Energy Renewed

Malaysia

Economic News

22 Jul 2010
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With memories of last summer's soaring oil prices still fresh in their minds, governments around the globe have sought to diversify their sources of energy. In line with this trend, Malaysia has put much pressure on the production of cost-effective and commercially viable sources of energy.



The government has played a major role in providing sufficient incentives for the country to make the switch to fuels derived from biomass. The 9th Malaysia Plan, which runs from 2006 to 2011, builds on past efforts and introduces new initiatives, such as the launch of B5 - a new fuel mixture of 5% processed palm oil and 95% petroleum diesel. Furthermore, in October 2008 the Renewable Energy Action Plan was implemented, with the aim of increasing the share taken by renewable energy in the country's overall energy balance, which was comprised of gas (65%), coal (28%), hydro (5%) and diesel (2%) in 2008.



According to Malaysian Palm Oil Board statistics, palm biodiesel production reached 182,108 tonnes in 2008, up from 95,013 tonnes the previous year.



In addition to the apparent political will, Malaysia also benefits from considerable interest from the private sector. On February 4, Angi Energie, a global leader in the field of renewable and alternative clean energy technology, was awarded a contract to build two biomass energy plants in Malaysia. Experts believe that fuels derived from biomass will reduce expenses associated with palm oil manufacturing. These plants are designed to generate electricity from oil palm Empty Fruit Branches (EFBs) and woodchips, using renewable energy technology. Under this contract, the company will design, build and commission an 8MW and a 4MW plant in the Limban and Lawas districts of Sarawak respectively. Construction is due to begin in March and should be completed by September 2010.



In an effort to further diversify the country's sources of energy, the prospect of harnessing renewable energy from hydropower is also being considered. Tenaga Nasional, Malaysia's largest power firm has undertaken a project to connect a hydroelectric dam to a 650km undersea cable that will connect Sarawak to Malaysia. The project will be launched in 2010 and is due to be completed by 2014. Hopes are high, with hydropower production expected to rise from 5% in 2008 to 35% in 2030, according to Datuk Shaziman Abu Mansor, the Minister of Energy, Water and Communications.



Other plans for diversification include developing solar energy - given Malaysia's geographic location in the equatorial region - and other feed alternatives to palm oil such as oil extraction from algae and palm oil fatty acids.



As a last resort, Tenaga Nasional has suggested resorting to nuclear energy, especially in the event that natural resources do not meet the energy demand, though there may be domestic and global political barriers for Malaysia to take up this option in terms of non-proliferation sensitivities.



Political will, combined with private initiatives, present an opportunity for fast tracking renewable energy production. According to some official estimates, biomass from Malaysia's EFBs alone could meet between 5 and 10% of the domestic demand in the future. Malaysia can also capitalise on its competitive edge over Indonesia, thanks to its larger production capacity of between 1 and 1.5m tonnes of biodiesel. When compared to biofuel production from rapeseed in Europe, production from palm oil is much cheaper. Malaysia also benefits from its geographic proximity to China and its ever-growing energy demand. In light of the current global energy challenges, Malaysia is pushing the sector in the right direction to meet both domestic and regional demands.

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