Energy policy of Malaysia

The energy policy of Malaysia is determined by the Malaysian Government, which address issues of energy production, distribution, and consumption. The Department of Electricity and Gas Supply acts as the regulator while other players in the energy sector include energy supply and service companies, research and development institutions and consumers. Government-linked companies Petronas and Tenaga Nasional Berhad are major players in Malaysia's energy sector.

Governmental agencies that contribute to the policy are the Ministry of Energy, Green Technology and Water, Energy Commission (Suruhanjaya Tenaga), and the Malaysia Energy Centre (Pusat Tenaga Malaysia). Among the documents that the policy is based on are the 1974 Petroleum Development Act, 1975 National Petroleum Policy, 1980 National Depletion Policy, 1990 Electricity Supply Act, 1993 Gas Supply Acts, 1994 Electricity Regulations, 1997 Gas Supply Regulation and the 2001 Energy Commission Act.[1]

Policy overview

Malaysia's oil production no longer fulfills its needs.

The Ministry of Energy, Green Technology and Water has identified three principal energy objectives that would be instrumental in guiding the development of its energy sector.[1]


To ensure the provision of adequate, secure and cost-effective energy supplies through developing indigenous energy resources both non-renewable and renewable energy resources using the latest cost options and diversification of supply sources both from within and outside the country.

In pursuit of the supply objective, policy initiatives, particularly with respect to crude oil and natural gas,Malaysia have aimed at both extending the life of domestic non-renewable energy resources, as well as diversification away from oil dependence to include other forms of energy sources.


To promote the efficient utilisation of energy and discourage wasteful and non-productive patterns of energy consumption.

The policy's approach to realise this objective is to rely heavily on the energy industry and consumers to exercise efficiency in energy production, transportation, energy conversion, utilisation and consumption through the implementation of awareness programs. Demand side management initiatives by the utilities, particularly through tariff incentives, have had some impact on efficient utilisation and consumption.

Government initiatives to encourage cogeneration are also aimed at promoting an efficient method for generating heat energy and electricity from a single energy source.


To minimise the negative impacts of energy production, transportation, conversion, utilisation and consumption on the environment.

The environment objective has seen limited policy initiatives in the past. All major energy development projects are subjected to the mandatory environmental impact assessment requirement. Environmental consequences, such as emissions, discharges and noise are subjected to the environmental quality standards like air quality and emission standards.

Renewable energy policy

The Malaysian government is seeking to intensify the development of renewable energy, particularly biomass, as the 'fifth fuel' resource under the country's Fuel Diversification Policy. The policy, which was set out in 2001, had a target of renewable energy providing 5% of electricity generation by 2005, equal to between 500 and 600 megawatt (MW) of installed capacity. The policy has been reinforced by fiscal incentives, such as investment tax allowances and the Small Renewable Energy Programme (SREP), which encourages the connection of small renewable power generation plants to the national grid.[2]

The Small Renewable Energy Program allows renewable projects with up to 10 MW of capacity to sell their electricity output to TNB, under 21-year licence agreements. Numerous applications for the program have been received, mainly involving biomass, and of these over half are for palm oil waste. In 2005 there were 28 approved biomass projects involving the installation of 194 MW of grid-connected capacity. There were also four approved landfill gas-based projects, with 9 MW of capacity, and 18 mini hydro-electric projects offering 69.9 MW of total capacity.[2]

Currently (2016), the Sustainable Energy Development Authority (SEDA) of Malaysia is conducting a comprehensive onshore wind mapping effort. SEDA Malaysia is a statutory body formed under the Sustainable Energy Development Authority Act of 2011. One of the key roles of the SEDA is to administer and manage the implementation of the Feed-in Tariff(FiT) mechanism, including a Renewable Energy fund mandated under the Renewable Energy Act of 2011.[3] The Renewable Energy fund was created to support the FiT scheme. The current onshore wind mapping exercise will determine whether wind energy should be included in the FiT regime [4]

Production and consumption

Traditionally, energy production in Malaysia has been based around oil and natural gas.[5] Malaysia currently has 13GW of electrical generation capacity.[6] Power generation capacity connected to the Malaysian National Grid is 19,023 MW, with a maximum demand of 13,340 MW as of July 2007 according to Suruhanjaya Tenaga.[7] Total electricity generation for 2007 is 108,539 GW·h with a total consumption of 97,113 GW·h or 3,570 kW·h per capita.[8] The generation fuel mix is 62.6% gas, 20.9% coal, 9.5% hydro and 7% from other forms of fuel.[9] In 2007, the country as a whole consumes 514 thousand barrels (23.6 million tonnes) of oil daily against a production of 755 thousand barrels (34.2 million tonnes) per day.[10]

However, Malaysia only has 33 years of natural gas reserves, and 19 years of oil reserves, whilst the demand for energy is increasing. Due to this the Malaysian government is expanding into renewable energy sources.[5] Currently 16% of Malaysian electricity generation is hydroelectric, the remaining 84% being thermal.[6] The oil and gas industry in Malaysia is currently dominated by state owned Petronas,[11] and the energy sector as a whole is regulated by Suruhanjaya Tenaga, a statutory commission who governs the energy in the peninsula and Sabah, under the terms of the Electricity Commission Act of 2001.[12]

Peninsular Malaysia historical electricity production and consumption data

Year Production capacity Maximum demand
TNB Production capacity IPP Production capacity Total Production capacity
2005 6346 11277 17623 12493
2006 6346 11977 18323 12990
2007 6346 13377 19723 13620
2008 6436 13377 19723 14007
2009 7040 14777 21817 14245

All figures are in Megawatts

Source: Suruhanjaya Tenaga (Energy Commission) Annual Report[13][14]

Sabah historical electricity production and consumption data

Year Production capacity Maximum demand
2005 660 548
2006 708 594
2007 706 625
2008 812 673
2009 903 719

All figures are in megawatts

Source: Suruhanjaya Tenaga Annual Report [13][14]

Energy efficiency

Industrial consumers use about 40% of primary energy, as well as about 55% of the electricity (which consumes about 38% of primary energy) used in Malaysia. This means that industrial consumers use about 60% of the total energy used in Malaysia. The Malaysian Energy Commission has set up various energy efficiency programs.[15]

See also


  1. 1 2 "National Energy Policy". Ministry of Energy, Green Technology and Water. 31 January 2008. Retrieved 25 May 2009.
  2. 1 2 Business Monitor International (February 2008). "Malaysia Power Report Q2 2008", London,UK: Business Monitor International.
  4. Ho, L.-W. (Jan 2016). "Wind energy in Malaysia: Past, present and future". Renew. Sustain. Energy Rev. Elsevier. 53: 279–295. doi:10.1016/j.rser.2015.08.054.
  5. 1 2 "Renewable Energy and Kyoto Protocol: Adoption in Malaysia". Retrieved 24 September 2010.
  6. 1 2 Global Energy Network Institute 1-619-595-0139 (28 June 2007). "National Energy Grid of Malaysia – National Electricity Transmission Grid of Malaysia". Retrieved 24 September 2010.
  7. "Statistics of Interim on the Performance of the Electricity Supply in Malaysia for the First Half Year of 2007" (PDF). Suruhanjaya Tenaga. 29 January 2008.
  8. "Electric Supply Industry in Malaysia Performance And Statistical Information 2007" (PDF). Suruhanjaya Tenaga. Retrieved 25 May 2009.
  9. Department of Electricity Supply Regulation, Energy Commission (2007). "Electricity Supply Industry in Malaysia – Performance And Statistical Information 2006" (PDF). Suruhanjaya Tenaga.
  10. "BP Statistical Review of World Energy June 2008". BP plc. June 2008. Retrieved 25 May 2009.
  11. "U.S. Energy Information Administration Independent Statistics and Analysis Malaysia". U.S. Energy Information Administration. 2009. Retrieved 24 September 2010.
  12. "Overview of Energy Commission". Retrieved 24 September 2010.
  13. 1 2 Suruhanjaya Tenega. "Suruhjana Tenega Annual Report 2009".
  14. 1 2 Suruhjana Tenega. "Suruhanjaya Tenega Annual Report 2007" (PDF).
  15. "Energy Efficiency". Suruhanjaya Tenaga. 6 May 2009. Retrieved 25 May 2009.
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