At the peak of the pandemic, only essential industries were allowed to operate, some at only 50% capacity, while the rest of the industries were either shutdown or adapted to remote working practice.
It had resulted in a sudden decline in energy demand, especially in commercial and industrial usage.
Despite a surge in household consumption of electricity, it was not enough to fill the drop in commercial and industrial usage as the economy was only operating at 45% of its capacity during the seven-week movement control order (MCO) period.
Tenaga Nasional Bhd
(TNB) had said during the MCO, electricity usage in the industrial and commercial sectors dropped between 25% and 50% as businesses and industries halted activities, while usage in the residential sector surged between 20% and 50% as families stayed indoors and employees worked from home.
It expected the electricity consumption to drop between 6% and 10% year-on-year in 2020, mainly due to slowing activities in the commercial sector.
The forecast is within the range of 5%-10% of global electricity demand fall predicted by the International Energy Agency (IEA).
This has also impacted the demand for coal, oil and gas.
According to the IEA, renewable was the only source that posted a growth in demand, driven by larger installed capacity and priority dispatch.
“Electricity demand is unlikely to return to normal levels even after the development of a coronavirus vaccine, ” according to a report by scientists from Columbia University.
TNB feels the pinch
Its nine months net profit declined to RM2.38bil from RM3.88bil from the same period last year. Revenue for the cumulative months ended Sept 30,2020 also slipped to RM33.65bil from RM38.76bil previously.
It serves 9.2 million accounts, of which 7.4 million accounts are residential while the remaining are the commercial sector.
In a filing with Bursa Malaysia, TNB said the increase in demand from the residential segment was unable to fill the decline in commercial and industrial usage as both contributed close to 80% the sales in Peninsular Malaysia.
It also reported that the Covid-19 pandemic is impacting the progress of the group’s initiatives to reduce its current exposure; including the restructuring and turnaround exercise and sale of investment, particularly in its 30% owned companies in GAMA (Turkey) and GMR (India).
However, the group’s UK assets are insulated by the long-term subsidy scheme.
Going forward, it will leverage its existing UK assets and market experience to build up a sizeable renewable energy portfolio by 2021 through acquisitions of both operating assets and development of green field projects.
Incentives
As lockdown measures and its subsequent impact led to unemployment and job losses, the government introduced various incentives under economic stimulus packages such as electricity discount to 7.5 million residential users and other affected sectors and flexi payment plan.
On the regular six-month Imbalance Cost Pass-Through surcharge, TNB confirmed the adjustment was to zero from two sen/kWh for both domestic and non-domestic electricity users, from July 1 to Dec 31,2020.
This is due to a reduction in actual fuel cost for the period of January-June 2020 compared with the previous six-month period (July-December 2019).
Shifting to renewable energy
The government has introduced several initiatives such as the enhanced net energy metering programme (NEM) and solar leasing to boost renewable energy (RE) uptake.
Banks have offered solar power financial packages with lower interest and it will help Malaysia achieve the 20% RE efficiency target by 2025.
Participation from big companies such as Taliworks Corp Bhd, Malakoff Corp Bhd and Fraser & Neave Holdings Bhd, and International Paper Sdn Bhd will help Malaysia achieve the target faster.
Other companies that seem to support the RE industry were FGV Holdings Bhd and Malakoff Corp Bhd’s unit, Southern Biogas Sdn Bhd, each installing a biogas power plant in Pahang and Johor, respectively.
Mah Sing Plastics Industries Sdn Bhd and AT Glove Engineering Sdn Bhd, each installing solar photovoltaic projects in smart factories in Klang and a manufacturing factory in Perak, respectively.
Meanwhile, the government decision to provide more incentives under Budget 2021 will boost the RE industry growth.
Among the initiatives are the first Sustainability Bond for environmental and social initiatives and RM2bil under the green technology financing scheme.
The Sustainable Energy Development Authority has estimated that some 4.1 million buildings in Malaysia might still accommodate solar panels, and collectively generate about 24-gigawatt peak of electricity.
According to the Institute for Democracy and Economic Affairs, RE capacity is expected to reach 12 gigawatt to 13 gigawatt grid installed capacity by 2030. — Bernama
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