KUALA LUMPUR: The government aims to grow renewable energy (RE) share of the generation mix from the current 2% to 20% 2025-2030, among the rising fuel prices to deliver the electricity industry.
This is good with the electricity supply industry (ESI), which is now breaking the rising global carbon price.
Eventually, the new goal can enable more stable prices in the future, analysts say.
Some 53% of Malaysia's electricity comes from coal, 42% from natural gas and the rest from hydro and RE.
The coal price is currently pending over US $ 100 per ton, an increase of more than 100% after reaching a 10-year low in 2016 when it fell below US $ 50 per ton.
The price increase since July has dropped a key in ESI's general costs, as carbon imports 100%.
Over 60% of the coal is purchased from Indonesia, and the rest from Australia, South Africa and Russia.
"Cold demand over the next two years is expected to remain stable at the current levels," says Hans van Cleef, Senior Energy Economist at ABN Amro.
"Although the headlines in the newspapers can suggest that demand for coal will track soon, demand will remain solid in the next few years," he added.
In order to prepare for such a scenario, the industry has taken steps to achieve greater efficiency in power generation through coal power plants.
All new coal-fired power plants now use ultra-supercritical (USC) technology that burns less coal for more power while meeting emission standards.
Tenaga National's (TNB) 1,000 megawatts (MW) power plant, Manjung 4, which started operations in 2015, is South East Asia's first coal power plant in the USC that can produce enough electricity for two million homes with a 3% reduction in coal consumption .
In the future, the government has introduced some mechanisms to increase renewable energy use in power generation, including network measurement, large scale solar (LSS), Green Sukuk funding scheme and entry tariff mechanisms.
TNB has started the country's largest LSS park with the 50MW project in Kuala Langat, Selangor, as well as some joint ventures in biomass and biogas power plants.
TNB's latest venture is through its re-subsidiary, where the company plans to offer financing of solar cell panel self-propulsion packages to retail customers at the turn of the year.
These packages have already been offered to customers and commercial customers.