KUCHING: As Malaysia’s largest renewable energy provider, Sarawak Energy Bhd (Sarawak Energy) is stepping up its game in providing electricity to Indonesia, specifically to Kalimantan, in its mission to becoming a regional powerhouse.
This comes hot off the heels of the group celebrating a century of growth and transformation into Malaysia’s largest renewable energy developer and primary provider of electricity to Sarawak and beyond.
Earlier this year, Sarawak Energy organised a townhall which reflected on Sarawak Energy’s transformational journey over the past century and provided a look forward into the next century of growth.
Sarawak Energy started as an electrical section within the Public Works Department in 1921 to oversee electricity supply in Sarawak and has grown into an energy development company and vertically integrated power utility with a vision to achieve sustainable growth and prosperity for Sarawak by meeting the region’s need for reliable and renewable energy—providing electricity to 3 million Sarawakians in urban and rural areas as well as bulk power to energy intensive and export customers.
The group turned 100 years old last year in 2021 but celebrations were deferred as a result of the restrictions of the pandemic, with the allocation as well as staff donations handed over to Tabung Bencana Sarawak to alleviate the burden of fellow Sarawakians.
As Malaysia’s largest renewable energy provider, Sarawak Energy continues to create space for growth towards realising its aspiration to be a renewable energy powerhouse in Southeast Asia.
As of the end of 2021, Sarawak overall electricity supply coverage reached 98.6 per cent, with full coverage for urban areas and 96.5 per cent over the rural areas, while the remaining 3.5 per cent to be achieved by 2025.
Sarawak Energy is committed to providing affordable 24/7 electricity access for all Sarawakians and continues to invest significantly in a modern and reliable power system.
And beyond the country, Sarawak is spreading its wings to neighbouring Indonesia. It started off with Sarawak–West Kalimantan Interconnection, a cross-border HVAC link, connecting two systems at the Mambong 275kV substation in Sarawak to the Bengkayang 275kV substation in West Kalimantan, through a double circuit 275kV transmission line at a system frequency of 50Hz.
According to Sarawak Energy’s website, this interconnection will improve security of supply through the sharing of spinning reserve; optimise operation cost through the sharing of spinning reserve and generation capacity, among others.
Sarawak Energy is exporting an average of 190 to 200MW of power to Indonesian national utility, Perusahaan Listrik Negara (PLN).
Sarawak Energy commenced the initial export of power to Indonesia in January 2016. The project is one of the most significant milestones towards realising the Asean Power Grid, an initiative by the Association of Southeast Asian Nations to strengthen electricity infrastructure in the region.
Sarawak Energy has also developed plans with neighbours Sabah and Brunei for further interconnection projects (power exports) that will advance the concept of the Asean Power Grid.
Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg revealed that the state is looking at supplying Singapore with electricity should Sarawak have a surplus.
Abang Johari said Sarawak was currently in talks with Singapore on the matter, adding that Sarawak would only be giving no more than 1,000 megawatts should the plan come to fruition.
“I told them that if they have any investments that require energy, they should bring it to Sarawak, which they have agreed to do,” he said at the opening of the 15th Parti Pesaka Bumiputera BersatuConvention at the Borneo Convention Centre Kuching mid-June.
Developing Mihep hydro project in North Kalimantan
And the partnerships does not stop there: The Sarawak government had signed an agreement to participate in the development of the Mentarang Induk hydroelectric project (Mihep) in Malinau Regency in North Kalimantan, as it seeks to extend its long-standing infrastructure cooperation with Indonesia.
The project will be jointly managed by Sarawak Energy, its joint venture company PT Kayan Hydropower Nusantara (PT KHN), which signed agreement to develop Indonesia’s first large scale sustainable energy facility to support the Tanah Kuning Green Energy Park.
To note, PT KHN is an Indonesian Foreign Investment Holding Company formed in January 2018 through a joint-venture between PT Kayan Patria Pratama (KPP) Group and Sarawak Energy.
In March 2022, Deputy Premier Datuk Amar Awang Tengah Ali Hasan led a delegation from Sarawak to meet Indonesia’s Coordinating Minister of Maritime and Investment Affairs Luhut Binsar Pandjaitan in Jakarta.
It was made known then that state-owned Sarawak Energy, is participating in this project via its joint venture company, PT KHN.
During the meeting with the minister, Awang Tengah expressed Sarawak’s appreciation to the Indonesian government for the continuous support and assistance given to Sarawak Energy and PT KHN over several years of Mihep’s extensive preparation.
Mihep is designed to generate an installed capacity of 1,375MW from Mentarang River, expected ground breaking to construct a dam will be tentatively in October 2022.
MIHEP is set to deliver bulk renewable energy at a regionally competitive price for the sustainable domestic processing of Indonesia’s mineral ores in Tana Kuning Industrial Park, as the catalyst for the Renewable Energy Based Industry Development (REBID).
At the same time, MIHEP provides more affordable and less polluting sources of power for the communities in Kalimantan.
Consul-General of the Republic of Indonesia in Kuching Raden Sigit Witjaksono welcomes the collaboration between Sarawak and Indonesia will prove beneficial especially the energy sector.
“Collaboration between Sarawak and Indonesia will prove beneficial as Indonesia is expected to kick-start the development of our new capital, Nusantara in East Kalimantan which could start anytime soon.
“Being neigbouring countries, Indonesia welcomes Sarawak’s help and is working closely with Sarawak in the energy sector,” said Raden Sigit.
He added, Sarawak’s participation in hydropower development in North Kalimantan builds both countries long and successful partnership with Indonesia’s Listrik Negara (PLN), for Sarawak-West Kalimantan interconnection since 2016.
“Sarawak through Sarawak Energy’s experience in large hydropower is an added advantage in Sarawak’s participation for Tanah Kuning Green Energy Park, strengthening the power development,” he said.
‘Sarawak-Indonesia power ties very important’
Raden Sigit also acknowledged how important the project cooperation with both countries and the seriousness of Sarawak in collaborating with Indonesia in the power sector especially when Awang Tengah visited few places in Indonesia, Jakarta, East Kalimantan, Samarinda, Balikpapan and then up to the new capital in North Kalimantan.
“I can understand that the project is very important and so far, what I understand, this year, hopefully will be the ground breaking of the electricity project, in North Kalimantan, the Mihep 1,375MW from Mentarang River, and we hope once materialised, the power consumption necessity will be able to generate electricity surrounding the areas/regions.
“What I can understand about Mentarang River, this is huge importance to being able to generate 1,375MW to the region. The expertise and technology come from Sarawak, the technology here (Sarawak) is good and it is very advance, and the potential for future hydropower is big,” he said.
In fact, he said Sarawak is no stranger to Kalimantan as Sarawak has cooperation with Sarawak on energy at a consumption of 100MW to 120MW supply directly from Sarawak to Pontianak, in West Kalimantan, which is a direct supply.
“We have our own state enterprise for electricity, PLN (Perusahaan Letrik Negara) so actually they also said that for import from Sarawak to West Kalimantan, the total consumption of energy in particular Pontianak is at 0.54 per cent, which is around 100 to 120MW, and it is still not enough.
“We visited Temajuk (near Telok Melano) recently, it is one of the areas near the border (Sarawak and Kalimantan), they do not get enough electricity so they use generator set, so they might ask for more collaborations with Sarawak,” he said.
On the costing of the energy supply to Kalimantan, Raden Sigit thinks it is cheaper to get from Sarawak as Sarawak and Indonesia are the closest neighbouring countries.
“When you talk about the distance of delivering energy supply from Sarawak to Kalimantan, of course we are the closest and less expensive, comparing to get electricity from Jakarta.
In fact, we have a lot of rivers as well, not just Kalimantan, we also have in Jawa, Sumatera, Sulawesi, because we area all islands, about 17,000 islands, big islands, big rivers, and they are not yet optimised as hydropower.
Meanwhile, way forward he said future collaborations between Sarawak and East Kalimantan in supplying energy to the region is very promising.
“We are in the same island, because of the closer distance, Kalimantan, Sarawak, Sabah and even Brunei Darussalam, and then not only because of the distance, we historically in the same route, one Borneo, Kalimantan, with the same spirit I believe.
“Historically we are very close, even people in Sabah and Sarawak, they have connectivity with families in our side (Indonesia).
“This is the strength if we want to pursue our future collaborations, so based on this with the same spirit, we may even go beyond this region. We want to complement each other from Kalimantan with Sarawak, to export out energy not only for this region consumption, and also beyond perhaps Japan, South East Asia and Europe,” he said.
Which Asean country will decarbonise their power sectors first?
Given its location and proximity to oceans, the Asean region is one of the most vulnerable regions to the impact of global warming.
In recognising the risks, countries within this region has set decarbonisation targets, pledged reduction plans in their nationally determined contributions (NDCs), and passed laws and policies to address climate change.
According to S&P Global Commodity Insights associate director of gas, power and climate solutions Cecillia Zheng, of the 10 Asean countries, eight have announced national targets to achieve net-zero GHG emissions or to become carbon neutral by 2050, corresponding to the 1.5 decrees Celcius target set by the Intergovernmental Panel on Climate Change (IPCC).
The exceptions are Indonesia, which committed to net zero by 2060, and the Philippines, which is the only Asean country that has not committed to a net-zero target.
“However, despite these pledges, most Asean countries have not yet developed firm measures to help them achieve the targets,” Cheng said in an excerpt on the topic.
“Also, an important part of net-zero actions is to reduce coal use in power generation, but current PDPs mostly do not reflect the coal phaseout plans, neither do they align with their net-zero targets.”
According to the current PDPs and the region’s ability to deploy clean energy, there will still be substantial coal power capacity, mostly already under construction, to be added in the major power systems.
Therefore, Asean is expected to witness coal-fired generation growth in next seven years. Post-2030, the reliance on coal will ease over time, with more renewable projects coming online.
Accordingly, Cheng said the power sector’s emission would reduce but not reach net zero by 2050.
“Asean power sector carbon dioxide emissions will continue to grow and peak at 805 million metric tons (MMt) in 2029,” she added. “Emissions will then plateau between 2029 and 2040, as the region retires 20GW of coal capacity (40 per cent from Malaysia) in this period while adding 54GW of new gas capacity to provide stable power output and to balance the renewables.
“The region’s total emission will move downward only from 2041, owing to accelerated renewable growth combined with a phase-down of coal in total power generation.
“The reduction will accelerate from 2045 owing to the implementation of multiple decarbonisation measures in the region, including large-scale coal capacity retirement and the expectation of carbon capture and storage (CCS) technologies being installed largely on new thermal power plants.
“Grid emission factors will improve significantly from 0.54 kg/kWh in 2019 to 0.18 kg/kWh by 2050. Besides, progress in attaining the emission peak remains uneven among individual countries.”
Front-runner club analysis
In the next five 15 years, S&P Global Commodity Insights said Singapore is positioned to be the leader in the decarbonisation of power sector.
This comes as it is the only country that is projected to achieve a carbon dioxide emission reduction by nine per cent in 2030 compared with the 2019 level.
“It is followed by Malaysia and Thailand, each representing an emission growth of 11 per cent and 12 per cent. Indonesia, Vietnam, and the Philippines will lag owing to heavy dependence on coal-fired generation and reliance on external funding to support projects,” Cheng added.
“Singapore power sector’s carbon dioxide emissions are expected to peak in mid 2020s, as the country not only set a net-zero target but also made tangible actions by deploying domestic renewable projects, planning for low-carbon/renewable imports, and applying carbon tax to incentivise low-carbon energy.”
In alignment with the country’s net-zero targets, the government launched various programmes to aggregately deploy solar power.
In addition, the country is actively exploring renewable import projects, with two rounds of requests for proposals (RFPs) launched to call for up to 4GW of dispatchable low-carbon power imports, mostly to come online before 2035.
A positive decarbonisation perspective will also be aided by efficiency improvements of gas-fired generators (some of which have already signed contracts with the equipment suppliers for upgrades) and the carbon tax that started with S$5 per metric ton of carbon dioxide equivalent between 2019 and 2023, with a plan to increase to S$50 to S$80 by 2030.
“Thailand is also in the front-runner club, after Singapore. Thailand power sector’s emission will have a brief increase from oil during 2022-2023 as some gas plants have temporarilyswitched to burning oil owing to gas price hikes.
“From 2024 onward, emission will continue to grow but at modest rates as the country manages to cap the generation from coal-fired power plants.”
To note, Thailand stopped building new coal plants and will continue to promote renewable energy.
Thailand has launched the Bio-Circular Green (BCG) economic model as the national agenda to promote renewable energy, and the National Energy Policy Committee (NEPC) approved the New RE Quota for purchasing 5.2 GW electricity from renewables under a feed-in-tariff (FIT) scheme between 2022 and 2030.
Coupled with the renewable expansion, Thailand has made significant progress toward smart grids and prepared the enactment of third-party access codes to the power grid systems. Thailand also intended to increase imports from Laos’s hydropower and is accelerating legal and policy actions to implement enhanced carbon pricing.
“Similar to Thailand, Malaysia is ranked high from a low-carbon perspective. The country has stopped building new coal-fired power plants and announced plans to retire the existing coal fleet in stages or once PPAs with each facility expire,” the director continued.
“In addition, Malaysia is endowed with abundant gas resources, and it could quickly ramp up gas capacity to make up for the capacity loss from coal.”
An interesting point to make is that Malaysia has represented strong renewable energy demand. To promote renewables, the country has awarded 2.2GW capacity in four rounds of large-scale solar (LSS) tenders and released the Malaysia Renewable Energy Roadmap (MyRER) to provide detailed plans for expanding the use of renewable energy sources and support further decarbonisation of the electricity sector through 2035.
“As a result, emissions will slowly increase for a few years and reduce significantly owing to gas replacing coal alongside the renewable boom, presumably from 2030.”
Followers struggling between economic growth and decarbonisation
As for Vietnam, Indonesia, and the Philippines, Cheng said the three are facing the same dilemma — They represent the strongest economic growth in Asean and require substantial new power capacity, including reliable thermal power plants, to sustain the growing demand.
Meanwhile, they are the most coal-reliant countries and decarbonising the existing power fleet appears to be a difficult task.
“Vietnam has announced a net-zero target and made commitments to quit coal at COP26, but no strategic report has been issued to clarify the route to the net-zero target.
“The quit-coal statement was not joined by specific proposals. In fact, despite PDP8 drafts showing that Vietnam’s power system would center on gas and wind, the capacity of coal and wind moves up and down in different drafts (see Figure 3), and the final release has been delayed repeatedly.
“Furthermore, the expansion of renewable capacity in the past three years came with great challenges to Vietnam’s grid system. Therefore, in January 2022 Vietnam’s National Load Dispatch Center (NLDC) announced not to add wind and solar power to the 2022 national plan.
“In view of the investment deficiency in the grid not being able to accommodate the renewable expansion, Vietnam is to consider opening the grid sector to private and foreign investors.
“Neverthless, Vietnam has one wild card to play, that is its two big gas blocks: Block B and Cá Voi Xanh. Should prices of LNG imports continue to trend higher, Vietnam may try to push forward its domestic gas development more and accelerate the coal retirement accordingly.”
Indonesia is heavily coal-reliant and has been slow to develop renewables. Therefore, carbon dioxide emissions will grow quickly through 2041 owing to increasing power generation from coal-fired power plants. In the next five years, more coal capacity will still be added, and coal generation share will remain high.
Various plans around coal have been announced, but key ones (PLN coal retirement plan will be after the completion of 16GW planned mega coal projects; the country’s low-carbon vision, LTS-LCCR 2050, still specifies that coal will continue to have an important role in the power sector; and recent New and Renewable Energy Bill classified liquified and gasified coal as “new energy” and is part of Indonesia’s efforts to replace petroleum imports) delivered the same message that Indonesia is not ready to remove coal from the power sector in the medium term and even in the long term.
Meanwhile, instead of phasing out coal, Indonesia has been actively involved in biomass co-firing to phase down coal use. It also established a carbon tax, but the initial price of 30 Indonesian rupiah per kilogram of CO2e, or US$2.09, is viewed as being too low to incentivize decarbonisation actions. All these actions could slow the emission growth rate before 2041 but would not move the peaking earlier.
Last but not least, The Philippines is the only Asean country that has not committed to a net zero target. It is well positioned for more renewable development in terms of policies, procurement, and economics.
However, Cheng noted that the only domestic gas source (Malampaya) is depleting, and the introduction of LNG has been slow. It appears difficult for the country to completely phase out coal soon.
“In December 2020, the Philippines’s energy secretary announced a moratorium of new coal plants. In 2021, power companies announced discontinuing some coal projects,” she said. “However, at least half of the planned coal capacity stays on the table.
“Therefore, the Philippines’s emissions will likely grow following the coal-fired generation growth through 2028. It remains to be seen if the newly elected President Ferdinand Marcos Jr would commit to favor renewables and roll out decarbonisation measures.”