Tajuddin: The best plans may still not be doable

Posted on March 26, 2011. Filed under: Energy |

-The Star-

The multitude of challenges faced in planning the country’s energy supply is not unfamiliar terrain for Energy Commission chairman Tan Sri Ahmad Tajuddin Ali (pic), who was appointed to the regulatory body exactly a year ago. Between 1996 and 2000, he called the shots as chief of the national power company Tenaga Nasional Bhd, after taking over the role from Tan Sri Ani Arope. It was a hot seat then as confidence over the utility company was battered following a nationwide blackout in 1996. Over the years, following several restructuring and reorganisation efforts, he had managed to place the company on steadier footing.

Today, the power sector is again faced with myriad of issues; the biggies include how to reduce dependence on fossil fuels, should the country harness nuclear energy and formulating a clear tariff pass-through formula.

In an interview with StarBizWeek‘s ANITA GABRIEL and LEONG HUNG YEE, the engineer by training who also holds a PhD in Nuclear Engineering, speaks candidly about these issues.

SBW: As it stands now, what is the compulsion to get our energy mix correct?

AT: It is of national interest that we do the right thing for the future energy supply. Hopefully we will get to that optimal (point) but there other factors that are unanticipated and unexpected that come in which can cause disruption to the supply chain. So, the best plans you make may still not be doable because of disruption like floods in Queensland or an earthquake in Japan …

One is the lack of indigenous supply. To use gas from other sources, it needs to be priced to the market. Otherwise someone has to bear the difference … if it is negative, it will impact Petronas’ bottomline, which is not fair.

The other thing is the continued large-scale use of fossil fuel, be it coal or gas, which affects global climate change. Any effort to reduce dependence on this is in the right direction, hence the move towards utilising more renewable energy. From the energy mix standpoint, we need to do this balancing within a policy framework.

Also, there are small contributions that can have an impact, such as more efficient utilisation of energy which can help manage demand.

What needs to be done to promote alternative energy sources such as renewables?

For the private sector to invest in renewable energy, there must be some economic justification. In order words, the pricing of product must be right. In the end, who has to pay for it? It’s the consumer.

Could that mean that the Government may need to subsidise electricity generated by renewable sources?

Not subsidies per se. If the Government subsidises, that money comes from taxpayers anyway. The Government collects money from people and redistribute. At the end, whether you do it through government subsidy or direct payment by consumer, the net effect is the same.

To nuke or not to?

Is there an ideal target in terms of fuel mix for power generation?

Yes. There is a general scenario planning. The Government has announced that it is looking at future supply and demand. Beyond 10 years, nuclear is projected to be one of the options, constituting about 22% of the fuel mix in the peninsula. Will that happen? That will definitely be the subject of intense debate, in the light of Fukushima.

Because of Japan, the public is demanding that we rethink this. In the end, the Government will have to listen to the people, but it also has to ensure there is enough capacity. It needs to decide if this is a risk we have to take and move on or at whatever cost, we are not going to go into nuclear and find other sources.

We, in the Energy Commission, will try to manage this going forward. It is not for us to push one or the other. It is for nation to make that decision.

Is a rethinking going on?

We haven’t signed any contract (for nuclear plant). It is very preliminary. I would say the overriding thing at the moment is that we are in the phase of public consultation. With this new reality of Fukushima, maybe this public consultation will be more intensified. My hope is that finally a rational decision will be made. We have to secure long-term reliable adequate power supply.

If we were to take nuclear out of the equation, how does it change the dynamics for you as a planner?

That’s the biggest issue at the moment. If we are to look at renewable energy, it is not enough. People say we’ve got plenty of sun, but it is nothing compared to the demand. Nuclear generation cost is lower but the availability of solar itself, even if we cover the whole of the peninsula with solar panels, we still cannot fulfil energy demand.

There are two coal plants with 1,000MW each in the pipeline. One has been awarded, while the other one in the process to be awarded soon. Malakoff (Bhd) and Jimah are preparing their bids at the moment to be submitted to us by early April. Our demand is increasing at about 1,000MW a year. If you take into account decommissioning (of old plants), the additional plant replacement is about 1,000MW.

If we were to tap power from Bakun, do you need these two coal plants?

The decision at the moment is not to tap. That’s why we had the coal plants to fill up the gap.

Something to worry about?

Do we have a comfortable reserve margin at the moment?

There is such a thing as name plate reserve capacity and real life reserve capacity. This is because there are plants that need to be taken out or forced shutdowns due to equipment failure and so on. The real life margin could be less. Scheduled maintenance and unscheduled outage cuts out the reserve margin and depending on which plant that is not available, it also affects the fuel supply chain. For example we may have stacks for coal in the coal yard but if the plant not working that day, it is useless. These are things we have to manage on a day to day basis.

Our reserve margin is tough. The fact that the light is on means there’s enough capacity but I won’t go into details. It is something we have to manage.

What is the mix for renewables currently?

On renewable fuel mix, currently hydro produces the most. Although hydro is renewable, it is in a slightly different bracket. The real renewable is mini and micro hydro.

Do you see renewable energy gaining in a big way? I find that it is largely rhetoric.

We are not too far off. We targeted 5,000MW. At the moment, we produce some 500MW renewable energy but the total connected to grid is 50MW as others are for in-house use. They are generating power using biomass but it’s for in-house use in palm oil mills. The Government is doing its best. At the end of the day, for the investors, it’s whether it makes economic sense … otherwise they will not do it.

Which renewable energy, in your opinion, is the most preferred?

Best, if you take from a technical standpoint, it would be mini and micro hydro. Next, we have a lot of biomass. We also have waste from palm oil mill to generate biogas. Still, these are limited in quantities to meet demand. That’s why even as we talk about a few MWs here and there, we still need to invest in a 1,000MW coal plant.


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