Dire need for electricity reform

The whole world is turning away from coal but not malaysia. no, in malaysia, we’re using more coal to fuel more power plants to generate more electricity ... that we don’t have a use for.

THE news last week was grim. The haze aside, what really blew a fuse in me was the approval of a new power plant. All this while, I’ve been patient and pragmatic about awaiting reforms. But this jolted me into shock.

With a Rm1tril national debt – which ordinary people were contributing towards a year ago – why are we investing in a pricey project we don’t need? Frankly, the country needs a new power plant like we need a yacht from Jho Low.

The Rm3.5bil contract awarded to Tadmax Resources to develop a plant in Pulau Indah, Klang, should have been independently scrutinised, say industry experts, most of whom are against it. Some experts also question awarding the contract to a company with no experience in the field, though Tadmax has apparently roped in Korean Electric Power Corp for the relevant skills.

And it seems a deal is imminent for another power plant in Kedah.

We are approving power plants we don’t need, leaving us with way more power than we’ll ever need while also polluting the environment. Such deals are also binding for two decades or so, limiting supply options, such as using cleaner energy to tackle the climate crisis.

Is this not madness?

At some point, you and I, as consumers, will pay for this. Currently, subsidies keep our tariffs low. The sector is already encumbered with heavy costs.

We produce way more power than we’ll ever need. Our “reserve margin”, or generation capacity above peak demand, was 36% in Peninsular Malaysia in the 2017 Energy Commission report, but this has since risen.

Why so much capacity? Because we have so many power plants. Why so many plants? Suffice to say that the energy industry is one of the most lucrative around with opportunities for billion-dollar deals.

A small amount of excess capacity is reasonable, in case of emergencies. But our figure is super high! Add in the Pulau Indah deal and the Kedah plant, and that excess could shoot up to a staggering 50%, an industry expert disclosed.

On top of this, the government pays independent power producers a “capacity charge” – like a monthly rent – throughout the life of the plant. This is in addition to paying for electricity generated and fuel costs. The plant will run whether or not we need the electricity. And we will pay for it.

Consider this analogy. Imagine if we built 10 spanking new modern sports stadiums – but never used them. Yet we still pay a monthly rent for them. Can you imagine the outrage? This is the level of waste. It is shocking.

Last year, the government said they would review plans for eight new power plants. They decided to axe four plants with contracts lacking competitive prices and made in “direct negotiations” rather than open tender. Plus, these deals would have hiked the reserve margin up to 46%, Yeo Bee Yin, the Energy, Science, Technology, Environment and Climate Change Minister, said in August last year.

Yeo also promised then: “In future, any company that wants to be involved in the power sector should only go for open tenders.” (Online at bit.ly/yeo_tender.)

So where is the open tender now? Where is the oversight, the transparency? Note in some countries, a select committee – not a minister or Cabinet – must approve large projects. To build 50% more capacity than needed is an appalling waste of money and resources. Plus there’s the terrible cost to the environment. The main driver of our power supply is coal, ie, “dirty energy”. Burning it releases black carbon, which, like the haze, contains ultrafine, deadly particulates. Other countries are desperately trying to cut out coal and switch to solar energy, which is now much cheaper and involves no fuel costs. But we are jacking up burning fossil fuels and fouling our air when we don’t even need the power!

Also, we have much work to do with efficiency. For example, we need more “cogeneration” plants, which can double efficiency by recovering and reusing the heat produced in power plants. (Conventional power plants are shockingly inefficient). In Germany, this heat is commonly used to warm houses, in what is known as “district heating”. We could use it for air-conditioning. Cogeneration plants could serve small industrial areas without

The main driver of our power supply is coal, ie, ‘dirty energy’.

being connected to the national grid. The potential for savings are huge.

The power industry has gone through much upheaval. For years, there have been calls for greater transparency, better efficiency and cleaner, greener technology. But there was limited room to manoeuvre, because the industry was so straitjacketed by bad deals that served not the interests of consumers or the country but independent power producers, who accrued huge profits.

Earlier this month, Prime Minister Tun Dr Mahathir Mohamad pledged the government would combat corruption to develop Malaysia Baharu and would also protect the environment.

Let’s make good on that promise. We need electricity reform. This new plant has no place in the New Malaysia.

Mangai Balasegaram writes mostly on health, but also delves into anything on being human. She has worked with international public health bodies and has a Masters in public health. Write to her at lifestyle@thestar.com.my. The views expressed here are entirely the writer’s own.