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Malaysia:

Zpryme Smart Grid Insights | March 2012

The Smart Grid Has Landed


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Malaysia: Smart Grid

the Malaysian government's move to purchase power assets might be the start of an overhauling of the country's whole power generation industry in the long run.
Source: Malaysia tycoon near power assets deal with govt firm-sources, Reuters, March 5, 2012.

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Zpryme Smart Grid Insights | March 2012

Malaysia: Smart Grid

Malaysia: The Smart Grid Has Landed


From an energy standpoint, Malaysia is as diverse as its art, music, and literature. Malaysia is divided into 13 states and three Federal Territories, separated by the South China Sea with 11 states and two federal territories (Kuala Lumpur and Putrajaya) in Peninsular Malaysia and two states and one federal territory (Labuan) in East Malaysia. The demand for energy consumption in Malaysia is projected to increase by 5% per year over the next five years, and is likely to double in the next 20 years. To meet this need, Malaysias largest utility, Tenaga Nasional Berhad (TNB), has undertaken an ambitious Smart Grid demonstration project working with 5,000 customers in 3 different cities. The goal of this project is to reduce the nations dependence on natural gas and coal, and to withdraw from national electricity subsidies in the next 4 years. The national goal of the Malaysias Smart Grid program is to reduce carbon emissions to 40% of the 2005 level, and increase the renewable energy levels to 2,080 MW 4,000 MW by 2020 and 2030, respectively. In addition, the Smart Grid will help Malaysias utilities reduce grid operational costs and improve energy efficiency.

the communication and wireless infrastructure segment is projected to grow the fastest from 2011 to 2016, growing at an annual rate of 28.5%. The smart meters segment is projected to be the largest, reaching $29.8 million by 2016.
Malaysia Electric Generation Forecast 2011 to 2016 (in billion killowatthours) (figure 1, source: EIA & Zpryme) 129 135

160 140 120 100 80 60 40 20 0 2011 113

142

116

122

2012

2013

2014

2015

2016

$120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $0.0

Malaysia Smart Grid Technology Market Value Forecast 2011 to 2016 (in U.S. millions) (figure 2, source: Zpryme) $91.7

$109.0

Malaysia Smart Grid Market Value


The total Malaysia Smart Grid technology market is projected to grow from $35.2 million in 2011 to $109.0 million in 2016.
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$59.0 $49.6 $35.2 $41.8

The market is projected to grow at an annual rate of 25.4% during this time period. Among the five major Smart Grid technology areas,

2011

2012

2013 2014 2015 Zpryme Smart Grid Insights | March 2012

2016

Malaysia: Smart Grid

Malaysia Smart Grid Market Value Forecasts by Technology


(figure 3, source: Zpryme U.S. millions)
Smart Grid Segment Software & Hardware Smart Meters Sensors Comm. & Wireless Infrastructure Smart T&D Equipment Other 2011 $6.7 $8.7 $5.3 $5.4 $4.6 $4.6 2012 $7.9 $10.3 $6.4 $6.7 $5.5 $5.0 2013 $9.3 $12.3 $7.8 $8.3 $6.6 $5.4 2014 $11.0 $14.7 $9.4 $10.2 $7.8 $5.9 2015 $15.0 $25.0 $13.5 $15.2 $12.2 $10.8 2016 $17.7 $29.8 $16.3 $18.8 $14.5 $11.8 CAGR 21.6% 28.0% 25.3% 28.5% 25.7% 20.8%

Total Smart Grid Market Value


Percent of Total Market Software & Hardware Smart Meters Sensors Comm. & Wireless Infrastructure Smart T&D Equipment Other Total
3

$35.2
2011 18.9% 24.6% 15.1% 15.3% 13.2% 13.0% 100.0%

$41.8
2012 18.8% 24.7% 15.3% 16.0% 13.2% 11.9% 100.0%

$49.6
2013 18.7% 24.8% 15.6% 16.6% 13.2% 11.0% 100.0%

$59.0
2014 18.6% 24.9% 15.9% 17.4% 13.2% 10.0% 100.0%

$91.7
2015 16.4% 27.3% 14.7% 16.6% 13.3% 11.8% 100.0%

$109.0
2016 16.3% 27.3% 15.0% 17.3% 13.3% 10.8% 100.0%

25.4%

Zpryme Smart Grid Insights | March 2012

Copyright 2012 Zpryme Research & Consulting, LLC All rights reserved.

Malaysia: Smart Grid

Malaysia Smart Grid Plans


There are three utilities in Malaysia: Tenaga Nasional Berhad (TNB), Sarawak Energy Berhad (SEB), and Sabah Electricity Sendirian Berhad (SESB).1 By far, TNB is the largest with 7.6 million customers, while SEB has 500 thousand, and SESB has 414 thousand customers. 2 Clearly, TNB is the most influential electric utility in Malaysia.3 Because of its size and influence, TNB has embarked upon a Smart Grid development plan for Malaysia. The driving forces for Smart Grid development are several. There is a growing demand for electricity that is estimated to increase at 3.5% per year for the next 10 years.4 This is projected to double demand over the next 20 years.5 The country is facing a depletion of domestic natural gas, which is being replaced by coal.6 There are environmental issues of pollution and carbon dioxide emissions. 7 And there is a growing recognition of a need to increase operational efficiency by reducing transmission and distribution losses.8 Recent outage incidents (January 2005, April 2008) have increased pressure to obtain a more reliable system to deliver power.9 In addition, increasing energy efficiency is a main goal for TNB, as studies show that even a slight decrease in
Rakob, M.Y. Planning for Smart Grid in TNB System. 2010 IEEE Conference on Power and Energy. PECon 2010. 2010. 2 Ibid. 3 Ibid. 4 Smart Grid Development in Malaysia. Between the Poles. geospatial.blogs.com/geospatial/2011/10/s,art-groid-development-in-malaysia.html, 2011. 5 Viola, C. Malaysia: TNBs Smart Grid Demonstration Project. Smart Grid Opinions. October 18, 2011. 6 Smart Grid Development in Malaysia. Between the Poles. geospatial.blogs.com/geospatial/2011/10/s,art-groid-development-in-malaysia.html, 2011 7 Ibid. 8 Ibid. 9 Ibid.
1

the annual growth rate for energy consumption could produce save trillions of dollars for consumers. 10 TNBs Smart Grid Plan By focusing on 5,000 customers (.06% of the population), TNB expects to obtain insights into how to implement Smart Grid throughout the entire country. The TNB Smart Grid development was begun in November 2009,11 with plans to implement a Smart Grid test at three demonstration projects in the north (Bayan Lepasindustrial area), in the central region (Bukit Bintangcommercial area), and in the south (Medinagreen field).12 A Smart Grid Steering Committee was formed to provide direction.13 The demonstration project at the three sites will involve 5,000 customers at those locations.14 There are three phases that exist in the Smart Grid plan: Phase I (2010 2011) to improve operational efficiency via automation [completed June 2011]; Phase II (2011 2013) to empower customers and improve energy and network efficiency; and Phase III (2011 2015) to reduce carbon dioxide via renewable energy.15

greenpurchasingasia.com/content/lobby-smart-grid-roadmap-malaysia Rakob, M.Y. Planning for Smart Grid in TNB System. 2010 IEEE Conference on Power and Energy. PECon 2010. 2010. 12Ibid. 13Ibid. 14 Lobby for Smart Grid Roadmap in Malaysia. Green Purchasing Asia. www.greenpurchasingasia.com/content/, September, 2011. 15 Rakob, M.Y. Planning for Smart Grid in TNB System. 2010 IEEE Conference on Power and Energy. PECon 2010. 2010.
10 11

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Zpryme Smart Grid Insights | March 2012

Malaysia: Smart Grid

The projects are aligned with the three Phases. In Phase I, implementation of distribution automation, deployment of the distribution management system modules (fault location, isolation and restoration; state estimator; auto contingency analysis; auto feeder reconfiguration), and development of integrated customer information system have been completed.16 In this phase all equipment will be retrofitted with sensors and improved communication devices. In Phase II, to increase customer participation, deployment of an advanced metering system, improvement of billing, and an improved new connection process is underway.17 This will effectively install 5000 smart meters in key test locations. Also in Phase II, to improve energy efficiency, hardware and software for VAR control, demand side management information, and a better transmission and distribution asset utilization system are planned.18 In Phase III, to reduce carbon dioxide, solar photovoltaic panels, energy storage batteries, electric car charging stations, and solar/LED street lighting are scheduled. 19

A project involving a 730 kilometer high-voltage transmission line and a 670 kilometer undersea cable for the 240 megawatt Bakun hydroelectric dam has been considered which would connect all three of Malaysias utility companies. Many of SEB and SESBs generation plants are still not interconnected to a grid. Of note is that the national grid in Malaysia has cross-country connections. There are two connections to Thailand and one electricity connection to Singapore. Obviously, these other countries rely upon reliable supplies of electricity.

Key Smart Grid Players in Malaysia


Because TNB decided to use only a demonstration project approach toward full-scale Smart Grid installation, only a limited number of companies are involved at this time. In Malaysia, Renesas Electronics Corporation has several sales offices and manufacturing facilities located there. Renesas has also created several programs that have strengthened the community involvement with Malaysia, such as community outreach programs to plant groves of Mangrove trees, and hosting robotic competitions in Malaysia. IBM, ABB, Siemens, FMC-Tech in association with General Electric, Paradox Engineering, and inCONTROL Tech all plan to play a part in development of a Smart Grid for Malaysia. 21

Noteworthy Items
Most recently, Malaysian tycoon Ananda Krishnan is nearing a deal to sell his $3 billion worth of power assets to a government company. Analysts said the Malaysian government's move to purchase power assets might be the start of an overhauling of the country's whole power generation industry in the long run.20

Rakob, M.Y. Planning for Smart Grid in TNB System. 2010 IEEE Conference on Power and Energy. PECon 2010. 2010. 17Ibid. 18Ibid. 19Ibid. 20 Malaysia tycoon near power assets deal with govt firm-sources, Reuters, March 5, 2012.
16

General Electric Invests in Smart Grid Startups Including Irish Company. Ryan Academy. ryanacademy.wordpress.com/2011/18, 2010.
21

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Zpryme Smart Grid Insights | March 2012

Malaysia: Smart Grid

IBM has maintained offices in Malaysia since 1961 and has worked to develop key alliances with the Malaysian government to help develop the Smart Grid there. IBM states that they will continue to work with Malaysia to provide cutting edge technology that will enable the country to meet its strategic goals. ABB established operations in Malaysia in 1973 and brings the technological advancements of the United States and Europe to the lower cost manufacturing facilities in Malaysia. FMC-Tech has two main projects in Malaysia- Shell Gumusut and Murphy Kikeh Spar, both off shore drilling operations. Because of the relationship developed in working to provide oil for Malaysia, FMC-Tech is poised to play a large role in the development of the Smart Grid in Malaysia. Last, its alliances with General Electric, Paradox Engineering, and inControl Tech can aide it in re-focusing its participation in Malaysias electrical system.

Zpryme Credits
Editor Managing Editor Research Lead Megan Dean Sean Sayers Stefan Trifonov

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Zpryme Smart Grid Insights | March 2012

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