Energy Transition in Malaysia and ASEAN: Key Trends and Challenges

KUALA LUMPUR: In a recent opening plenary session at Enlit Asia 2024, Datuk Ir. Megat Jalaluddin Bin Megat Hassan, President and CEO of Tenaga Nasional Berhad (TNB), addressed key trends shaping the energy transition in Malaysia and the wider ASEAN region. During a dialogue moderated by Narsingh Chaudhary, President of Asia Pacific and India at Black & Veatch, Datuk Megat outlined the critical drivers of energy transformation and their impact on the industry.

The world is undergoing a profound shift towards cleaner energy, driven by both environmental imperatives and technological advancements. In Malaysia and across ASEAN, this transformation presents unique challenges and opportunities. As one of the largest energy providers in the region, TNB is at the forefront of these changes, navigating both market and regulatory dynamics.

Key Trends in the Energy Transition: The 4Ds

In response to Narsingh Chaudhary’s question on the key market trends in the energy transition, Datuk Megat elaborated on four crucial drivers, referred to as the “4Ds”: Decarbonization, Decentralization, Digitalization, and the Democratization of Energy.

1. Decarbonization: The Core of Energy Transition

The first and foremost trend is decarbonization, which lies at the heart of the global energy transition. Reducing carbon emissions by transitioning from fossil fuels to renewable energy sources is a priority not only in Malaysia but across ASEAN. As Datuk Megat pointed out:

“The first is actually the intent to decarbonize, so decarbonization is a trend that is the core to this energy transition.”

He emphasized that, while efforts are underway to shift towards renewable energy sources such as solar and hydropower, the journey remains complex.

“The biggest challenge for Malaysia and ASEAN is how to decarbonize while maintaining growth in electricity demand,” Datuk Megat remarked.

He acknowledged that hydro and solar power are among the most readily available renewable options but highlighted their limitations, particularly solar power’s intermittent nature, which only provides energy for 4-5 hours per day.

2. Decentralization: Moving Away from Centralized Power Generation

The second key trend is decentralization. Traditionally, power generation followed a centralized model where large power plants supplied electricity through a national grid to consumers. However, the energy landscape is evolving, and power generation is becoming more distributed. This decentralization allows for power to be generated on both the supply and demand sides, enabling smaller producers, such as residential households or businesses with solar panels, to contribute to the energy supply.

“In the past, we had a sequential power system—big power plants, transmission lines, distribution to customers. But now, generation is decentralized. Both supply and demand can now generate power.”

This shift, as Datuk Megat explained, is transforming how energy is produced and consumed.

3. Digitalization: Harnessing AI and Data for Efficient Energy Management

The third trend, digitalization, is a critical enabler of the energy transition. As the energy grid becomes more complex with the integration of decentralized and renewable energy sources, there is a growing need for sophisticated technologies to manage the system efficiently. Digital tools, particularly artificial intelligence (AI) and data analytics, are essential for optimizing energy generation, distribution, and consumption.

“We see now that we require digitalization because we need a lot of data and communication to make the energy transition possible, especially when controlling generation and the grid.”

Digital solutions help energy providers gather real-time data, allowing them to better manage the grid and ensure a stable energy supply.

4. Democratization of Energy: Empowering Consumers

The final trend is the democratization of energy, which refers to the increasing ability of individuals and smaller entities to generate and control their own power. With advances in technology, energy generation is no longer the exclusive domain of large corporations. Small producers, even individual households, can now contribute to the overall energy mix.

“The democracy of energy means that, with available technology, individuals can generate energy. The ASEAN Power Grid is an example of this democracy, where countries can share and generate energy collectively.”

This democratization is particularly significant in the ASEAN region, where cross-border energy cooperation is growing. Datuk Megat cited the ASEAN Power Grid initiative as an example of democratization in action, where ASEAN countries share and generate energy collectively.

“It’s about empowering individuals and countries to generate their own energy,” he explained.

This shift could reduce energy inequality and promote greater energy independence.

Challenges in Decarbonizing Malaysia and ASEAN’s Energy Sector

Despite the progress in these four areas, Datuk Megat acknowledged the significant challenges ahead, particularly when it comes to decarbonization. Fossil fuels remain a significant part of the energy mix, and while solar and hydro power are valuable, they may not be enough to meet the region’s growing energy demands.

Relying solely on solar energy, for instance, would not provide the speed needed to achieve decarbonization targets.

“Solar has its limitations,” Datuk Megat stated, highlighting its intermittent availability and the fact that it only generates power for a few hours a day.

He stressed the need to explore alternative energy sources to supplement solar and hydro power, such as hydrogen and biomass co-firing.

“There’s debate on whether battery storage is an energy source or a vector, but at the end of the day, the market is looking for solutions,” Datuk Megat noted, highlighting the importance of developing effective storage systems to support renewable energy.

Datuk Megat also raised the question of whether nuclear power could play a role in providing the baseload energy needed to replace coal and other fossil fuels. While nuclear power remains a contentious issue in the region, it offers the potential for low-carbon, high-capacity energy generation.

Looking Ahead: Innovation and Collaboration as the Path Forward

As Malaysia and the ASEAN region continue their energy transition, Datuk Megat emphasized the importance of technological innovation and regional collaboration. The development of new fuel sources, such as hydrogen, and advancements in storage technologies will be critical to meeting decarbonization goals.

At the same time, initiatives like the ASEAN Power Grid demonstrate the potential of regional cooperation in building a more resilient and sustainable energy future. By working together, ASEAN nations can overcome the challenges of energy transition and share the benefits of a cleaner, more decentralized energy system.

Malaysia and the wider ASEAN region are moving toward a sustainable energy future. The energy transition in these countries is being driven by four key factors: decarbonization, decentralization, digitalization, and democratization. These factors are interconnected and interdependent. For example, decarbonization requires decentralization, which in turn requires digitalization. Democratization, in the form of community and citizen participation, is essential for successful implementation of the other three factors.

While challenges remain, particularly in decarbonizing legacy power systems, innovation and cooperation will be key to achieving a sustainable energy future.

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