ENERGY PLANNING CHALLENGES:

FROM TNB PERSPECTIVE

Regulatory Economics & Planning Division

TENAGA NASIONAL BERHAD
September 2014

‘WE’VE GOT THE POWER - to serve, to deliver, to excel’

‘WE’VE GOT THE POWER - to serve, to deliver, to excel’
 CONTENT

The System Today

Planning for Future Power System

Recognizing & Addressing Challenges in Power System Planning

Closure

2
 THREE MAJOR ELECTRICITY UTILITIES IN MALAYSIA

Sabah Electricity Sdn Bhd

Tenaga Nasional Bhd (TNB) (80% TNB holding)

BRUNEI SABAH
Tenaga Nasional
PENINSULAR
Berhad
MALAYSIA
SARAWAK

SINGAPORE

Pen. Malaysia (2014)1 Sarawak (2013) Sabah (2013)6

Customers ~7.85 mn Customers3 0.504 mn Customers 0.49 mn

Installed Capacity 21,060 MW Installed Capacity5 2,930MW Installed Capacity 1,241 MW
TNB Capacity2 10,814 MW SEB Capacity4 1,352 MW SESB Capacity 449 MW
Max Demand 16,901 MW Max Demand5 1,758 MW Max Demand 917MW
Note:
1. Source: Power Resources & Planning, Single Buyer Department, TNB)
2. TNB Capacity: Includes Janamanjung & KEV
3. Source: Sarawak Energy Berhad Annual Report 2010
4. Source: www.meih.st.gov.my
5. Source: Load Forecast Unit, SEB
6. Source: Planning Department, SESB
3
 INDUSTRY OVERVIEW IN PENINSULAR MALAYSIA
Generation Business
• TNB (Thermal, Hydro) – 10,8141 MW
• IPPs (Thermal (Gas) and Coal) – 10,245 MW
Generation
Transmission Business
• TNB – Transmission Division
• Total Overhead Lines Length – 19,328 circuit-km
• Total Underground Cable Length – 811 circuit-km
• Total Transformer Capacity – 82,130 MVA
• Total Number of Substations - 391
Transmission

Distribution Business
• TNB – Distribution Division
• Co-generators (KLIA & KLCC)
• Bulk Suppliers (e.g. Bandar Utama, Sunway Pyramid, Genting
Utilities, KL Sentral (Wirazone)) Distribution
& Retail
Current Maximum Demand: 16,901MW (June 2014)
Customers (Total ~ 7.85 million2)
• Domestic 82.0%
• Commercial 16.9%
• Industrial 0.4%
• Public Lighting 0.8% Customers
• Agriculture & mining <0.02%

Notes:
1. Includes Janamanjung & KEV
2. TNB Annual Report 2013
4
 THE STRUCTURE OF ELECTRICITY SUPPLY INDUSTRY
IN PENINSULAR MALAYSIA

Regulator Suruhanjaya Tenaga

Generation
Gg
TNB Generation IPP plants

• Electricity procurement
Single Buyer (SB) • Manage PPA & SLA
• Carry out system planning activities

Transmission
Grid System Operator
TNB Transmission
(GSO)

Distribution Other
TNB Distribution Distribution
Franchisee

Customers Franchise
Domestic Commercial Industrial
customers

Legend: Regulator TNB entity IPP Others Ring-fenced

5
ELECTRICITY DEMAND IN PENINSULA
IS INCREASING ON Y-o-Y BASIS

Current peak demand:

16,901 MW
Recorded in June 2014

339 MW increase
(2.0% growth)

16,562 MW
Recorded in May 2013
THE DEMAND IS MET BY PENINSULAR MALAYSIA
THE SUPPLY SYSTEM MAIN GRID

PERLIS
LANGKAWI
• Majority of the power plants are located along Chuping
Kangar

Kuah

the West coast which is near to the load center. PERLIS Kota Bharu

POWER
Kota Setar Alor Setar

• Hydro power plants are mostly concentrated in

KEDAH
Gurun
Bedong
Sg. Petani
Tanah Merah N
the northern Perak , Kelantan and Terengganu.
PERGAU
PRAI POWER
Georgetown
Butterworth TEMENGOR
PULAU PINANG Bukit Tengah Kuala Terengganu
Kulim BERSIA
Junjung
GELUGOR Bukit Tambun KENERING
• Total installed capacity of the power plants is
KELANTAN
SG PIAH UPPER
Kuala Berang
SG PIAH LOWER
21,060 MW CHENDEROH

Kuala Kangsar
Gua Musang
KENYIR
TERENGGANU
Taiping
PERAK PAKA
Ipoh

• These power plants are connected to the load SEGARI Papan

Kampar
Batu Gajah
JOR
YTL
GB3 Ayer Tawar
centers via 500kV, 275kV and 132kV transmission
Telok Kalong
Seri Iskandar
Lumut Kuala Lipis Dungun
WOH

systems JANAMANJUNG
Teluk Intan
ODAK
Jerantut

Kuantan
PAHANG

• The grid system is also interconnected with Kuala Kubu Baru

Bukit Tarek
Mentakab
Kg Awah

power system in neighbouring countries :

SELANGOR Temerloh
Kuala Selangor Bentong

KL (N) KL (E)
WILAYAH
• 300kV HVDC link Gurun  Khlong Ngae, PORT KLANG Shah Alam PERSEKUTUAN
KL (S)
SERDANG
CONNAUGHT BRIDGE
Southern Thailand (300 MW) GENTING SANYEN
Banting Salak
Hicom G
NEGERI SEMBILAN
Muadzam Shah

Seremban Kuala Pilah

Tinggi
Paroi
PD POWER Gemas
Segamat

• 132kV AC link Chuping  Sadao, Southern TJPS

MELAKA Mersing
POWERTEK
Thailand (80 MW) PAHLAWAN
Kelemak
Melaka
Melaka JOHOR
Yong Peng (E)
Yong Peng (N)
Kluang
PANGLIMA Muar
• 275/230kV HVAC link with Singapore Power 500kV line
Batu Pahat

grid (450 MW) 500kV energised 275kV line Pontian Kechil

Skudai
YTL
Johor Bahru
Gelang Patah
PASIR
275kV line TG BIN GUDANG

7
 CAPACITY & ENERGY MIX FOR PENINSULAR SYSTEM

Generation
Generation Capacity
Capacity by
by Fuel
Fuel Type
Type Energy
Energy Generated
Generated by
by Fuel
Fuel Type
Type

Oil Distillate
Hydro 1.3% 0.4%
4.9%

Hydro
9%

Total : Total:
Coal Gas
21,060 MW 111,117.16 GWh1
34% Gas Coal 50.5%
57% 43.0%

Note: 1. Based on Calendar Year 2013

8
 CONTENT

The System Today

Planning for Future Power System

Recognizing & Addressing Challenges in Power System Planning

Closure

9
THE ELECTRICITY DEMAND IS EXPECTED TO GROW 2%-3% PER ANNUM
IN THE MEDIUM & LONGER TERM

Peninsula Electricity Demand Outlook

27,000

25,000

23,000

MW 21,000

Year Demand (MW)

19,000
2015 17,579
2020 20,721
17,000
2025 22,938
2030 24,598
15,000

10
NEW GENERATION CAPACITIES ARE REQUIRED TO MEET THE GROWING
DEMAND & TO REPLACE THE AGING CAPACITIES

New Capacity Projection for Peninsular System (2014-2030)

25,000

2,000

20,000 2,000

1,353

15,000 2,000
NUCLEAR

2,000 SARAWAK IMPORT

MW 9,355
HYDRO
1,353
GAS
10,000
649 COAL
- 4,855

2,855
5,000
8,010
6,010
5,010

-
2014-2020 2014-2025 2014-2030

11
 AT THE SAME TIME, THE ENERGY MIX NEEDS TO BE DIVERSIFIED
TO ENSURE SYSTEM SECURITY

Energy Mix Projection for Peninsular Malaysia (2014-2030)

Coal Gas Hydro Sarawak Nuclear RE HHI
100% 1% 2% 2% 2% 2% 2% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 2% 2%
5% 4% 5% 5% 5% 4% 4% 4% 4% 4%
10% 10% 10% 10% 10% 10% 10% 10% 9% 9%
90%
4% 9% 8%
10% 9% 9% 9% 9% 9% 9%
80% 29% 29% 28%
34% 31% 32% 4% 4% 4% 4% 4% 4%
37% 37% 5% 5% 5%
70% 44% 25%
52%
23% 23% 22% 22%
24% 24% 23% 23%
60% 24%

50% 0.50 0.50 0.49 0.50

0.47 0.48
0.45 0.45 0.46 0.46
40% 0.42

0.34 0.35 0.35 0.36

64% 64% 65% 0.32 0.33 0.33 0.34
30% 62% 61% 0.32
56% 57% 59% 58%
50% 51% 52% 52% 53% 54%
50% 48% 49% 50%
20% 42%

10%

0%
2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033
12
 CONTENT

The System Today

Planning for Future Power System

Recognizing & Addressing Challenges in Power System Planning

Closure

13
 KEY CHALLENGES IN POWER SYSTEM PLANNING ACTIVITIES

MAJOR Environmental
Sustaining Energy
CHALLENGES and
Security
Socioeconomic

•Availability of fuel - •Climate change

gas & coal issue linked to
Uncertainty in burning of fossil
•Limitation of Land Related
Planning fuel
alternative fuels – Issues
Parameters
nuclear, hydro & RE •Stringent emission
standard and
•Impact of global •Difficulty in securing global concerns on
economic crisis Rights-of Way (ROW) carbon emission
for transmission line
•Volatility of fuel •NIMBY syndrome
prices •Limited sites for future
power plant
14
 COST OF FOSSIL FUEL IS INCREASING STEADILY

• EIA fuel cost projections indicated

that the prices of liquid fuel and
natural gas will be on the rising trend

• Coal and nuclear are going to be

stable and low in the long run

• Coal in the US is stable mainly due to

domestic production and high reserve

• Nuclear fuel is still expected to be low

and stable despite import of uranium
Source: EIA – US Energy Price

• Situation is expected to be the same

for Malaysia especially the natural gas
prices

15
…AT THE SAME TIME OUR INDIGENOUS NATURAL GAS IS DEPLETING

• Power sector needs 1350 mmscfd at

least until 2020
• Local gas resources are depleting
• Future gas development will be more
challenging:
 High CO2
 Smaller fields
 Costly
• Future demand cannot be met from
indigenous sources. Hence, Malaysia
needs to import gas in the form of LNG
– 1st LNG plant in Melaka to be
commissioned in Melaka
– Possible 2nd LNG plant in south-east
Johor
• mmscfd = million million square cubic feet per day Source: PETRONAS presentation

16
 …HENCE, THERE IS A NEED TO IMPORT GAS
TO MEET THE DEMAND
JDA JDA Phase 2
(150 mmscfd)
SONGKHLA 300 mmscfd

THAILAND LAWIT/BINTANG PM-3

TTPC (450 mmascfd) (220 mmscfd) • PETRONAS imports
JERNEH around 25% of our gas
GELUGOR (350 mmscfd) from West Natuna
PRAI RESAK (Indonesia) and Joint
(200 mmscfd)
Development Area (JDA)
ANGSI in Thailand
GPPs KERTEH (280 mmscfd)
PAKA Associated Gas
SEV / (2000 mmscfd)
(385 mmscfd)
GB3
DUYONG
KUANTAN
(150 mmscfd)

PORT KLANG KUALA LUMPUR

CONNAUGHT SERDANG
BRIDGE West Natuna A
West Natuna ‘B’
PORT DICKSON SEGAMAT (150 mmscfd) 100 mmscfd
MELAKA
East Natuna
1000 mmscfd
P. GUDANG
SENOKO

Source: PETRONAS presentation 17

 EXPENSIVE LNG AND UNCONVENTIONAL NATURAL GAS
CAN BE CONSIDERED AS OPTIONS
• Future gas could be from shale, tight
sand gas, coal bed methane or
conventional non associated/
associated fields
• PETRONAS has signed for coal bed
methane gas from Australia to supply
the Peninsular
• Gas is still expected to be one of the
contributor for the future

48 shale basins in 38 nations

However, there is growing evidence that

the extraction and use of shale gas results
in the release of more greenhouse gases
than conventional natural gas, and may
lead to emissions greater than those of oil
or coal
Source: US EIA 18
 EFFICIENT MACHINES HELP TO MINIMIZE THE IMPACT
OF EXPENSIVE NATURAL GAS

42% Plants Efficiency 60% & more?

1980s 1990s 2000s 2010s onwards

E Class Technology E Class Technology F Class Technology H Class Technology & beyond

Gelugor Power Station New CBPS Power Station

Tuanku Jaafar Power Station Prai Power Station

Paka Power Station P. Gudang Power Station

Con. Bridge Power Station

19
THERE IS LIMITED HYDRO POTENTIAL IN PENINSULAR MALAYSIA

• Total remaining hydro potential in Peninsula is less than 2000 MW, mainly high cost peaking hydro
• All large hydro potential in Peninsula are utilized except for Lebir and Nenggiri (to be developed).
• Hydro is very much under the control of the State Governments.
• Developing new hydro projects requires strong support from the state governments

TERENGGANU
1. Hulu Terengganu; 250 MW (2016)

PAHANG
1. Ulu Jelai; 372 MW (2016)
2. Tekai; 156 MW
3. Telom; 132 MW
4. Raub-Bentong; 70 MW

PERAK
1. Sg. Pelus; 35 MW
2. Kerian-Selama; 21 MW

KELANTAN
1. Lebir (multipurpose); 270 MW
2. Nenggiri (multipurpose); 416 MW
20
20
 …BUT THERE’S A HUGE HYDRO POTENTIAL IN SARAWAK
• Sarawak has the potential to generate over 20,000 megawatts of hydro-electric power
• With competitive price, potential in Sarawak could be connected to the Peninsular
• Bakun will not be connected directly to the Peninsular. The power will be used to support SCORE
corridor
Examples of
Capacity Available
hydro potential in
(MW) Year
Sarawak
Bakun 2400 2012

Murum 900 2013

Baram 1000 2015

Baleh 1400 2019

Limbang 150 2013

Batang Ai
50 2011
Extension
Mertjawah,
Belepeh, Linau, 2014 -
1000
Tutoh, Ulu Ai & 2020
Lawas

21
 COAL WOULD BE THE BEST ALTERNATIVE (…FOR NOW)

• With gas moving to market price, contribution from coal is expected to increase

• Advancement in clean coal technology such as Integrated Gasification

Combined Cycle (IGCC), Coal to Liquid – which produces LNG, diesel etc.

• Increasing efficiency of coal technology power generation makes it more

competitive

Source: IEA

22
 NEVERTHELESS, THERE ARE PROS & CONS WITH COAL

+ Points
• Coal is cheaper than gas
• Coal reserve is abundant throughout the
world

- Points
• Coal is 100% imported with 80% of the
supply is sourced from Indonesia (current)
– Indonesia, Australia and South Africa
• Exposed to fuel supply risks
– Weather (affecting coal mines)
– Political (Change of policy or
instability)
– Competition from other countries
(e.g. China and India)
• Environmental risks due to carbon
emission
– Higher coal price due to carbon tax

23
 MALAYSIA HAS TO BALANCE BETWEEN ENERGY REQUIREMENT
& ITS ENVIRONMENTAL COMMITMENS
• Malaysia signed the Kyoto Protocol in
March 1999 and ratified the Protocol
in Sept. 2002

• During Copenhagen 2009, PM has

indicated that Malaysia is adopting
an indicator of a voluntary reduction
of up to 40% in terms of carbon
missions intensity by the year 2020
compared to 2005 levels subject to
assistance by the Annex 1 countries

• Possibility of more stringent

environmental regulations –
– Locally : Clean Air Act
– Internationally : carbon emission
limit

24
 RENEWABLE ENERGY (RE) IS A FEASIBLE OPTION WITH SOLAR
SEEMS TO BE THE FAVORITE AMONG THE DEVELOPERS
Solar
Potential:
•~6,500 MW (for building integrated)

Biomass Biogas

Potential: Potential:
•~1,340 MW by 2030 •~410 MW by 2028

RE

Mini-Hydro Solid Waste

Potential: Potential:
•~490 MW by 2020 •~360 MW by 2022

RE requires subsidy to move forward. Government introduced Feed-in-Tariff (FiT) in 2011

Source: Ministry of Energy, Green Technology and Water, Energy Commission, MBIPV Project 25
THE AVERAGE PRICE OF A COMPLETED PV SYSTEM HAS DROPPED BY 33% SINCE
THE BEGINNING OF 2011

SOURCE: SEIA website: http://www.seia.org/policy/solar-technology/photovoltaic-solar-electric

 DEPARTMENT OF ENERGY US (DOE) FORECASTED SOLAR ENERGY TO ACHIEVE
GRID PARITY BY 2020[1]

• Grid parity (or socket

parity) occurs when an
alternative energy source
can generate electricity at a
levelised cost that is less
than or equal to the price of
purchasing power from the
electricity grid.

• When you reach the point

of grid parity, the free market
kicks in. Government
subsidies are no longer
needed to spur innovation in
and adoption of solar
technology because the
market itself creates natural
demand for solar energy.

• Based on 30-
year cost
recovery period
• WACC = 6.6%

[1] EIA, “Levelized Cost of New Generation Resources in the Annual Energy Outlook 2013”, U.S. Energy Information Administration, January 2013
 THE CURRENT MALAYSIAN GRID CODE (MGC) DOES NOT ADDRESS THE
TECHNICAL REQUIREMENT FOR GRID-CONNECTED SOLAR PV

Reactive power Fault ride-

control (within limits) through
and voltage capability
regulation

Possible technical
requirements for grid
connected solar PV for
Peninsular Grid Active power
and frequency
control by
Reactive supply droop function
requirement
during voltage dip
Capable of operating
continuously within the
voltage and frequency
variation limits

*Excerpt from Mohd Yusof bin Rakob, “Utility Scale Solar PV and Effect on the Grid”, 23rd December 2013

28
HIGH PENETRATION OF SOLAR PV REQUIRES ADDITIONAL ANCILLARY SERVICES
TO ENSURE SYSTEM SECURITY & RELIABILITY

In the light of system security and reliability, the following ancillary services are
required to address the intermittency issues that come with solar PV:

– Higher operating reserve ; and/or

– Dedicated stand by capacity; and/or
– Transmission/Distribution network reinforcements
– Other measures

The costs to provide those additional ancillary services must not be

overlooked in assessing the utility scale solar integration
 ANOTHER FEASIBLE OPTION IS TO HAVE MORE INTERECONNECTIONS
WITH NEIGHBORING POWER SYSTEM

• Power Purchase and Economic Exchange may be possible from ASEAN power
• Continuous effort and collaboration among ASEAN members is on going. Nevertheless, interconnection issues will be
evaluated specifically on case by case basis.

30
 NUCLEAR OPTION IS STILL BEING EXPLORED…
WHAT IS SO SPECIAL ABOUT NUCLEAR?
0.30 Levelized Cost (RM/kWh)
• Energy Security and Diversification
– Reduction of fossil sources dependency 0.25

– Local sources is limited, longer fuel 0.20

cycle for nuclear could provide security
and allow better planning and 0.15

execution 0.10
– Multiple sources for power generation
helps distribute the risk of energy 0.05

security 0.00
Gas CC - Gas CC - Gas CC Coal (USD Nuclear
NO subsidy with LNG (27.00) 88/tonne)
(21.40) subsidy
• Economic of scale for long term (10.70)

– Longer fuel cycle results to lower fuel

cost 1
Carbon Emission (tCO2/MWh)
0.9
– Cushion other fuel price volatility risks 0.8
– Nuclear levelized cost is the cheapest 0.7
compared to gas and coal options 0.6
0.5
0.4
• Environmental concern
0.3
– Relatively very low or non-existence 0.2
emission in comparison to other 0.1
sources 0
Gas CC Coal Nuclear

31
 PUBLIC CONCERNS ON NUCLEAR POWER PLANTS
 Not-In-My-Backyard (NIMBY) syndrome (i.e. safety, health and property related
concerns)
 Incidents in Three Mile Island, Chernobyl and Fukushima raised the bar for nuclear
safety globally (Note: Germany has decided to exit from nuclear energy by 2022)
 Long lead time, 10 to 15 years and high cost of investment (Risks of cost over-run
and stalled project)
 Extensive preparation e.g.: public acceptance, regulatory, site preparation,
manpower development (Readiness level)
 Used fuel storage issues (Environment and safety issues)
 Proliferation and possibility of terrorism (e.g.: Perception by neighbours)
 Weapons development (e.g:Embargo)

“ Thirty years on, my views have changed, and the rest of the
environmental movement needs to update its views, too, because
nuclear energy may just be the fuel source that can save our planet
from another possible disaster: catastrophic climate change.”

- Patrick Moore, co-founder of Greenpeace, in the Washington

Post, April 16, 2006.

32
32
DEMAND SIDE MANAGEMENT (DSM) & ENERGY EFFICIENCY (EE) INITIATIVES
MAY ALSO SERVE AS SOLUTIONS FOR THE SUPPLY-DEMAND BALANCE

 DSM & EE are “the cheapest, fastest & cleanest” energy source. The objective of
DSM is to encourage the consumer to use less energy during peak hours, or to
move the time of energy use to off-peak times such as night time and weekends
 A strong policy and program on DSM & EE is required to spur interest in the
industry, commercial and residential sector. KeTTHA is coming up with National
Energy Efficiency Master Plan to spur growth in DSM and EE
 DSM is an approach that help utilities maintain a desirable balance between
electricity supply and demand while providing “value added” service for customers.
 Examples of DSM initiatives:
 Load management
 Energy efficient building
 District Cooling Plant
 Off-peak tariff

33
KEY ISSUSES RELATED TO DEVELOPMENT OF NEW TRANSMISSION LINES

 We need the transmission line but cannot secure the Rights-Of-Way (ROW) or
cannot get the ROW on time
 Compensation/Acquisition cost is too expensive thus forcing TNB to look for
other options or abandon the projects
 Lengthy process of getting ROW which can risk the security of supply
 Strict rules imposed by authorities (e.g. Putrajaya)

 We have the ROW and we can construct the lines but:

 The ROW is insufficient
 Strong objections to having the transmission line by the public or authorities
 Unable to construct the lines because of illegal encroachment particularly from
the squatters

Note :
Rights-of-Way (ROW) = Wayleave = Rentice = Easement
34-
 MAJOR CONCERNS ON LAND RELATED ISSUES

 Impact of urbanisation
 Area once sparsely settled have now become densely populated
 Development around existing substations/OHL makes it difficult to get public
acceptance when proposing to upgrade the lines or to rehab the substations
 Urbanisation also exposes the line to a higher risk e.g. soil erosion, land slide,
theft etc
 Areas suitable for development of future power plants and substations being
threaten and diminishing

 Demands from authorities/public/customer

 To underground the existing OHL (EMF issue)
 To reduce the width of ROW
 Not to have lines built on common corridor
 To construct special towers aesthetically blended with the sensitive
surroundings

35
EXAMPLES OF DIFFERENT TOWER DESIGNS IN TNB TO ADDRESS THE
ROW ISSUES

Monopole towers in exclusive residential or

commercial areas

Compact monopole towers in between elevated

highways

Quad circuit towers next to a conventional double

circuit towers to optimize ROW

36
IN COMPARISON, CERTAIN PRACTICE DIFFERS FROM OUR NEIGHBORS

Optimizing Rights-of-Way : Double circuit monopole towers in metro Manila

37
 CONTENT

The System Today

Planning for Future Power System

Recognizing & Addressing Challenges in Power System Planning

Closure

‘WE’VE GOT THE POWER - to serve, to deliver, to excel’

38
 CONCLUSIONS
 Future planning for the power system in Peninsular Malaysia is becoming more
challenging and demanding, internally as well as externally
 Changing industrial landscape
 High expectations from the stakeholders, e.g.:
 Government/Shareholders : Financially viable and efficient company with high
returns
 Customer/Investor : Lower costs but highly reliable supply and performance

 Issues related with ensuring adequate fuel supply and secured fuel sources would be the
focus in the future
 Similar concerns by other utilities in this region
 High generation costs would be likely. Thus, compelling utilities to explore other
means and sources for power generation

 Securing ROW for new transmission lines would be difficult and tough, thus requiring
longer project lead-time
 May lead to system constraints if the planned projects do not complete on-time,
thus increasing the operational risks

39