Friday, August 22, 2008

Energy Efficiency – 2 Statutory Framework

E.E. Subject to Market Forces

In Malaysia, as energy is "relatively" cheap and due to her liberal economy, E.E. measures are subject to market forces. Due to these factors many a zealous salesman trying to market E.E. measures and gadget from the 1980s up to the 1990s, were NOT very successful. Purveyors of E.E. systems and gadgets (in the author's experience) of which many were from Singapore (due to the island republic's experience on E.E.), in the author's opinion, suffers from a lack of sufficient understanding of the E.E. market in Malaysia and additional burden of hubris of "technologity superiority". In the late 1990s up to present, with the subsiding of "Thatcheronomics/Mahathironomics" (note 1), and following the establishment of the Energy Commission under the 'Energy Commission Act' (2001) many ESCOs (energy services company) were set up providing services in energy consulting, training, management etc. However to date (2008), ESCOs who depend solely on energy as their core business do not seem to be surviving successfully and ESCOs who DO NOT depend on energy as a core business will be able to survive, e.g. (modestly) the undersigned website still raw and ..... I can't advertise for them just go to their website àhere.

Note 1: I would aver that economic opportunist who claimed to be proponents of 'moneterist' and 'neoliberal' ideologies are still fighting a VERY ACTIVE rear guard action for the rich pickings from 'privatisation' in Malaysia.

In the absence of (statutory) punitive or incentive measures, E.E. measures, when subjected to market forces will have to survive on the merit of financial "RoI" (Return on Investment).

However despite market forces, E.E. measures which can work, are practical for local conditions and at least do not have very high capital cost may still be considered by the Malaysian public for implementation; examples of some successful measures commonly adopted in Malaysia are (without the need for legislative incentive and punishment):

1. Introduction of solar heater hot water application since the late 1970s. Solar heaters are common gadgets on many Malaysian residential roof tops. Link1, Link2, Link3. Research on solar heating for drying in the food processing industry has been an ongoing reserach at Malaysian Universities since the 1960s.

2. Waste heat recovery from standard air cooled condensers of air conditioning units are commonly used to recycle waste (low grade) heat from air conditioners, usually to supplment electric heater for hot water application. Developed since early 1980s, this home-grown technology is considered 'matured' and is commonly used (by experienced design engineers) for bangalows, restaurant and even hotels. Visit this company for details àpecol.

3. The use of key-card system for hotel rooms (since the 1980s is now standard design practice). The early 'limit' switch key pocket system (which use to suffer from high failure rate due to rough handling by house staff) are now currently more sophisticated with the use of magnetic- switch, optoelectric-switch and smart card system.

4. The replacement of incandescent lamps with energy saving lamps, replacement of light box diffusers with more efficient reflectors were measures which became popular from the mid 1980s. This is in fact a clear case of E.E. measures which DO NOT 'survive' on merit of "RoI", being popularly adopted from the mid 1980s (though it was not overly capital-intensive).

5. Malaysian is a world leader in plantation management and technology and as far back as the 1980s, mini 'cogeneration plant' burning waste biomass and generating steam (for process) and electricity was a norm in many mills of large plantations (these were some of the real-world experience where I cut my teeth designing for the Guthrie plantation group as a consultant).

Statutory Framework – A Brief Historical Overview

A historical timeline of energy regulations in Malaysia can be summarised as follows:

Early years Under British Colonial government, electricity generation and distribution were undertaken by municipal authorities and private licensees. It can be said that the early years of electricity generation was actually more liberal with companiies such as"The Perak River Hydro Co.", "Kinta Electrical Distribution Co." snd "Penang Municipal Electrical Dept".

1949 Electricity Ordinance the 'Central Electricity Board' (CEB) was established to regulate the industry by issuing licenses and regulating the various municipal and private utilities.During the first decade after Merdeka, the CEB apart from issuing licenses and accrediting competent persons (testers, chargeman, wireman), was also responsible for developing the nascent national grid. A major agenda of the CEB was 'Malaysianisation'.

1962 – 'Sarawak Electricity Supply Corporation Ordinance'. The Sarawak Electricity Co. Ltd. was corporatised as the 'Sarawak Electricity Supply Corp. (SESCO).

1963 Sabah The North Borneo Electricity Board was renamed the Sabah Electricity Board.

1965 National Electricity Board (NEB) or Lembaga Letrik Negara (LLN) aving sucessfully 'Malaysianised' the electricity industry, the CEB was renamed the NEB or LLN to reflect national aspirations. The NEB/LLN embarked on estalishing a national grid and developing electricity infrastructure for the next 15 years. By this time production of oil off MIRI Sarawak was slowly ramping up. Oil production was usually parcelled to foreign concessionaires.

The 1973 Oil Crisis was a shock to world economies arising out of the Isreali-/Arab war (Yom Kippur/ Ramadan war of 1973)

1974 'Petroleum Development Act' (download hereàsite) All national assets of petroleum is vested in PETRONAS. Instead of concessionary agreement on oil production, PETRONAS instituted 'production sharing agreement'. Together with the 'Petroleum Regulations (1974)' Petronas as a wholly owned Government company, has sole rights to all exploration and production in the upstream sector. The'Regulations' also vest in Petronas the power to regulate the downstream end of the industry.

1975 First export of crude oil by Petronas.

1976 Production Sharing Agreement
Petronas concluded the first production sharing agreement with ESSO and Shell.

1980 National Depletion Policy was established to address the issue of diminishing oil resources by limiting the production of oil for large fields.

1981 – 4 fuel strategy By the early '80s, Malaysia was heavily dependent on oil for electricity generation. The four-fuel strategy was established to diversy fuel mix in national energy-usage. Natural gas, the rising star, provided the main impetus for the 4th fuel.

1983 – Sabah Electricty Act established the Lembaga Letrik Sabah (Sabah Electricity Board) to regulate the electricity industry in Sabah. The first shipment of LNG from Bintulu, Sarawak destined for Japan was inaugrated.

1984 Phase 1 of PGU (Peninsular Gas Utilisation) project covering about 32km in the east centered around the Kertih Gas Processing Plant (GPP) was completed by Petronas.

1987 – 'Electrical Inspectorate Act' Up to this stage, the electricity utility (NEB/LLN) was also acting as the regulator. The 'Electrical Inspectorate Act' provide for separation of the regulator from the utility operator with the establishment of the Chief Electrical Inspectorate (CEI) who is the forerunner of the Energy Commission (Suruhanjaya Tenaga).

1990 'Electricity Supply Act 1990' (download here àktak) marked the first step towards 'liberalisation of the electricity market'. The Act allows for the licensing of private generators and the establishment of Independent Power Producers (IPPs). In line with the Act, the NEB/LLN was corporatised as Tenaga Nasional Berhad (TNB). The Chief Electrical Inspectorate is now reorganised as the Electricity Supply Department (or Jabatan Bekalan Elektrik - JBE).

1992 Phase 2 of PGU (Peninsular Gas Utilisation) comprising 3 GPPs and 714km of trans-peninsular pipeline connecting to West Malaysia, Johore and Singapore was completed.

1993 – Gas Supply Act 1993 (refer here àEnergy Commission) allows for the regulation of the retail end of the gas supply industry. The 'Gas Supply Department' is combined with the 'Electricity Supply Department' to form the 'Electricity & Gas Supply Department' (Jabatan Bekalan Elektrik & Gas or JBEG). JBE has now morphed into JBEG).

1994 – 'Electricity Supply Regulations' (refer here àEnergy Commission) was gazetted for regulating public safety.

1997 – 'Gas Supply Regulations' (refer here àEnergy Commission) was gazetted to regulate the retail sector of Gas supply. The upstream end of gas production and transmission under PGU still remains under the jurisdiction of the 'Petroleum Development Act'.

1998 – Sabah, PTM and PGUIII was a busy year for the energy sector with the following major events:

1. Sabah Electricity Board was privatised with the establishement of 'Sabah Electricity Sdn Bhd'.

2. The Ministry of Energy, Communication & Multimedia established Pusat Tenaga Malaysia (PTM)

3. Phase 3 of PGU reached the Thai border along the West Coast with the construction of 450km of pipeline and 2 new GPPs.

2000 – CETREE or "Centre for Education and Training in Renewable and Energy Efficiency" was establised with the support of DANIDA (the Danish International Development Agency, under the Danish Ministry of foreign affairs) and the Ministry of Energy, Communication & Multimedia is based at Universiti Sains Malaysia (Penang).

2001 – Energy Sector Activities Intensify This year 2001 saw a flurry of activities in the energy sector"

1. The Energy Commission was established with the enactment of the 'Energy Commission Act'. This Act include 'Energy Efficiency' as an agenda under the jurisdiction of the EC or Suruhanjaya Tenaga.

2. The MS1525 "Code of Practice on Energy Efficiency and Use of Renewabe Energy For Non-Residential Buildings' was published by SIRIM. As this document is copyright please contact SIRIM and pay for a copy.

3. The 5th fuel policy was announced by the Ministry of Energy, Communication & Multimedia. A target 5% of biomass in fuel mix for electricity generation was put forward (refer to 4 fuel policy). The SREP programme and biomass programme was immediately launched sometime this year.

2002 – BIOGEN The Biomass Power Generation and Co-Generation project jointly funded by UNDP-GEF and the Ministry of Energy, Water & Communications, Malaysia (MEWCM) was launched in line with the 5-fuel strategy. PORIM (with their ownership of database on biomass in Malaysia) signed the first development agreement with the BIOGEN group.

2004 – LEO Building The MEWCM moved into their Low Energy Office Building located in Putrajaya in September of this year.

2005 – Privatisation of SESCO the Sarawak Electrictiy Supply Corporation was fully privatised as Syarikat SESCO Berhad.

2005 – MBIPV The Malaysia Building Integrated Photo Voltaic programme cofunded by UNDP-GEF and the Ministry of Energy, Water & Communications, Malaysia was launched.

2006 – National Biofuel Policy Concurrent with the trend of biofuel worldwide and the activities on biodiesel plant in Malaysia, the Government launched this policy around March of this year.

2007 – ZEO Building Pusat Tenaga Malaysia (Malaysia Energy Centre) moved into their Zero Energy Office Building this year.

1st decade of the new millenium (from 2000 to present)

The early years of the decade saw much promise for the energy industry in Malaysia:

1. The agenda for liberalising the energy markets was still very much on the table. The experience of Singapore has shown in the way and it was expected that Malaysia, having 'deregulated' the generation-end of the electricity market, will follow by opening up the retail-end of the electricity market to competition. In particular with the completion of the peninsular-wide gas pipeline (PGU) and power link-up with Singapore and Thailand, there was much expectation that a regional energy exchange (hopefully based in Malaysia) for the ASEAN region will emerge.

2. Legislation was put into place to address the issue of energy efficiency as a national strategy. This include revision to the 'Electricity Act' to allow for regulatory oversight over 'electricity efficiency' in 2001. The 'Energy Commission Act' was also enacted towards this end. During the early half of the decade, much debate on a proposal to gazette regulations for mandatory requirement of energy audits and energy managers was carried out.

3. Renewable energy and in particular biomass enjoy strong government support and funding including assistance programme from DANIDA and UNDP. The Small Renewable Energy Programme (SREP) was launched with much fanfare and very quickly a number of 'mega' projects were announced particularly with PORIM.

4. The Energy Commission with the support of DANIDA convened two advisory boards (Building and Industry) made up of industry stake holders to advise the EC on energy efficiency. Work groups was quickly convened on the following:

(a) Energy labelling workgroup for common consumer product ("star labelling"). This workgroup culminated in a proposal for implementing energy-labels for fridges under the legal framework of the 'Electricity Act'.

(b) High Efficiency Motor (HEM) workgroup. More information on HEM can be obtained in this file à ('understanding EE motors') and here à 'seminar on HEM' (caution 2.7MB).

(c) Workgroup on energy efficiency in building (of which members from JKR were a majority). The context for this workgroup can be found here à 'EE in Building'.

(d) Working on the experience of the LEO Building and with funding from DANIDA, JKR initiated a workgroup which culminated in the publication of a document (which will hopefully serve as the bench mark and design criteria for government buildings) titled: "Design Strategies for Energy Efficiency in New Buildings (Non-Domestic)' (sorry no downloads due to copyright. Contact JKR for a copy.)

5. JETRO (Japan External Trade Organisation) and the Energy Conservation Center of Japan (ECCJ) became involved in the energy forum around 2006 (up to this date DANIDA seems to be monopolising the energy agenda in Malaysia) by convening workgroup with the Ministry of Energy and Pusat Tenaga Malaysia. The workgroups comprising industry stakeholders (IEM, ACEM, MASHRAE, FMM, JKR, ST etc.) published the following documents:

(a) "Energy Efficiency And Conservation Guidelines for Malaysian Industries" published in July 2007. This document address the detail technical practice for EE as oppose to performance-based criteria listed in the MS1525 (no download due to copyright. Contact PTM for purchase).

(b) Recognising that a major sector of energy are thermal equipment in industry, a 'thermal workgroup' is currently looking at drafting guidelines for energy efficiency. The topic covered under this workgroup include boilers, heat recovery unit, cogeneration, absorption chillers, ovens. The 'guideline' on thermal is schedule for publication in 2009.

Unfunished Matters & Unfulfilled Dreams

ASEAN-Energy Grid Currently 'deregulation' of the energy markets is in stasis. The Malaysian public is currently soured out on privatisation and especially the privitisation mode of IPPs. The dream of an ASEAN-wide energy exchange centered in Malaysia is as yet unfulfilled. However this dream refuses to go away with the àTrans-ASEAN Gas Pipeline (TAGP) and à the ASEAN Power Grid.

Energy Audits and Energy Managers. As of this date and despite some objections from ACEM, (of which the undersigned is a member – another blog will have to be written on this subject) the draft Act/Regulation is accepted by the Energy Commission and enactment of a new law making energy audits, energy efficient programme and the employment of energy managers or technicians mandatory for Malaysian Industry IS STILL AWAITING enactment (Parliament) or approved (Minister) (though I was told by sources that this agenda is still very much on the table despite the 5 years wait).

PTM Unspun The establishment of PTM during the early years carries much possibilities for the energy industry in Malaysia. Energy can be considered a strategic issue in the national agenda and it include multidisciplinary expertise in economics, engineering, sociology and politiics. Befitting its importance as a strategic issue (similar to national security and geopolitics), the formulation of energy policies and strategies should be based on indepth studies and analysis. In line with this, the Energy Commission (the principal though not the only regulator) should have a research arm focusing on energy economics and technology (i.e. ST needs a the brain to perform its task of regulating and strategising for the energy industry). As examples:

Unfortunately (this is only my private opinion and apologies to alternate views), PTM in trying to establish themself as the chair of the (then in 2003) newly formed Association of Energy Service Company (ESCO) and professionals give the impression that they are disconnected (or maybe they are?) from the Energy Commission (by normal practice ESCO association should be an NGO). Due to this they seem to be a disjoint between the three Government funded agencies on energy; viz Ministry of Energy, Water and Communications, Suruhanjaya Tenaga and Pusat Tenaga Malaysia. At look at their website will reveal the overlap between the three organisations. It is my opinion that PTM should return to an agenda as a high-powered think tank and research institute, serving and advising the Energy Commission and the Ministry of Energy and should be fully funded by the Government).

CETREE Unplug Since the halcyon days of its inaugration CETREE seems to be suffering from a lack of program. Check their programme, research, publication and activities tab on their website. It would seem that CETREE exist purely to educate schools on EE. The industry seems to be totally NOT in CETREE agenda (perhaps that was the intention?).

Fragmentation of Energy Regulation The Malaysian energy industry is fragmented among a number of regulatory regimes and authories:

1. Petronas under the 'Petroleum Development Act, 1974' controls the upstream and down stream oil and gas industry.

2. The Energy Commission under the Ministry of Energy regulates the retail and demand-side of the energy industry under the jurisdiction of the 'Electricity Act 1990' and the 'Gas Supply Act 1993'.

3. The Ministry of Transport Malaysia (Jabatan Pengakutan Malaysia) regulates the transportation sector.

The transportation sector consumes about 37.8% of total energy which is a massive amount by any standard

Energy Use by Sector (PetaJoule) Source:






337.5 – 36.4%

432.9 – 37.1%

650 – 38.2%


327.8 – 35.3%

422.8 – 36.2%

642.5 – 37.8%

Residential & Commercial

118.8 – 12.8%

147.8 – 12.7%

213.2 – 12.5%


125.4 – 13.5%

142.8 – 12.2%

165.2 – 9.7%


18.7 – 2%

20.8 – 1.8%

28.9 – 1.8%


928.2 – 100%

1,167.1 – 100%

1,688.8 – 100%

A a check on MoT website shows that the Ministry's strategic plan (view here
àMoT) do not contain any statement on Energy Efficiency.

5th Fuel Agenda/Biomass The biomass initiative launched with much fanfare, loads of funding, support from international agencies (DANIDA, UNDP) and with more than 60 over projects approved in the early 2000s is to-date limping along. A check on the Ministry website and the Energy Commission website seems to show that the 5th fuel policy and target for biomass as a fuel has vanish or is hard to find. Check with published statistics here (page 41 for 2005) shows:

  • that only 6 projects are up and running.
  • the total installed capacity is only 39MW out of a national total installed capacity of 26.8GW (a miniscule sub percent).
  • Only large projects can be considered (the smallest running is the 2MW landfill gas project, all others are 6MW and above).

Major reasons for this (only my opinion) are as follows (in order of importance):

  • high standby and startup charges by TNB, where, as in most cases, standby or top-up supply is required from the public grid, the charges imposed will effectively render the project non-viable. Therefore the first criteria must be generation from biomass is totally surplus for export back to the grid.
  • rate of electricity exported back to the grid paid by TNB is too low; this issue has been a contentious one between industry and the public electricity supplier (TNB) and some form of subsidy from Government has been suggested.
  • high interconnection cost (all interconnection to the grid will have to be borne by the proposer).
  • other issue will have to depend on the consistency of biomass and load profile (which resides with the project proposer).

As a comparison Thailand biomass initiatives and agenda can be gleaned from this paper here-biogen3.

Flagging Resolve Though the early part of the decade saw a flurry of acitivities, currently regulatory initiatives on E.E. are almost at a standstill. Some initiatives still on the table (since 2003):

(a) Citation of MS1525 in the latest revision to the Uniform Building By-Law. This will have far reaching consequences as it will make it mandatory for architects and engineers to design to EE standards. Issues relating to this include:

  • Not enough understanding by architects on the MS1525, as building shell design is the first issue of EE (OTTV calculations). Inevitably many M&E engineers will be at the butt-end of architects on the MS1525 and EE (the author has already experienced this).
  • Insufficient education of local authorities who will have to gauge compliance to MS1525 in building plan submission.

(b) Despite its publication (MS1525) in 2001, to-date it is practically unknown by many practitioners in industry. Reasons, insufficient promotion and non-compulsion in usage even for government project.

Next Topic à3A E.E. Standards (Overview)

Sunday, August 17, 2008

Energy Efficiency – 1 The Malaysian Context

As Malaysia (and the world) is currently facing
an energy crunch, engineers will be increasingly asked about their expertise or knowledge on energy efficiency and green technology and its application in building, factory and process design and facility management. Having being active in many national forums on energy in Malaysia, I will attempt to present some perspective (with specific focus for the design and consulting engineers) on energy and energy efficiency in a series of articles in this blog post.

This introductory article give a brief overview of Energy Efficiency (E.E.) and energy markets in Malaysia. Hopefully with a background perspective on the issue at hand, readers can embark on the design and technical aspect of E.E.

Liberalisation of Energy Markets (Electricity)
Energy became a serious issue of interest to the Government during the 1990s in tandem with the then trend of 'privatisation' and 'liberalisation'. Hot on the heels of "Thatcherism" (from the 1980s) 'deregulation' and 'liberalisation' were twin pillars of the new economic energy sweeping the country up to the end of the 20th century (though 'liberalisation' can be viewed as the 'poor' twin). By the early 2000s, the generation end of the electricity market was liberalised (albeit partially) with the establishment of Independent Power Producers (IPP). However the California energy crisis of 2000 marked a transition in the public debate over 'privatisation' and 'liberalisation'. For a refresher on the California crisis, go à here ( and à here (
While in Malaysia, we were still debating and getting confused over the merits of liberalisation and deregulation ('liberalisation' does not mean deregulation and 'liberalised markets' in fact require stronger regulations to ensure fair market practice), Singapore was (by 2003) further down the road of liberalisation with the freeing of the retail and generation end of the electricity market and the establishment of power pools and exchange. System transmission (of electricity, also termed the system operator) however still remain under the control of one government corporatised entity. TNB which has all along been resisting this trend of breaking their monolithic structure managed to hold their position and currently 'liberalisation' of the energy market in Malaysia is in stasis.

Overview of Energy Markets
An overview of energy markets in Malaysia can be reviewed from the diagrams above.
Figure 1 – Total Energy Production, Consumption & Intensity of Usage (Source:
The gap between production and consumption represents the amount exported. Energy intensity is an economic indicator measuring the energy required to produce a unit of GDP (in US$ corrected by US$2000 for inflation). For a full explaination of energy intensity go here à
Figure 2 – Oil Production, Consumption and Proven Reserves (Source:
The gap between production and consumption represents the amount exported.
Figure 3 – Gas Production, Consumption and Proven Reserves (Source:
The gap between production and consumption represents the amount exported.
Figure 4 – Energy Used in Malaysia (Source:
The gap between generation and consumption represents the loss (transmission loss, idling etc.)

All the datas summarised in the charts can be obtained --> here. From the graphs above, we can conclude as follows:
(1) Malaysia as a resource rich country is a nett energy exporting country. As to whether this is a 'curse' (go here --> wiki and here--> "Encyclopedia of Earth") OR a blessing (context here --> slate and here --> aftenposten). can be balance by reading these reports here --> and here -->
(2) Since about 2003, the gap between production and consumption has narrowed and with no new major finds expected, Malaysia will be a nett energy importer in about 15 to 20 years (charts 1, 2 & 3).
(3) Chart 3 on natural gas affirms the importance of natural gas to the national economy. Malaysia is touted as one of the largest exporter of LNG in the world accounting for about 25% of Asia/Oceania and 3% of world total.

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