Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252

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Renewable and Sustainable Energy Reviews

journal homepage: www.elsevier.com/locate/rser

Energy policy and alternative energy in Malaysia: Issues and challenges for
sustainable growth
Tick Hui Oh *, Shen Yee Pang, Shing Chyi Chua
Faculty of Engineering and Technology, Malaysia Multimedia University (MMU), 75450 Bukit Beruang, Malacca, Malaysia

A R T I C L E I N F O A B S T R A C T

Article history: Energy is essential to the way we live. Whether it is in the form of oil, gasoline or electricity, a country’s
Received 18 November 2009 prosperity and welfare depends on having access to reliable and secure supplies of energy at affordable
Accepted 2 December 2009 prices. However, it is also one of the benefits taken for granted by many people, knowing little about the
impact of electricity on their lives. Having dependent mainly on oil and gas for half a century, Malaysia
Keywords: has started to realize the importance to adopt renewable energy in the energy mix and continuously
Renewable energy reviewed its energy policy to ensure sustainable energy supply and security. This paper examines and
Sustainable energy
discusses the intricacy of the existing and new energy policies, issues and challenges in Malaysia. The
Energy policy
Energy mix
overall approach in addressing the energy issues and challenges will continue to focus on adequacy,
Energy efficiency quality, security and sustainability of both non-renewable and renewable energy supply in the country’s
development and the promotion and implementation of its energy efficiency programs. The recently
launched National Green Technology Policy is also discussed.
ß 2009 Elsevier Ltd. All rights reserved.

Contents

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1241
2. Energy policies and outlook in Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1243
3. Energy mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1243
3.1. Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1244
3.2. Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1244
3.3. Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1244
3.4. Hydro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1244
3.5. Renewable energy (RE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1245
4. Alternative energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1246
4.1. Solar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1246
4.2. Wind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1246
4.3. Landfill gas and municipal solid waste (MSW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1247
4.4. Hydrogen fuel cells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1248
4.5. Nuclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1248
5. Energy efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1249
6. Challenges and a way forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1251
7. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1251
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1252

1. Introduction developing countries. These growth trends exacerbate the

challenge connected to limitations in energy supply, and the
According to estimates done by the International Energy resulting competition for resources. Currently, with a total of
Agency, a 53% increase in global energy consumption is foreseen 20,493 MW installed capacity, the energy reserve margin of
by 2030, with 70% of the growth in demand coming from Peninsular Malaysia stands at 47%. With an average of 4% annual
growth, it is estimated that the maximum demand of electricity
will be at 23,099 MW in 2020, which is nearly twice the current
* Corresponding author. Tel.: +60 6 2523258; fax: +60 6 2316552. demand [1]. At present, every 1% growth in gross domestic product
E-mail address: [email protected] (T.H. Oh). (GDP) is accompanied by a growth in energy demand (and

1364-0321/$ – see front matter ß 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.rser.2009.12.003
1242 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252

associated greenhouse gas emissions) of 1.2–1.5%. With increasing

industrialization, electricity consumption has increased from
19,932 GWh in 1990 to 87,164 GWh in 2007, an increase of
337%. In fact, the period from 1990 to 2000 marked the period of
rapid economic growth where demand for electricity recorded
double digit growth [2].
The excessive exploitation of the natural resources make
possible by the advancement of technologies has resulted in
unwanted by-products such as waste and pollution. Fossil fuels
consume and pollute water, endanger flora and fauna, generate
toxic wastes and cause global warming. Consequently, we are now
facing bigger challenges in finding solutions to overcome the
problem of depleting natural resources, climate change, energy
supply and food security. Meeting the increasing demand for
energy is indeed a subject that continually plagues the govern-
ment. This is further compounded by the concerns on the effect on
the environment as a result of burning fossil fuels and the
persistently high energy costs for the past few years.
The Malaysia Federal Government and the Non-Financial Fig. 1. Total energy demand (ktoe).Source: Preliminary Energy Outlook, PTM.
Public Enterprises (NFPEs) have invested a substantial amount
of allocation to continue providing an adequate, reliable and
reasonably priced supply of electricity to the people. For example, Today, the world is more circumspect. Green technology applica-
a total of RM27.9 billion (US$7.75 billion) was spent in the tion is seen as one of the sensible solutions which are being
electricity supply sector under the 8th Malaysia Plan to undertake adopted by many countries around the world to address the issues
electricity sector programs in generation, transmission, distribu- of energy and environment simultaneously. Green technology is a
tion as well as rural electrification. The amount is expected to technology that allows us to progress more rapidly but at the same
increase to RM30 billion (US$8.33 billion) under the 9th Malaysia time minimizes the negative impact to the environment. However,
Plan. With these investments and coupled with strong policy the world needs to find more efficient and effective ways to adopt
measures, the electricity coverage in Malaysia is expected to green technology against other technologies which have been
increase to 95.1% in 2010 from 89.5% in 2000, with the rural widely used and though cheaper, not necessarily benevolent.
electrification rate in Peninsular Malaysia currently at 99% [2]. Investment in sustainable energy sources in 2008 has defied the
Figs. 1 and 2 show the total energy demand and the energy mix global recession. Last year marked the first time that investment in
trend in Malaysia, respectively. new power generation capacity sourced from renewable energy
The crucial challenge facing the power sector in Malaysia all (RE) technologies, estimated at US$140 billion including large-
this while is the issue of sustainability that is to ensure the security scale hydro, was more than investment in fossil-fuelled technolo-
and reliability of energy supply and the diversification of the gies, approximately US$110 billion. In Malaysia, there seems to be
various energy resources. The question of security and reliability of renewed impetus in promoting the growth of an indigenous ‘‘green
supply is critical, to ensure smooth implementation of develop- economy’’. Not only does the country face the growing threat of
ment projects to spur economic growth in Malaysia while climate change and pollution, but the government also have to find
diversification of energy resources is critical to ensure that the new sources of growth and move up the value chain. Therefore, the
country is not dependent only on a single source of energy [3]. aim of this paper is to describe the numerous energy policies which

Fig. 2. Energy mix trend in Malaysia.Source: Malaysia Energy Commission forecast.

 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252 1243

have been adopted in Malaysia thus far, including the newly Table 1
Energy mix in Malaysia.
launched National Green Technology Policy, to ensure long-term
sustainability, reliability and security of energy supply for Source 1980 (%) 1990 (%) 2000 (%) 2005 (%) 2010 (%)
continuous development growth. This paper will also update Oil/diesel 87.9 71.4 4.2 2.2 0.2
and discuss on both the non-renewable and renewable energy (RE) Natural gas 7.5 15.7 77.0 70.2 55.9
sources in the existing Five-Fuel Diversification Strategy energy Hydro 4.1 5.3 10.0 5.5 5.6
mix. The most recent various alternative energies available and the Coal 0.5 7.6 8.8 21.8 36.5
Biomass – – – 0.3 1.8
various energy efficiency programs in Malaysia will also be
Source: BioGen (2003); 9th Malaysia Plan (2006–2010), Table 19-5.
presented. Lastly, we will cover the challenges faced in the green
and RE implementation.

2. Energy policies and outlook in Malaysia hydro became viable, as natural gas and hydro were largely untapped
then, and coal was considered a plentiful and reliable worldwide
For the past 60 years, Malaysia government has formulated quite resource with low and stable price. Direct consequence from this
a number of energy-related policies to ensure sustainability and strategy saw the contribution of oil in the energy mix dropped
security in energy supply, with the very first policy dated back to drastically from a high 87.9% in 1980 to 4.2% in 2000 as shown in
1949 when the Central Electricity Board (CED) was first formed, Table 1, and projected to drop below 1% by 2010 [4]. On the other
before it was changed to National Electricity Board (NEB) in 1965. hand, natural gas and coal have become the two main contributors in
But over the last three decades, pragmatic energy policies have the energy mix, followed by hydro. Oil is no longer seen as a feasible
facilitated a more environment-friendly energy development path. source to generate electricity due to its fast depleting supply and
The first policy that really impacted the industry was the Petroleum nowadays, it is mostly used as back-up supply for emergency.
Development Act 1974, vested on PETRONAS, the state-owned oil However, the burning of fossil fuels (coal and oil) and natural
and gas company, the exclusive rights to explore, develop and gas may result in one day these resources will be totally exhausted
produce petroleum resources in Malaysia, followed by the National and will significantly contribute to the emission of greenhouse
Petroleum policy 1975 to regulate downstream oil and gas industry gases (GHG) from their combustions, raising the climate change
via the Petroleum Regulations 1974. The more significant policy, the issue. Thus, in addition to fifth policy, the government has ratified
National Energy Policy was actually introduced in 1979 with three Kyoto Protocol in September 2002. As Malaysia is non-Annex 1
primary objectives; supply, utilization and environmental. The first country, Malaysia can utilize the Clean Development Mechanism
objective is to ensure the provision of adequate, secure, and cost- (CDM) to reduce domestic CO2 emissions as well as transfer
effective energy supplies through developing indigenous energy advanced technologies from developed countries.
resources both non-renewable and renewable energy resources As a rapid developing nation, the energy consumption in
using the least cost options and diversification of supply sources Malaysia will no doubt keep increasing, raising a lot of energy
both from within and outside the country. The second objective is to challenges. The 8th Malaysia Plan (2001–2005) had targeted to
promote the efficient utilization of energy and to discourage generate 5% of the country’s electricity from RE by 2005, but only
wasteful and non-productive patterns of energy consumption, and 0.3% was achieved. This was further emphasized in the 9th
the last objective is aimed to minimize the negative impacts of Malaysia Plan where efforts in the utilization of RE resources and
energy through efficient energy utilization. After that, the National efficient use of energy were further promoted. The establishment
Depletion Policy 1980 and a year later, the Four-Fuel Diversification of the Ministry of Energy, Green Technology and Water to replace
Strategy 1981 were implemented, with the former to prolong the Ministry of Energy, Communications and Multimedia earlier
lifespan of the country’s oil reserves for future security and stability this year reflects Malaysia’s seriousness in driving the message
of oil supply and the latter to pursue balanced utilization of oil, gas, that ‘clean and green’ is the way forward towards creating an
hydro and coal. economy that is based on sustainable solutions. The launch of the
The fuel diversification policy in Malaysia is reviewed from time new National Green Technology Policy in April 2009 by the current
to time to ensure that the country is not over-dependent one main Prime Minister, Datuk Seri Najib Tun Razak, that follows shall
energy source, especially after the two occurrences of international provide guidance and create new opportunities for businesses and
oil crisis in 1973 and 1979. The policy was further revised in 1999 industries to bring a positive impact to the economic growth. The
with the announcement of the Five-Fuel Diversification Strategy. National Green Technology Policy is built on four pillars – (1) seek
Renewable energy (RE) was made the fifth fuel in the energy to attain energy independence and promote efficient utilization;
supply mix with the target to contribute 5% of the country’s (2) conserve and minimize the impact on the environment; (3)
electricity demand by year 2005. In order to meet this goal, the enhance the national economic development through the use of
Small Renewable Energy Program (SREP) was launched in May technology; and (4) improve the quality of life for all. It will also be
2001 under the initiative of the Special Committee on Renewable the basis for all Malaysians to enjoy an improved quality of life, in
Energy (SCORE) aimed to support the government’s strategy in line with the national policies, including the National Outline
intensifying the development and utilization of RE as the fifth fuel Perspective Plan, where the growth objectives for the nation will
resource in power generation, which is also stipulated in the continue to be balanced with environmental consideration [5].
objectives of the Third Outline Perspective Plan (OPP) for 2001– While fossil fuels are expected to remain the dominant source of
2010 and the 8th Malaysia Plan (2001–2005). The primary focus of energy for decades to come, RE such as wind, solar, biomass,
SREP is to facilitate the expeditious implementation of grid- biofuel and geothermal heat are expected to double between now
connected RE resource-based small power plants. In the 9th to year 2030, although their share in the energy mix is most likely
Malaysian Plan (2006–2010), the emphasis on energy efficiency is still be around 5.9% of the total energy demand by 2030 [6].
intensified to address the nation’s energy challenge in line with the
sustainable development agenda. 3. Energy mix
Before the Five-Fuel Diversification Strategy in 1999, oil made up
a large portion of the country’s energy mix for the past few decades. Malaysia has adopted the Five-fuel Diversification Strategy
After faced with the possibility of prolonged energy crisis back in the energy mix since 1999, whereby the five main sources are oil,
1970s, other options of energy resources such as natural gas, coal and natural gas, coal, hydro and RE.
1244 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252

3.1. Oil consumption, it has also expanded regional natural gas trade.
Malaysia already trades small amounts of piped natural gas with
The contribution of oil in Malaysia energy mix was once up to Singapore and Indonesia, and PETRONAS reported that in 2006
87.9% before the Four-Fuel Diversification Strategy was imple- construction was completed on the Trans-Thailand–Malaysia Gas
mented in 1981. After the international oil crisis in 1973 and 1979, Pipeline System, which allows Malaysia to pipe natural gas from
the government had called for the diversification of energy the Malaysia-Thailand JDA to its domestic pipeline system. This
resources to prevent over-dependency on oil. Malaysia has proven linkage marks a significant step toward the realization of the
oil reserves of 5.46 billion barrels as of January 2008 [7]. The proposed ‘‘Trans-ASEAN Gas Pipeline’’ (TAGP) system, which
majority of the country’s reserves are located off the east coast of envisions the establishment of a transnational pipeline network
Peninsular Malaysia and tend to be of high quality. Several new oil linking the major natural gas producers and consumers in South
production projects have come online during the last few years, East Asia. On account of Malaysia’s extensive natural gas
although Malaysia’s oil output declined somewhat in 2006. infrastructure and its location, the country is a natural candidate
Average production for 2006 stood at 798,000 barrels/day (bbl/ to serve as a hub in the proposed TAGP project [9].
d), down 7% from 2005 levels. In 2006, Malaysia consumed an Based on the ratio between the reserves and production rate
estimated 515,000 bbl/d of oil, with net exports of about (assume that it has remained about the same up to now), it
283,000 bbl/d. According to Oil and Gas Journal, Malaysia had indicates that the natural gas could still contribute to the energy
about 545,000 bbl/d of refining capacity at six facilities as of mix as the main source of energy for the next 36 years compared to
January 2007. oil which is only around 20 years. At the moment, almost 80% of the
Malaysia’s state-owned national oil company, Petroleam energy mix in Malaysia is contributed by natural gas. As in the oil
Nasional Berhad (PETRONAS), dominates upstream and down- sector, PETRONAS dominates the natural gas sector as well.
stream activities in the country’s oil sector. PETRONAS operates
three refineries (259,000 bbl/d total capacity), while Shell operates 3.3. Coal
two plants (200,000 bbl/d), and ExxonMobil one (86,000 bbl/d).
Malaysia has invested heavily in refining activities during the last Malaysia has coal resources located in the states of Selangor,
two decades, and is now able to meet the country’s demand for Perak, Perlis, Sarawak and Sabah. Current production of coal comes
petroleum products domestically, after relying on the refining primarily from six mines in Sarawak. The DMG has estimated the
industry in Singapore for many years. country’s coal resources at some 1724 million tons of which 274
Despite growth in exploration activities and several new million tons are measured, 347 million tons indicated and the
projects that are set to come on-stream in the next several years, balance of 1102 million tons as inferred. Some 80% of the resources
Malaysia’s proven oil reserves have declined in recent years and are located in Sarawak, 19% in Sabah and one per cent in Peninsular
the oil production fell to 693,000 bbl/d in 2008, a 13% decrease Malaysia. The largest reserves of coal are located in Merit Pila,
from 2006 level [8]. Provided that the production rate is consistent Sarawak and in Maliau and Malibau, Sabah. Output in 2007
at around 700,000 bbl/d, Malaysia’s oil reserves will be exhausted increased to 1,063,078 tons from 901,801 tons in 2006. Malaysia’s
in around 20 years. demand for coal has been on the rise, with 15 million tons in 2008
and is expected to rise to 19 million tons by 2010. Most of the
3.2. Natural gas country’s requirements are met by imports from Indonesia,
Australia and China. They are consumed mainly by the power
In Malaysia, this natural source which can be found in abundant generation and cement plants, and to a lesser extent by the iron
has become the main energy contributor since early 2000s. Since and steel plants. The country aims to boost coal’s share of the
its discovery in 1983, its contribution in the energy mix has grown overall energy mix from the present 18–30% by 2010. The total
significantly since, replacing oil as the main source. As in Jan 2008, energy consumption in Malaysia from coal is 30% or 14,200 MW in
Malaysia held 88 trillion cubic feet (Tcf) of proven the natural gas 2008 and it is expected to increase to 42% or 17,600 MW in 2013
reserves [7]. While much of the oil reserves are found off [10]. Most of the coal is imported but efforts are continuing to
Peninsular Malaysia, most of the natural gas production comes enhance the security of supply by exploring the potential for
from East Malaysia, especially offshore Sarawak. Malaysia has development of local sources, particularly in Sarawak, as well as
three LNG processing plants, all located in a massive complex at securing long-term supplies from abroad.
Bintulu (East Malaysia) and supplied by the offshore natural gas Currently, there are four coal fired plants to which Tenaga
fields at Sarawak. The Bintulu facility is the largest LNG complex in Nasional Berhad (TNB), Malaysia’s state-owned power company,
the world, with a total liquefaction capacity of 22.7 million metric arrange coal supplies to. TNB owns two of the plants – Kapar
tons (MMt), or equivalent to 1.1 Tcf per year. Natural gas reserves (1600 MW) and Janamanjung (2100 MW) plants. Two others are
in Malaysia is the second largest in South East Asia after Indonesia independent power producers (IPPs), namely Tanjong Bin
and its production has risen steadily in recent years, reaching (2100 MW) and Jimah (1400 MW).
2.2 Tcf in 2004, up 47% since year 2000. Domestic natural gas
consumption has also increased substantially, with 2004 con- 3.4. Hydro
sumption at about 1.2 Tcf, which is 61% higher than year 2000
level. Malaysia is a significant net exporter of natural gas, primarily In the light of the constraints in fossil fuel supply as well as the
in the form of liquefied natural gas (LNG). In 2005, Malaysia ensuing high prices caused by resource nationalism around the
exported 21.2 MMt of LNG, which accounted for 15% of the total world, hydro power is expected to play a more prominent role in
world LNG export. our generation mix. Its share in the generation mix is expected to
Malaysia has one of the most extensive natural gas pipeline increase from 5% in 2008 to 35% in 2030 for Peninsular Malaysia.
networks in Asia, owing to the multi-phased Peninsular Gas The share of gas in the generation mix is projected to decline from
Utilization (PGU) project completed in 1998. The goal of the PGU is the current 60% to about 30% for the same period if the
to expand natural gas transmission infrastructure on Peninsular consumption level maintains at 1350 mmscfd. In view of this
Malaysia. The PGU system spans more than 880 miles and has the the government intends to ensure that TNB maintains the reserve
capacity to transport 2 billion cubic feet/day (Bcf/d) of natural gas. margin at around 20% in Peninsular Malaysia. The state govern-
Not only has the PGU initiative helped boost domestic natural gas ment of Sarawak has recently announced plans to develop several
 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252 1245

large hydroelectric projects under the Sarawak Corridor of wastes such as such as palm oil, rice, sugar cane, timber/sawmill,
Renewable Energy. The development spanning over a period of paper recycling, municipal waste, biogas, to name a few.
22 years has the potential to generate 28,000 MW of electricity Nevertheless, credit should be given for the continuous concerted
once fully developed. The Bakun dam in Sarawak, one of the largest efforts undertaken by the government all these years to promote
dams in South-East Asia, is expected to finally complete by 2010 and develop the benefits and utilization of RE resources.
(this project was halted twice in 1997 and 2001 due to the Asian In tandem with the government’s efforts, the Small Renewable
Financial crisis) with a capacity of 2400 MW. The Bakun Energy Power (SREP) Program was launched in May 2001 and
hydroelectric dam project involves the construction of a 205 m initially covered biomass, biogas, landfill waste and mini-hydro.
high rock-filled concrete dam to create a reservoir that spans a Later in 2003, solar PV and wind were incorporated into SREP as
massive 695 km2. The Bakun project is expected to cost some RM7 well. Under the SREP Program, the utilization of all types of RE
billion (US$2 billion) while TNB together with Sarawak Energy Ltd. sources is allowed. Small power generation plants utilizing RE
are to form a consortium to build a 1650 km transmission system sources can apply to sell electricity to the utility through the
that will cost another RM9 billion (US$2.57 billion) of which country’s distribution grid system. Maximum capacity of small RE
650 km will be the undersea submarine cable [11]. Plans are plant designed for sale of power to the grid must not exceed
underway to export about 5000 MW of power in the medium term 10 MW. A Special Committee on Renewable Energy (SCORE) has
to Peninsular Malaysia via 500 kV high-voltage direct current been set up under the then Ministry of Energy, Communications
overhead (HVDC) and undersea cables by 2020 and an additional and Multimedia to coordinate the program and a secretariat
5000 MW by 2030. By 2030, hydroelectricity is expected to functioning as a One-Stop Centre at the Energy Commission (EC)
account for about 30–35% of the generation mix. Amongst the facilitates industry participation in the program. Latest report from
projects which are already identified to be developed are the Malaysia Energy Centre (PTM – Pusat Tenaga Malaysia) shows 60
Murum dam (940 MW), Baleh dam (950 MW) and Pelagus dam projects have been approved as in 2005, using various types of
(770 MW) in the upper reaches of the Rejang river in Sarawak. The renewable energies (see Table 2), with the most coming from
Sarawak State Government has awarded the construction of the biomass using palm oil wastes and mini-hydro. All these projects,
Murum dam to a successful bidder with an expected completion with each given a 21-year operating license to generate up to a
date by 2013. Whereas, for the Baleh and Pelagus dams feasibility maximum of 10 MW, manage to generate a total of 375 MW
studies are being conducted [2]. energy with 325 MW connected back to the national distribution
grid. Among all the sources of RE, biomass appears to be the most
3.5. Renewable energy (RE) promising, especially from empty fruit bunches since Malaysia is
one of the world’s top producers of oil palm. PTM estimates the
Rapid depletion of fossil fuel reserves as well as climate change country has the capacity to produce up to 2000 MW using biomass
has driven the world towards RE sources which are abundant, and biogas alone.
untapped and environmentally friendly. In particular biomass Biomass Power Generation and Demonstration (BioGen) Project
fuels hold great promise as a component of Clean Development was introduced in October 2002 with the main objective to reduce
Mechanism (CDM) strategies in the Kyoto Protocol to reduce GHG the growth rate of GHG emissions from fossil fuel by utilizing
emissions to acceptable levels. The Biomass Energy Plant Lumut is excess oil palm biomass residues and further promote and
the first Malaysian project to be registered at the UNFCCC as a CDM demonstrate biomass and biogas grid-connected power generation
project. The first large scale CDM project to be registered from projects. The project is jointly funded by Malaysia Government,
Malaysia is this project where biomass is co-fired with coal in United Nations Development Program, Global Environment
cement kilns in two cement works in Kanthan and Rawang. The Facility and various Malaysian private sectors. BioGen also
Jendarata steam and power plant and Jenderata palm oil mill have facilitates development of the grid-connected biomass-fuelled
the expected combined emission reduction of carbon dioxide of small power systems, disseminates awareness information in palm
more than 30,000 tons annually. oil industry, provides building and technical assistance in policy
Aforementioned, RE was added as the fifth source of energy formulation, and financial facility assistance through favourable
when the Five-Fuel Diversification Policy replaced the four-fuel bank loans and tax exemption among others. To date, some of
policy back in 1999 with the target to contribute 5% of the total BioGen significant projects include the first 14 MW (export
energy mix by 2010 in the 8th Malaysia Plan (2001–2005). The 10 MW) power plant in Tawau, Sabah which uses oil palm
development pace of RE in Malaysia is rather slow and still at its residues (empty fruit bunch, fibre and shell) that successfully
infancy, with its current contribution at around 1% only of the total mitigate 40,000–50,000 tons of CO2 in 2004 and more recently, a
energy mix, even though the fifth fuel policy had been announced a 13 MW (export 10 MW) and 500 kW (FELDA Serting) power plants
decade ago. Presently, RE in Malaysia is still being generated on a are grid-connected and commissioned in July 2009 and a total of
small-scale basis only although Malaysia is blessed with abundant 447 MW off-grid electricity has been produced by private palm oil
of resources available on renewable basis, with mostly from mill millers.

Table 2
Status of SREP projects approved by SCORE as at 2005.

Type Energy resource Approved application Generation capacity (MW) Grid connected capacity (MW)

Biomass Empty fruit bunches 25 220.5 174.8

Wood residues 1 6.6 6.6
Rice husk 2 12.0 12.0
Municipal solid waste 1 5.0 5.0
Mix fuels 3 19.2 19.2

Landfill gas 5 10.2 10.0

Mini-hydro 26 101.9 97.4
Wind and solar – – –

Total 63 375.4 325.0

Source: Energy Sector Incentive Workshop 23–24 December 2005.
1246 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252

Table 3 are factored in. It may be quite feasible to set a target of about
Renewable energy potential in Malaysia.
10 MW of grid connected photovoltaic system for Malaysia [14].
Renewable Energy Potential (MW) In 2005, the 5-year Malaysian Building Integrated Photovoltaic
Hydropower 22,000 Technology Application Project (MBIPV) was launched. This
Mini-hydro 500 project is jointly funded by the Government of Malaysia, the
Biomass/biogas (oil palm mill waste) 1,300 Global Environment Facility (GEF), and the private sector. It is
Municipal solid waste 400 intended to encourage the long term cost reduction of non-
Solar PV 6,500
emitting GHG technologies by the integration of energy generating
Wind Low wind speed
photovoltaic technology in building designs and envelopes. Over
Sources: Malaysia Energy Centre’s National Energy Balance.
the lifetime of the project, the energy generated is expected to be
able to avoid 65,100 tons of CO2 emissions from the country’s
Apart from biomass, in 2005, the government introduced the power sector [15]. The project has several demonstration PV
use of biodiesel for the transport sector as a step towards projects in various sectors including residential houses and
sustainable energy development through diversification of energy commercial buildings. The most significant recent project is the
sources. Back in the 1980s, the then Palm Oil Research Institute of Green Energy Office (GEO) building, an administration-cum-
Malaysia (PORIM) developed biodiesel using transesterification research office for PTM. It is constructed following the success
technology that was used 100% on special engines from Germany. of the Low Energy Office (LEO) building which currently housed the
In spite of that, biodiesel received lacklustre interest from Ministry of Energy, Green Technology and Water (KeTTHA) in
transportation and automobile industry due to unclear policy Putrajaya. The LEO building is the first Malaysia’s government
and directive from the government and also hindered by the high building to be built with integrated energy efficient design and was
price of the palm oil and low price of oil back then. The increasing designed as a showcase building to demonstrate energy efficient
oil prices and falling palm oil prices in the recent years have and cost effective features so that other public and private sector
somehow revived the interest, with legislation to require oil buildings can replicate such measures. The GEO building, on the
companies to sell biodiesel at their petrol stations. The biodiesel other hand, is a pilot project, a demonstrator building which
raw material is refined, bleached and deodorized (RBD) palm oil marked another milestone towards greater promotion and
and its composition is 5% processed palm oil blended with 95% adoption of sustainable building concept. PTM-GEO is the only
petroleum diesel for diesel engine vehicles and industrial and such building in Malaysia that integrates the energy efficiency (EE)
power generation [12]. In 2006, Malaysia’s biofuel production and RE in one working building. The building integrated
stood at 400,000 tons and increased to 1 million tons a year later, photovoltaics (BIPV) panels are all integrated into the building
which is mainly for export market. The increase in biofuel design to provide electricity for the building uses and are
production was achieved through yield increase and production connected to the national electricity (TNB) grid by feeding
efficiency without increasing the hectarage of plantation. electricity into the network and shaving the peak power demand
Table 3 summarized the rough estimation of the RE potential in of the grid during the peak daylight hours. The system provides
Malaysia in the long run. Hydropower and solar PV are without the almost 50% of everyday electrical needs. In daytime, the system
RE with highest potential due to Malaysia’s geographical terrain will feed any surplus of energy back to the TNB grid. At night, the
with many large rivers suitable for dam projects and its tropical electrical energy is imported back from the grid to be used for the
climate with plenty of sunlight. cooling system. Other green technology features of the building
which are not in the scope of this discussion can be found in [16].
4. Alternative energy Another national MBIPV program that is worth mentioned is
the SURIA-1000 program initiated in 2007, targeting the residen-
Apart from the main five energy sources stated in the Five-Fuel tial and commercial sector to establish the new BIPV market and
Diversification Strategy, the government has always been on the provide direct opportunities to the public and industry in RE
lookout for other possible sources of alternative energy such as initiatives. Every year since 2007, limited number of grid-
solar, wind, hydrogen fuel cells, landfill gas and municipal solid connected solar PV systems will be offered to the public on a
waste (MSW) incineration and more recently, nuclear. bidding (auction) concept, through local mass media and
administered by a project team, with minimum BIPV capacity
4.1. Solar for bidding is 3 kWp per application. Successful bidders would
then install the PV system supplied by the participated PV service
Although solar power has been identified and incorporated into providers as BIPV at their premises. The costs of the PV systems are
SREP as one of the REs in 2003, it is introduced here separately from borne by the successful bidders at the bidding price and
the RE in the section 3.5 sub-category because most of the solar supplemented by the project. This program is co-financed by
power used in Malaysia is domestic level only (mostly for solar the public (owners of the system), Malaysia’s Energy Commission
thermal), and large scale commercial use is not significant yet. and the PV industry. Today, the cost of a 5 kWp BIPV turn-key roof-
Solar power in Malaysia or also known as photovoltaic (PV) system top system in Malaysia is about RM27,000/kWp. Thus, a 5 kWp
is estimated to be four times the world fossil fuel resources [13], BIPV system costs RM135,000 (US$37,500). The system will
but the truth is that the potential of solar power is practically produce approximately 6000 kWh of energy per annum [17]. To
limitless. Presently, solar energy applications mostly oriented date, there are only a mere 0.4 MW of cumulative grid-connected
towards domestic hot water systems, water pumping, drying of PV installations and PV system unit cost has dropped by 16% in
agricultural produce. The tropical climatic conditions in Malaysia average since introduced.
are favourable for the development of solar energy due to
abundant sunshine with the average daily solar insulation of 4.2. Wind
5.5 kWm2, equivalent to 15 MJ/m2. PV-generated electricity,
whether standalone or grid connected, is electricity generated at Wind power is the conversion of wind energy into more useful
point of use. So, 1 MW of PV-generated electricity is equivalent in forms, usually electricity using wind turbines. In 2005, worldwide
fuel saving to about 4 MW of conventional electricity once capacity of wind-powered generators was 58,982 MW, their
generation and transmission losses of the conventional system production making up less than 1% of worldwide electricity use.
 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252 1247

Although still a relatively minor source of electricity for most methane is left untapped, it becomes a major greenhouse
countries, it accounts for 23% of electricity use in Denmark, 4.3% in contributor as methane is 23 times more hazardous than carbon
Germany and around 8% in Spain. Globally, wind power generation dioxide in terms of its global warming effects [21]. Currently, the
more than quadrupled between 1999 and 2005. Landfill Gas (LFG) Power Generation at Air Hitam Sanitary Landfill,
In Malaysia, wind energy conversion is a serious consideration. Puchong is the first grid connected RE project in the country. This
The potential for wind energy generation in Malaysia depends on project is owned by a subsidiary and its construction was
the availability of the wind resource that varies with location. completed in November 2003 and commissioned in April 2004.
Understanding the site-specific nature of wind is a crucial step in Generally, the project site is located at landfill area itself, where the
planning a wind energy project. Not much data are available on total gross area of landfill is about 58 hectares and the waste
wind energy potential of Malaysia can be found. One dated back in deposited close to 4 million tons. This landfill area receives
the early 1980s was conducted the Solar Energy Research Group 3000 tons of garbage/day from major parts of the Klang Valley.
from Universiti Kebangsaan Malaysia (UKM). Wind data were The 2.096 MW power plant has two gas engines rated at the
collected from ten stations distributed all over Malaysia (six in capacity of 1048 kW and the generator comprises of a set of gas
Peninsular and four in east Malaysia, Sabah and Sarawak) for a 10- extraction system which is directly connected to the pipe from the
year period (1982–1991), with all the stations located either at gas field or well. The system functions as the fuel pre-treatment
airport, near open sea, flat area or meteorology department. The system of the biogas such as filtration, heating and cooling of the
station located at Mersing (seaside) has the greatest potential with gas. The interconnection point of TNB substation with the gas
a mean power density of 85.61 W/m2 at 10 m above sea level [18]. power generator is located 30 m from the site, with 2 MW being
A more recent research in 2005, a 150 kW wind turbine in exported to the national grid. Each well can produce biogas for a
Terumbu Layang Layang was demonstrated with some success by a period of 20 years and the gas composition is more than 55%
team from UKM. However, the availability of wind resource varies methane gas with an 80% maximum moisture level at a production
with location. It is necessary to first carry out a general assessment rate of 40 m3/h.
of the wind energy potential nationwide. This can then be followed Besides power generation, this project also reduces odour level
with detailed assessment in promising locations. Understanding at surrounding area and mitigates emission of GHG [22]. The
the wind resource is a crucial step in planning a wind energy energy potential from an incineration plant operating based on
project. Wind energy is considered a green power technology 1500 tons of MSW/day with an average calorific value of 2200 kcal/
because it has only minor impacts on the environment. Wind kg is assessed to be at 640 kW/day [23].
energy plants produce no air pollutants or GHG and have great Another popular method of MSW disposal in Malaysia is
potential in tourist resort islands. However, any means of energy through open incineration and it is increasingly becoming a
production impacts the environment in one way or another, and problem due to pollutant emissions like heavy metals and
wind energy is no different [19]. mercury, and other hazardous compounds such as dioxin,
hydrochloric acid (HCl), nitrogen dioxide (NOx) and sulfur dioxide
4.3. Landfill gas and municipal solid waste (MSW) (SOx) being released to the atmosphere from clinical waste
incineration process. Open incineration is seen as the easiest way
Municipal Solid Waste (MSW) in Malaysia involves the disposal to handle waste by many due to shortage of land for landfills and its
of approximately 98% of the total waste to landfills. Current rising costs. In the early 2000s, a US$435 million biggest
disposal method of landfilling needs improvements to prolong the incinerator project in Asia was proposed to be built in the country,
landfill life and to minimize the problem of land scarcity. Rapid to be located at Broga, Selangor. But the 1500-ton behemoth
developments and industrialization in Malaysia necessitate a project had since been scrapped due to the large capital
better and more efficient waste management strategy. The expenditure and costly maintenance involved, on top of mounting
mushrooming of urban areas and rural–urban migration has protests from the public and environmentalists because the
increased the per capita income due to changes in the consumption proposed site was located near a university and surrounded by
patterns that led to increased waste generation. The local vegetable farms, palm oil and fruit plantations and near a water
authorities and waste management consortia have to handle catchment area. At present, incinerators in Malaysia are run by
approximately 17,000 tons of MSW everyday throughout the private entities in small scale and mainly used for medical and
country [20]. The largest sources are household waste followed by hazardous wastes only. The government has not totally dispose the
industrial and commercial waste (Table 4). The MSW consisted of plan of building more incinerators in the future as solid waste
putrescible waste, paper, plastic, wood, metal, glass, textiles, grass management is getting more serious by days, with the country’s
and others. MSW contains significant portions of organic materials capital, Kuala Lumpur alone discards some 3000 tons of solid waste
that produce gaseous products, an energy source known as biogas every day. Consequently, there are renewed interest and ongoing
which is naturally produced from anaerobic degradation at studies on thermal treatment for solid waste management through
landfills. The main content of the landfill gas (LFG) is methane, gasification and pyrolysis, which look quite promising [24].
which can be used for power generation, transport and as cooking Only about 5–15% of waste in Malaysia is recycled, compared to
gas. Harvesting energy from landfills is befitting as there are more much higher levels in many developed nations. According to the
than 261 landfill sites in Malaysia and 150 sites are still operating, Malaysian Newsprint Industries, a private joint venture newsprint
contributing to the immense potential of LFG formation. If the supplier, Malaysian publishers use about 250,000 tons of news-
print a year, of which only 100,000 tons is recovered. This is
Table 4 equivalent to disposing 2.55 million trees into the landfills. The
Composition of solid MSW in Malaysia. main factor that might influence the composition and amount of
MSW produced in any location is the extent of reduction, reuse and
Sector Weight (%)
recycling programs being implemented, and there have been much
Domestic 49
disputes that the government’s recycling campaign and its
Industrial 24
Commercial/institutional 16
collection points, with large bins in three colours for the various
Construction 9 types of waste, have been a failure. Where they existed, many of
Municipal 2 these bins are simply inaccessible or full of un-segregated rubbish.
Source: Malaysia Energy Centre 2008. And most households did not have easy access to such recycling
1248 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252

Table 5 Unfortunately, hydrogen does not exist naturally and thus the
Projected amount of MSW generated by 2020.
extraction and production methods of hydrogen are very expen-
Year Population Estimated amount of sive. The most common form of extraction is steam reforming
waste (tons/year) where water is heated to high temperature (roughly 1000 8C) using
1991 17,567,000 4,488,369 methane (CH4), which reacts with the hydrogen (cultivated for use)
1994 18,917,739 5,048,804 and carbon monoxide (emitted as GHG). Another alternative
2015 31,773,889 7,772,402 version of extraction which is more expensive but also the cleanest
2020 35,949,239 9,092,611
is through breaking water molecules into hydrogen and oxygen
Source: Malaysia Energy Centre 2008.
using electrolysis. The main drawback is that it takes more energy
to create the hydrogen than what is actually produced, making it
collection points. With the ever increasing population, it is not feasible. At the moment, research and development is being
projected that more than 9 million tons of waste will be produced carried out to harness hydrogen to be used in fuel cells for
a year by 2020 (Table 5). Composting can actually be incorporated transportation purposes. Hydrogen and fuel cells are identified as
in all the landfills in the country together with an integrated priority research by the Ministry of Science, Technology and
system of recycling. The integrated system would allow optimiza- Innovation (MOSTI) after solar, with RM7 million (US$2 million)
tion of waste reduction and reuse programs, which is actually a funded on hydrogen production and storage technologies between
realistic possibility to improve the MSW management in the 2002 and 2007 and RM34 million (US9.7 million) on the national
country. fuel cell research and development from 1996 to 2007 as
applications of fuel cells are viewed as one of the more important
4.4. Hydrogen fuel cells energy conversion devices in the future. Therefore, a task force
under the PTM has been set up recently and the hydrogen energy
Being the most abundant element on earth, hydrogen (H2) has roadmap for the next 20 years was drawn as shown in Fig. 3.
been identified as one of the most viable and long term renewable
alternatives to fossil fuel after solar. Other renewable such as 4.5. Nuclear
biomass is currently seen not sufficient enough to replace fossil
fuels. And fuel cell has been singled out as the most promising As the world struggles to cap CO2 emissions and GHG and deal
energy conversion device for hydrogen especially in transporta- with climate change, nuclear energy is becoming more and more
tion. The fuel cell is an electrochemical cell, which produces appealing. Fanned by climate change and dwindling fossil fuel
electricity directly from hydrogen and air (oxygen), without the supplies, there is now a nuclear renaissance. More and more
production of GHG. In principle, although a fuel cell operates like a countries are beginning to consider having nuclear reactors. In this
normal battery, it does not run out nor requires charging as long as region, Thailand, Vietnam, Indonesia and Malaysia have recently
fuel is supplied to it. announced their nuclear plans. Nuclear energy has existed for

Fig. 3. Hydrogen energy roadmap for Malaysia [25].

 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252 1249

many decades and is a popular energy source in developed those countries adopting nuclear power. The main concerns have
countries. For instance, according to World Nuclear Association, 75% always been the nuclear waste disposal, followed by the need to
of France electricity needs are supplied by its 59 nuclear reactors decommission the NPP once it ceases operation. Both are
and South Korea has over 20 nuclear power plants which supply expensive and thorny issues yet to be dealt with real effectiveness
40% of its needs. Nuclear has long been considered as the only form by nuclear-powered countries. If Malaysia were to pursue its
of energy that can replace fossil fuels adequately, which currently nuclear future, there are few aspects that need serious consider-
provides 85% of the world’s energy today. The burning of fossil ation.
fuels spews about 30 billion tons of CO2 into the atmosphere every
year but in contrast, nuclear reactors produce almost zero CO2, (1) Nuclear power is estimated to cost between US$0.15–0.21/
according to Environmentalist of Nuclear Energy. kWh whereas solar costs around US$0.20. But the costs for
In Malaysia, control over the use of radioactive substances nuclear are rising whereas for solar, it is dropping. Solar power
began in 1968 when the government passed the Radioactive does not present the problems of toxic waste containment,
Substances Act 1968. Due to rapid development of atomic energy inflated capital costs and the political and security risks
activities in Malaysia which requires more effective control, associated with nuclear power.
inspection and enforcement, the Atomic Energy Licensing Board (2) Nuclear fuel is not as abundant as one might think. Uranium
(AELB) was established in February 1985 to act as an enforcement ore, which contains enough U-238 to make enrichment
body and was placed under the Ministry of Science, Technology feasible, can only be found in a handful of countries. Some
and Innovation (MOSTI) since October 1990. Non-power applica- of these countries are politically unstable, others need the
tions of nuclear technology have contributed to improving uranium for their own nuclear reactors, and some may use it as
healthcare, generating new industrial products and processes, a mean of exchange (like Russia recently exchanges uranium
improving food and water security, and further development of with natural gas from Europe). Hence, the security of supply is
other areas of science and technology all this while. Such non- not guaranteed. Furthermore, usable uranium is a limited
power applications have been the main focus of nuclear technology resource, just like fossil fuel, and studies even show that the
development in Malaysia until now. peak of nuclear fuel can be expected during the coming decade,
As in many developed countries in the world, there is now a similar to the peak of oil. NPPs are designed to last around 60
renewed interest in using nuclear energy for electricity generation years and the radioactive waste such as plutonium has a half-
in Malaysia. Recently in July 2009, the government has agreed to life of 24,400 years. The process of enriching uranium for it to
include nuclear as an option in the energy policy of the country, be used as nuclear fuel is extremely energy intensive and
with the drafting of a new national energy policy expected to be produces lots of GHG. Thus, nuclear power is not as carbon
readied by the end of the year. This is due to the realization that the neutral as many had claimed [27].
available national energy resources are inadequate to guarantee (3) Currently, Malaysia runs at 47% over-capacity to compensate
supply beyond the year 2030 and in will take 10–15 years to for fluctuations in demand and interruptions in supply. Such
develop the human capital to tap into nuclear energy. Currently, large reserves are quite adequate for years to come, and this
electricity generation in the country is predominantly based on does not even include the 2400 MW Bakun dam which has yet
only three of the five fuel sources, namely, natural gas, coal and to be commissioned. Restructuring the set up of the existing
hydropower. Oil is hardly used for electricity generation, except for energy sector which favours IPPs at the expense of TNB seems
standby generation, and the contribution of RE to electricity to be a more feasible way forward.
generation is still insignificant and far below the target set under (4) It is estimated to cost US$4 billion for a 1000 MW nuclear
the 9th Malaysia Plan (2006–2010). In future, oil will no longer be a power plant (NPP), excluding other costs in running it, such as
viable option for electricity generation, due to the diminishing the waste disposal and other costs associated with the safety
national oil resources, and Malaysia is expected to become a net oil and security of the plant. Furthermore, the planning and
importer by the year 2030. Furthermore, fluctuating global oil building of an NPP normally takes 15–20 years and tends to
prices do not augur well for a reliance on oil for electricity incur cost overruns and construction complications. If the same
generation. As such, the priority for the use of oil should be in those amount of monies is pumped into solar plants which require
sectors where it is difficult to find a substitute, especially in the minimal maintenance, energy can be generated almost
transportation sector. Of the three current main sources for instantly. Studies conducted by the PTM estimated that
electricity generation, there is uncertainty over gas supply to the 6500 MW power can be generated by using only 40% of
power sector in the peninsular beyond 2030. To cover for the country’s house roof tops (2.5 million houses) and 5% of
shortfall in gas supply, coal-fired electricity generation may need commercial buildings alone.
to be increased. This is not an attractive option, given that almost
100% of the national coal supply is dependent on imports, with 5. Energy efficiency
current total of approximately 20 million tons per year.
With the increasing global demand for clean and sustainable As a significant element of Malaysia government policy, energy
energy, peaceful, safe and secure use of nuclear energy, further efficiency (EE) is explicitly addressed in the 9th Malaysia Plan
development of affordable and cost-effective small and medium- (2006–2010) besides promulgating the use of RE to ensure energy
sized nuclear power plants (NPP) is important. For Malaysia, the supply sustainability for continuous economic growth. EE pro-
nuclear power program can be initiated with a small nuclear power grams focus on energy saving features in the industrial and
plant as a power demonstration reactor, before larger plants that commercial sectors as well as residential in the domestic sectors.
are more cost-competitive can be built. This was the approach The industrial sector is expected to implement measures for
taken by Japan, which started with a Japan power demonstration improvements in plant, equipment and processes as well as the
reactor (JPDR) generating only 13 MW of electricity from 1963 to end uses. Efficient Management of Electrical Energy Regulations
1982, before building 53 larger plants with capacities between are to be introduced, Uniform Building By-Laws to be amended to
340 MW and 1300 MW [26]. incorporate energy efficiency features, and specifications promul-
In view of the increasing global interest for nuclear power gated for accurate and informative electrical appliance labelling to
generation, especially among developing countries, there are be further enhanced. Promotion of the use of high efficiency
concerns expressed by certain parties over the state of readiness of motors includes initiatives to develop local expertise in the
1250 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252

manufacture of energy efficient equipment and machinery. Energy professional publications, newspaper articles and advertorials
efficiency measures are to be intensified in the industrial, transport and by means of numerous workshops and seminars.
and commercial sectors, and in government buildings [7]. (5) Helped to establish the Malaysian Energy Professionals
The industrial sector is the largest consumer of energy, rivalled Association (MEPA), and association of energy experts, which
only by the transportation sector. Over the 8th Malaysia Plan is open to energy practitioners of various academic back-
period (2001–2005), the energy consumption was projected to grounds.
grow at an average of 7.8% annually and more than double over a (6) A Master Energy Services Agreement (MESA) was drawn up by
10-year period if no initiatives are implemented to improve the the MIEEIP Team at PTM as a sample document to assist energy
energy use efficiency performance of the economic sectors. The services companies (ESCOs) and industries in the implementa-
manufacturing sector is projected to consume 38.2% of the total tion of energy efficiency activities.
commercial energy at the end of 2005, an increase from 37.1% in (7) Ten EE technology demonstration projects in energy-intensive
2000 or at the end of the 7th Malaysia Plan, a growth rate of 8.5%. industries (pulp and paper, glass, food, steel, palm oil) have
In keeping the plan targeting the Malaysian industrial energy been supported as well as three local equipment manufac-
consumers, the Malaysian Industrial Energy Efficiency Improve- turers (motor rewinding, fans) by means of technical assistance
ment Project (MIEEIP) was jointly initiated in late 2000 by the (feasibility analysis) and investment support (through the
government, Global Environment Facility (GEF) and United Energy Efficiency Projects Lending Scheme, EEPLS).
Nation Development Program (UNDP), with the mandate to (8) One demonstration project (Heveaboard Bhd. in Gemas) based
reduce the barriers to industrial energy efficiency and conserva- on ESCO concept has been successfully implemented based on
tion, besides building institutional capacities in relevant organi- the MESA.
sations for sustainability. Energy audit activities carried out in
eight energy intensive industrial sectors (wood, food, glass, Table 6 summarizes the reductions in terms of energy
cement, rubber, pulp and papers, iron and steel, ceramic) revealed consumptions, costs and CO2 emissions achieved by MIEEIP in
potential energy savings amounting to 7.1 million gigajoules (GJ) all the eight sectors from a total of 48 audited industrial companies
per year with an estimated capital expenditure of RM100.4 up to 2007.
million (US$6 million). At the same time, the Malaysian Energy A more recent EE effort in Malaysia that worth to take note is
Efficiency Plan (EEP) envisages a potential energy saving of over the Green Building Index (GBI). GBI is launched earlier this year by
1400 GWh over the equipment life-time, equivalent to RM238 the Malaysia Architect Association and the Association of
million (US$61.6 million) for an investment of RM33 million Consulting Engineers Malaysia (ACEM) to assess the impact of a
(US$9 million) by the government in program expenses over the new building on its environment based on the six criteria of energy
remaining period of 8th Malaysia Plan, and up to 2006. Among the efficiency (EE) – indoor environment quality, sustainable site and
achievements of MIEEIP as in January 2008 include the following management, materials and resources, water efficiency, and
[28]: innovation. The index is soon becoming a standard for all buildings
in Malaysia because it recognizes and rewards advances in EE
(1) The E-Benchmarking activities have successfully compiled a through better technology and smart design. In line with the
database of more than 1500 industries built up from data National Energy Policy objective to promote the efficient utiliza-
sourced from the Department of Statistics (DOS). MIEEIP has tion of energy resources, the government has introduced tax
developed an Energy Efficiency and Conservation Guidelines incentives for companies that provide energy-saving consulting
for Electrical Equipment (EE&C Guidelines). services as well as for companies that incur capital expenditure for
(2) A total of 54 industries have been audited under the project, in EE and energy conservation. The government is also embarking on
the following sub-sectors: cement (3), ceramic (6), iron & steel energy conservation in the building sector, in particular the
(4), food (10), glass (3), pulp & paper (6), rubber (9), wood (7), government offices. All government agencies are currently
oleo-chemical (2), plastics (2) and textile (2). A 56-page working towards reducing energy consumption. As for new
document called ‘‘Industrial Energy Audit Guidelines – A buildings, the low energy office (LEO) building of the Ministry of
Handbook for Energy Auditors’’ was published. Energy, Green Technology and Water (MEGTW) has set the
(3) An energy efficient motor rating and labelling program has benchmark for more buildings to be built in the country with EE
been proposed to the Energy Commission. A ‘‘Boiler Best and RE features integrated in the building design [2]. The LEO
Practice’’ guidebook was developed. building was targeted to achieve a building energy index (BEI) of
(4) Various promotional materials that have been successfully 100 kWh/m2 per year and energy savings of more than 50%
developed and disseminated to stakeholders and beneficiaries, compared to buildings without energy efficient design. Following
by means of the quarterly newsletter (MIEEIP News), articles in the success of the LEO building is the green energy office (GEO) in

Table 6
Emission reduction impact of MIEEIP energy audits.

Sectors Food Wood Ceramic Cement Glass Rubber Pulp & paper Iron & steel Total

Energy consumption (’000 GJ/year) 1,835 1,032 774 21,557 4,000 611 5,080 4,223 39,113
6
Energy costs (10 RM/year) 42.2 13.5 24.1 204.2 97.8 16.9 84.2 160.1 643.0
No cost 24 8 39 1 31 57 52 64 277
Low cost 111 132 75 7 14 21 69 57 486
High cost 238 221 42 337 59 84 691 149 1,821
Total savings (’000 GJ/year) 374 361 155 345 104 162 812 270 2,583

Total cost savings (106 RM/year) 8.5 5.2 6.0 33.8 2.5 4.3 19.8 5.3 85.3
CO2 emission reductions (kt/year) 28.0 30.4 14.5 444.7 8.1 18.9 194.4 22.8 761.7
No. of audited factories 10 7 6 3 3 9 6 4 48
Factories registered 471 75 54 54 18 134 134 148 1,088
 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252 1251

The notion is further pursued in the 9th Malaysia Plan (2006–

2010) which has also set a target of 5% RE in the country’s energy
mix but as of last year, the vast majority of Malaysia’s energy
generation mix still came from conventional sources, comprising
gas (65%), coal (28%), large-scale hydro (5%) and diesel (2%). For any
green technology industry to succeed, the right support mechan-
isms must be in place to create the market. One of the key
stumbling blocks is the prohibitive price of RE that gives
households and businesses little incentive to adopt the technology.
Furthermore, Malaysians have become used to cheap energy, with
PETRONAS currently subsidizing approximately 60% of the natural
gas sold to utilities. Every type of energy has benefited from
assistance in its start-up phase, and RE should be no exception.
There is still massive support for conventional energy sources in
the forms of subsidies and export credits. If RE were to be
competent economically, it is important that RE receives the same
treatment as fossil fuels. Otherwise, such subsidies should be
removed or made transparent in order to create a level playing
Fig. 4. Installed solar PV system at Malaysia Energy Centre (PTM) building – Green field. This can be partly overcome through a mandatory feed-in
Energy Office (GEO). tariff, which has shown positive results in some countries. Under
the scheme, which might be part of the RE policy, electricity
utilities must buy renewable electricity at above-market rates set
2007 which currently houses the PTM. At the moment the GEO by the government. The higher price helps overcome the cost
building has achieved BEI of around 65 kWh/m2 per year (without disadvantages of RE sources. Recently, PTM has proposed that
PV generation). With PV energy generation, it can reach up to consumers who use electricity beyond a certain minimum point
35 kWh/m2 per year. Fig. 4 shows part of the installed PV system at are required to contribute 2% of their bill towards a RE fund, which
the GEO building. With more and more government buildings with will then be used to equalize the price between non-renewable and
EE and RE features to be built in the future, it is hoped that the renewable sources of energy. The scheme could change the
private sector will be encouraged to follow suit and practice EE as a mindset of consumers as it is based on the ‘‘polluter-pays’’
way of life. principle.
According to PTM, biomass and biogas, micro-hydro and solid
6. Challenges and a way forward waste will be prioritized as RE sources under the policy. Wind and
geothermal sources will play a secondary role and as for solar
The newly restructured Ministry of Energy, Green Technology energy, the potential is limitless. Since electricity from non-
and Water has drafted a comprehensive RE policy linked to the renewable sources such as gas and coal are heavily subsidized,
National Green Technology policy. The RE policy provides the rules solar energy is actually very competitive. This trend is very likely to
and funds to make RE an important component of the country’s continue, as not only end users became more and more demanding
energy mix, overcome technological barriers, address existing for such offers, but also professional real estate players, among
market failures, create a level playing field for these technologies them major Malaysian developers and house builders who are
and drive down costs. But while the role of public policy is clearly actively promoting these ‘green’ solutions. For instance, Monier
important, it is not enough. The government must take the lead Malaysia, a local company which specializes in energy efficient
and find ways to generate public will in supporting the sustainable roofing solutions, has seen systematic growth of demand for its
energy agenda. So far, the arguments in favour of supporting RE solar product, launched last year when oil prices peaked. Globally,
have been overwhelmingly environmental. the overall solar photovoltaic industry generated revenues of more
Undoubtedly, nuclear energy is seen as a viable and proven than US$100 billion in 2008. Malaysia managed to tap approxi-
energy source to sustain national socio-economic development mately US$4 billion worth of investment over the past three years
beyond the year 2020. This is not only to ensure national energy and created 11,000 jobs, and the market is far from saturated.
security, but also to help reduce total national GHG emissions, Although there are numerous setbacks at present, such as
especially under the new global regime which will replace the difficulty in securing EE project funding, unattractive tariffs and
current commitment under the Kyoto Protocol of the united lack of incentive for utilities to promote demand side management,
nations framework convention on climate change (UNFCCC), lack of awareness among key decision makers in industry,
which is due to expire in 2012. Aspirations for nuclear energy inadequate measures to ensure quality of services provided by
aside, REs remain the safest and cleanest of all potential energy energy service companies, fragmented EE program implementa-
sources in the long term. Despite the growing scientific evidence in tion, legal and regulatory frameworks, and relatively low energy
favour of switching to RE, however, the economic and political prices due to subsidize, the research and development of viable,
arguments are less straightforward and involve difficult choices. reliable and implementable RE solutions appropriate for Malaysia
Although the government has tried to promote RE in the past, for will be of paramount importance and thus, need to be stepped up.
example, through the Five-Fuel policy and by setting targets under While the RE policy is a welcome move, it must be supported by a
the five-year development plans, much of these efforts were ad larger umbrella policy that addresses energy and resource
hoc, and did not achieve the desired results [29]. The government’s efficiency, sustainable transport and waste management, if
SREP Program was introduced in 2001 with a target of 5% Malaysia is to make headway in building a low-carbon society.
(600 MW) contribution from RE in the energy mix by 2005 and
despite various fiscal incentives, only two plants of 12 MW total 7. Conclusions
capacity have been commissioned. Obviously, the progress in
bringing RE generation into the mainstream has been slow and An over-dependence on non-renewable fossil fuels in Malaysia
financing is still an issue. energy sector has made the country extremely vulnerable to
1252 T.H. Oh et al. / Renewable and Sustainable Energy Reviews 14 (2010) 1241–1252

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