to attract talented
innovators to study on RE, thus revitalizing the local energy sector. The potential energy storage
system in smart grid systems should be explored to store excess energy and alleviate energy
generation load [5].

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Conclusion

In conclusion, MESI 2.0 through MyPOWER Corp, is an initiative launched by the Ministry of
Energy, Science, Technology, Environment, and Climate change to reform the domestic electricity
supply industry. The government is looking to accomplish three main outcomes through MESI 2.0
which is better consumer experience, reasonable electricity prices and generating additional
economy. As an energy consumer, we always seek for an option to select the best utility services.
We believe that this liberalization is good for new players who want to get into the power industry.
In this era of new technology, energy quality service should be upgraded to supply electricity
sufficiently to high-ended products such as electric vehicles, smart charging, heat pumps, etc. We
need to ensure that the demand is met. Through MESI 2.0, we wish that the economic level of the
country would be increased. As result, we expect more new job opportunities offered in 2020 to
2030 and a huge increment in capital investment. We have faith in the green energy generation
company to invest more in the renewable energy sector and become one of the new players in the
power industry that can benefit from MESI 2.0 to reduce our dependence on coal and natural gasses.
Furthermore, we hope that consumers, especially for the lower-income group, can enjoy lower
tariffs due to a new electricity subsidy scheme implemented by the government through MESI 2.0
involving approximately 179,000 people [9]. This is a good step by the government to help the
Marhaen besides improving our utility service in the country. This reformation of utility supply also
moves Power Purchase Agreement (PPA) regime to capacity and energy market to be the most
efficient country in handling utility service in the world.
Perhaps, we hope that MESI 2.0 can change the landscape of utility service in Malaysia where
we focused more on renewable energy and go green campaign. The monopoly system should be
abolished from time to create a healthy competition for a better system for a better nation. The
domestic electricity industry is expected to be efficient, transparent, market-based, competitive,
sustainable and be more prepared to move towards renewable energy.

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References

[1] Energy Commission "Malaysia Energy Statistics Handbook 2015" 2015. [Online]. Available:
https://www.st.gov.my/contents/publications/statistics_energy/MALAYSIA%20ENERGY%20STATI
STICS%20HANDBOOK%202015.pdf
[2] Ministry of Energy, Science, Technology, Environment & Climate Change, "Reimagining
Malaysian Electricity Supply (MESI 2.0) ", 2019. [Online]. Available:
https://www.mestecc.gov.my/web/wp-content/uploads/2019/11/MESI_2.0_IGEM19-web.pdf
[3] Bernama, "Govt to Reactivate MYPower as part of industry reform", New Straits Times,
September 18, 2018. [Online]. Available:
https://www.nst.com.my/news/nation/2018/09/412509/govt-reactivate-mypower-part-industry-
reform-nsttv
[4] Energy Commission, “Leading Malaysia’s Energy Change,” Energy Malaysia, vol. 17, pp. 7–8,
2018.
[5] Energy Commission, “The Stakeholders Speak,” Energy Malaysia, vol. 17, pp. 11–12, 2018.
[6] Energy Commission, “Empowering the Energy Commission,” Energy Malaysia, vol. 17, pp. 17–
18, 2018.
[7] Energy Commission, “The Future is Renewable Energy,” Energy Malaysia, vol. 17, pp. 36–41,
2018.
[8] Energy Commission, “How Clean Energy Affects Energy Supply,” Energy Malaysia, vol. 17, pp.
21–22, 2018.
[9] TheSunDaily, “MESI 2.0 to reform domestic electricity supply industry” 2018. [Online]. Available:
https://www.thesundaily.my/archive/mesi-20-reform-domestic-electricity-supply-industry-
HUARCH578886 [Accessed 18 September 2018].