With TNB’s recent price hike, it is time to review Malaysia’s energy situation, focusing on electricity supply. The economics suggest that Peninsular Malaysia will go for coal in the long term, unless drastic measures are taken soon.
As fossil fuel resources become increasingly expensive, energy-exporting countries have to realise that in order to meet domestic energy demands, they will have to become net energy importers. Malaysia, while a major global energy exporter, may have already crossed that line. We have become a net importer of petroleum products since 2011, and we are also importing the vast majority of our coal. The government forecasts Malaysia’s energy demands to triple by 2050 as part of, or a result of, its planned growth trajectory, making energy subsidies and below-market energy rates increasingly difficult to sustain.
TNB’s price hike earlier this year gives us an opportunity to review Malaysia’s energy situation, focusing on electricity. Over the past 30 years, the Malaysian electricity supply has been growing exponentially. One of our landmark policies, the Four Fuel Diversification Strategy of 1981, reacted to the oil shocks of the 1970s and worked to phase out most of our oil power plants, which were then becoming increasingly more costly to operate due to rising oil prices. Oil power plants were gradually replaced with coal and gas power plants.
