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Power down usage to amp up savings

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Malaysians are advised to use electricity more efficiently to keep costs down.

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Free Malaysia Today
The government has allocated more than RM3bil to subsidise the electricity usage by consumers in Peninsular Malaysia this year.

PETALING JAYA:
When the sun sets, we flick on the light switch without a thought, and when the night gets too hot, we whip out the remote control for the air-conditioner.

At the end of the month, we complain about the huge electricity bill while the tedious and costly process of getting those kilowatt hours (kWh) of energy to our homes is mostly lost on us.

Little do we know that we are very lucky compared with many of our Southeast Asian neighbours.

For a start, all Malaysians have uninterrupted access to electricity supply, yet we pay among the lowest prices for the energy.

But, as deputy prime minister Fadillah Yusof pointed out, this privilege comes at a high price.

Costly endeavour

More than 90% of all electrical energy in Malaysia is generated through the use of coal and gas.

Since we do not produce coal and Petronas barely has enough gas to go around, we depend on imports, according to Fadillah, who is also minister of energy transition and water transformation.

But there is a snag. The prices of both commodities are volatile.

Events such as conflicts and natural disasters that lead to cuts in supply make it more expensive for us.

For instance, sanctions against Russia for its invasion of Ukraine have had a deep impact on supply, leading to higher costs.

Prices of oil, gas and coal became increasingly volatile in December 2021 when it became obvious that the Russian invasion was imminent.

In the first two weeks after Russian troops entered Ukrainian territory, the price of coal rose 130% while that of gas shot up by 180%.

For the country, it means that it gets more expensive to generate power.

Between July 1, 2022, and Dec 31, 2022, fuel and generation costs rose by RM16.2 billion, leading to an ICPT surcharge of 27 sen/kWh. The global price of coal skyrocketed to around US$440 per ton, far exceeding the US$79 per ton projected in Tenaga Nasional Berhad’s (TNB) base tariff.

As a result, the government allocated RM8.82 billion to maintain current rebates for domestic users and an additional RM1.9 billion to manage the ICPT surcharge for commercial and industrial sectors, bringing the total government expenditure to RM10.76 billion.

Unfortunately, even as costs increase, usage has also surged as a result of changes in the weather.

“Consumption of electricity tends to spike as people resort to cooling systems amidst the heat wave,” Fadillah said.

Still cheap in Malaysia

Despite the high cost of power generation, a majority of consumers in Malaysia continue to pay among the lowest tariffs for electricity.

This is made possible by a combination of tax exemption and subsidy.

For a start, consumers who use less than 600kWh of electricity per month are not required to pay the 8% service tax that was imposed on March 1.

It is estimated that 85% of households across the country fall under this category.

Over and above that, the government is spending billions to subsidise the electricity usage by consumers in Peninsular Malaysia.

For instance, a total of RM1.935 billion was allocated for that purpose for the period from January to June this year. Another RM2.192 billion will be needed to extend the subsidy coverage to December.

The initiative is to support efforts to improve public infrastructure, healthcare and education, Fadillah said.

Over and above the subsidy and tax exemption, each household among the hardcore poor will be entitled to a monthly rebate of RM40 on their electricity bill under the Electricity Rebate Programme.

A total of RM55 million has been allocated for this purpose and it will cover those who have registered with the e-Kasih system.

At the same time, steps are already being taken to improve energy consumption in Malaysia.

Energy conservation plan

At the macro level, steps are in place to achieve an overall reduction of 21% in our energy usage by 2040.

This will be achieved through initiatives under the National Energy Transition Roadmap (NETR), the first part of which was launched on July 27, 2023.

There are ambitious targets to be achieved under the NETR.

For a start, it calls for a reduction of 15% in energy use in the residential sector and 22% in the business (industrial and commercial) sector in the near term.

This will rise to 20% for residential property and 23% for industrial and commercial properties by 2050.

Over and above that, the share of renewable energy will be raised gradually — to 31% by 2025, 40% by 2035 and 70% by 2050.

To meet the objective of improving energy efficiency and reducing wastage, consumption will be regulated by the Energy Efficiency Conservation Act 2023 that was passed in the Dewan Rakyat on Oct 11, last year.

According to legal experts, another objective of the legislation is to support sustainable development efforts consistent with the green economic development agenda of the 12th Malaysia Plan.

Improving efficiency

The people are also expected to play a role in the energy transition (ET) plan by being more prudent with their electricity usage.

It does not take much to become more energy efficient.

“Adopting simple, yet effective energy-saving habits is a start. For instance, we should unplug electronics when not in use. Switch to energy-efficient appliances and optimise air-conditioning settings to reduce consumption,” Fadillah told FMT.

“The recommended setting is 24 to 26 degrees Celsius, a level that offers the greatest efficiency in energy usage,” he added.

Consumers can also reduce energy usage by keeping the fridge uncluttered, ensuring that the area around the air-conditioner is cleaned regularly, and keep windows open to let in natural light.

The benefit to the consumer is obvious. Reducing electricity usage means more money in the pocket.

The savings from using energy efficient appliances can also add up over the product’s service life to offset the initial investment.

Experts say an energy-efficient home is more likely to command a higher market value than those that are not.

Reducing energy use will also ensure that one is less vulnerable to increases in tariffs.

At the macro level, the benefits are enormous.

It lowers the overall demand for electricity, which translates into reduced dependence on costly and highly polluting energy sources such as fossil fuels.

Research has shown that reducing energy use can cut greenhouse gas (GHG) emissions by 25% to 30%.

As Fadillah pointed out, by conserving electricity, Malaysians can contribute to a sustainable energy future.

Future plan

Today, almost 90% of power generated in Malaysia is through the use of fossil fuels, particularly coal and gas.

However, steps are already in place to reintroduce renewable energy sources such as hydropower and solar.

Over the past five years, these two sources have accounted for 5% and 6% of our needs respectively.

Both the private sector and the government are already well ahead in the journey to energy efficiency in Malaysia.

New buildings are now routinely designed to conserve energy. In these smart buildings, natural light is harnessed to reduce the need for artificial light.

Solar panels on rooftops of residential units not only help consumers cut their dependence on the grid but also enable them to earn extra by selling excess energy back to power producers.

A combination of government incentives, innovation and consumer effort are all it takes to meet the NETR targets.

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