The Future of Renewable Energy In Malaysia

The future of energy use is renewable energy and the most spoken subject as it needs the right policies, infrastructure, and financing. Tengku Muhammad Taufik Tengku Aziz, president and CEO of Petroliam Nasional Bhd (Petronas), shared how the company is positioning itself for the future. 

According to him, Petronas has a window of two to three decades to strategise its position. Although it seems like a long period of gestation, the change could soon occur at any moment. 

He warned that the oil price collapse in 2020 was a clear example of how things could change instantly. 

At the beginning of March 2020, oil demand plummeted during the pandemic, and the price spat spurred the cost of the commodity to fall into negative territory. 

As a result, oil and gas firms worldwide, including Petronas, have taken a hit. In the second quarter of 2020, the company made an impairment of RM20.78 billion. Then, at the end of the first nine months, its depreciation amounted to RM32,12 billion. 

However, as the national O&G company entrusted, Petronas must continuously monetise, increase its value, and optimise hydrocarbons’ return to Malaysians while maintaining its sustainability. 

He indicated that as efficiency gains momentum and customer preference shifts for cleaner renewable energy, it has to be prepared to decrease oil demand. 

Gas remains a key and cleaner fuel source, but equally critical is diversification into renewable energy, stressed Tengku Muhammad Taufik. 

However, that does not say that oil will be obsolete and will still be used in refineries to manufacture petrochemicals used in everyday products. Consumption will always be there regardless of it. 

If the decision to venture into renewable energy is not made now, he assumes that there was a possibility that Petronas would become less critical in the future. “But it is necessary to consider the kind of investment we make carefully,” he said. 

There is a good demand for an energy mix in Malaysia and other jurisdictions, such as India and Vietnam. He said that Petronas made measured investments in India through Amplus Energy Solutions Pte Ltd, known as M+ based in Singapore. 

Over 200 multinational companies, including Honda, General Electric and Halliburton, represent the commercial and industrial facilities. As Asia rises, electricity demand will also increase, adding that there have been various studies pointing out that, depending on the time of the study, there were between 100 and 130 million people who did not have access to daily electricity. 

Petronas is tapping into what is available in abundance, which is solar power, for now. 

Tengku Muhammad Taufik said that there needs to be a deliberate policy change when one deals with an ever-changing energy mix. Malaysia announced in 2018 that by 2025 it had set a target of 20 per cent of renewable energy in its generation mix. 

A 2019 report on the website power-technology.com showed that Malaysia needed RM33 billion (US$8 billion) worth of investments in the renewable energy sector to achieve the 20 per cent energy mix goal. Tengku Muhammad Taufik said the world has heard that it takes between US$5 trillion and US$6 trillion to make the world move to more sustainable models, and much of the funding of the energy transition is required to make sure it happens. 

There must be an ecosystem that, he said, supports that. He thinks this is an ongoing debate, not just in emerging markets but in developed and mature markets and how much capital they want to put aside to allow the private sector to do so. 

Petronas, which is among the top five liquefied natural gas (LNG) players in Asia, is an apparent supporter of gas being the transition fuel to its 2050 Net Zero Carbon Emissions aspiration. 

The International Energy Association prospects see gas reaching 20 per cent – 25 per cent of the energy mix by 2040 and ramp-up.