This article first appeared in The Edge Malaysia Weekly on August 19, 2024 - August 25, 2024

RENEWABLE energy (RE) players have been invited for a briefing by the Energy Commission (EC) and the Ministry of Energy Transition and Water Transformation (Petra), on access to Tenaga Nasional Bhd’s (KL:TENAGA) national grid, which opens in September.

Participants in the briefing — which is slated to happen in the coming days — hope to get more clarity on the mechanism for access to the grid and its key components, including the system access charge (CAS), which is the price paid by a customer to buy electricity from other parties, but through Tenaga’s grid.

It is understood that policymakers and regulators have arrived at the CAS for the third-party access (TPA) programme, called the Corporate Renewable Energy Supply Scheme (CRESS).

Deputy Prime Minister and Minister of Energy Transition and Water Transformation Datuk Seri Fadillah Yusof tells The Edge that rates for the CAS are “still under discussion, and will be announced in September 2024” at the latest.

In previous large-scale solar (LSS) programmes in Malaysia, solar power producers have slashed their electricity selling prices to win quota from the government. Single Buyer, an entity ring-fenced within Tenaga, pools the electricity supply. Tenaga then sells the power to consumers, which range from factories to shopping malls, at standardised rates.

With CRESS, the solar plant operators can theoretically negotiate better electricity selling prices, as there will be more long-term purchasers to choose from. The long-term selling prices, added to CAS, will determine the full tariff to be paid by the customer.

Sources tell The Edge that CAS will be charged based on volume delivered, as opposed to distance. This means a power producer can build a solar plant in high-irradiance areas in Perlis and compete with a solar plant in Pahang to sell electricity to a data centre in Johor.

In his written reply, Fadillah shares other details of the programme, including doing away with the quota model common in rooftop solar awards and LSS bids.

“In principle, the CRESS programme will not be implemented based on quota allocations,” Fadillah says. “Capacity addition will be determined based on grid network system capability.”

The ministry anticipates at least 2gw of applications, he adds, based on market response to a similar mechanism called the Corporate Green Power Programme.

“The government, through the electricity supply and tariffs planning and implementation committee, will ensure that energy supply is sufficient and able to fulfil new demand in the future,” Fadillah says.

Industry players largely expect the CAS pricing to start at around 25 sen/kWh. A handful, however, suggest that it could go higher.

This is because of intermittency costs. To illustrate, imagine solar plant A sells power to factory B. When the sun sets, factory B still needs electricity. The gap will be filled by grid operator C, which needs to have standby generation capacity similar to solar plant A’s in order to be able to provide electricity to factory B at night.

During a 2021 pilot programme to transmit power to Singapore, the CAS, or wheeling charges, were fixed at 2.28 US cents/kWh (10.08 sen/kWh) and revised to three US cents/kWh later.

Reports suggest a higher rate of six US cents/kWh (22.1 sen/kWh) is being negotiated currently.

These competitive rates, however, take into consideration the government-to-government efforts to encourage activities that align with the ambitions of the Asean Grid, which are to achieve a more sustainable and interconnected future.

For CRESS, there are two categories of CAS — a lower charge for consistent (or firm) energy delivery such as large hydro or solar with battery storage, and a higher one for electricity generation that is not consistent, such as solar without battery storage, which fluctuates with the sunlight.

Industry players are mixed in their expectations for the wheeling charges.

“It has to make economic sense. If it is 25 sen/kWh, then the end customer might as well subscribe to the Green Electricity Tariff (GET),” one says.

GET is a premium paid by Tenaga’s customers who subscribe to firm RE supply from the grid. It was set at 20 sen/kWh for medium- and high-voltage consumers in 2024, and 21.8 sen/kWh for all customers in 2H2023.

At 21.8 sen/kWh, it is understood that a portion of the standby costs are still absorbed by other conventional electricity users in their base tariffs.

Meanwhile, another executive points out that the two programmes — GET and TPA — are different.

“GET is reviewed annually, while the TPA electricity tariff [agreed between the seller and the buyer] is long term,” he says. The TPA requires a stable CAS, he explains.

In its current form, CRESS is only open to new electricity demand and new green energy plants. It is still a sizable market, with data centre projects expected to contribute to a 7gw increase in power demand by 2030, Petra data shows, representing a 35% increase from the peak demand of 20gw in April this year. 

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