energy introduction

1. HAJI JUHARI BIN AB. RAZAK
ASSOCIATE PROFESSOR
FACULTY OF MECHANICAL ENGINEERING

2.  Definition and Objectives
 National Energy Policy
 Energy Efficiency

3. ENERGY MANAGEMENT
 The fundamental goal of energy management
is to produce goods and provide services with
the least cost and least environmental effect

4. ENERGY MANAGEMENT: DEFINITION
“The judicious and effective use of energy to maximize
profits (minimize costs) and enhance competitive
positions”
(Cape Hart, Turner and Kennedy, 1997, Guide to Energy
Management, Fairmont press inc.)

5. ENERGY MANAGEMENT: DEFINITION
“The strategy of adjusting and optimizing
energy, using systems and procedures so as to
reduce energy requirements per unit of output while
holding constant or reducing total costs of
producing the output from these systems”

6. ENERGY MANAGEMENT: OBJECTIVES
 To achieve and maintain optimum energy
procurement and utilisation, throughout the
organization
 To minimise energy costs / waste without
affecting production & quality
 To minimise environmental effects

7.  In the past, factory management cited the
following reasons to refrain from reducing energy
consumption or improve its efficiency:
a. Energy prices are relatively low because of
government subsidies;
b. Absence of incentives to encourage energy
efficiency;
c. Lack of support system to undertake greener
measures;
d. No proper financial scheme to help companies;
and
e. Regulations do not address energy efficiency.

8.  Today, however, efficient energy management
is possible and profitable.
 Implementation of ongoing energy efficiency
programmes, guided by the objectives of the
National Energy Policy, help promote efficient
use of energy resources across all sectors.

9. OIL & GAS
 Malaysia still has substantial reserves of oil and
gas resources. Globally, Malaysia ranks within the
top 25 in crude oil reserves and the top 20 in
natural gas reserves.
 As of January 2004, Malaysia’s crude oil and
available reserves stood at 4.83 billion barrels.
With the remaining oil reserves and current
national oil production target of 600,000 barrels per
day, oil is expected to last until 2025.
 At the current rates of production, Malaysia’s oil
and gas reserves stand to last for another 18 and 35
years respectively.

10. COAL
 Most coal deposits are located in East Malaysia
in remote sites with limited infrastructure
assets; the demand remains in Peninsular
Malaysia. Thus extracting coal has not been as
strong as other available energy resources. Coal
production increased from 114,100 tonnes in
1995 to 310,000 tonnes in 2000.

11. ELECTRICITY
 Currently Malaysia has approximately 84
gigawatts of electricity generation capacity, of
which 89.5% is thermal and 10.5% from
hydropower. The Malaysian Government
estimates that investment in the electric utility
sector will reach RM 9.7 billion through 2010.
Much of this will be invested in coal-fire plants
as the country intends to shift away from
reliance on natural gas for electricity power
generation.

12. RENEWABLES
 Renewable energy is a commodity just like any
other form of energy. It has a major role in
meeting energy demand needs and combating
global warming. Presently, RE represents only
5% of all prime energy use, but by the year
2060, it is predicted to reach 70%.

13.  Malaysia faces many challenges in the era of
globalisation on its quest to achieve developed
nation status.
 Sustainable development of the energy sector is
a pivotal factor to maintain economic
competitiveness and progress.
 For more than 20 years, Malaysia has
successfully diversified its energy consumption
by taking advantage of domestic energy
resources such as oil and natural gas

14.  The world oil crisis in the 1970s powerfully
illustrated that concerns over resource scarcity
were justified.
 The situation exposed the vulnerability of the
energy supply and the over-dependence on oil
as a fuel.
 These conditions lead to the necessity for the
diversification of energy fuel resources.
 Thus, this era triggered the development of
energy-related legislation and policies to
address energy requirements.

15.  Energy policies and regulations play an
important role in achieving the goals of
sustainable development in Malaysia.
 With strategic planning and sound
evaluation, initiated decades ago, of energy
resources, the country is able to meet current
and future energy needs and supplies

16.  National energy policies ensure that adequate
and available supplies are reasonably priced to
support national economic development
objectives.
 These measures place a priority on oil and gas
resources serving the needs of the nation, while
taking into account the need for conservation
and environmental protection.

17.  The National Energy Policy has three principal
objectives that guide future energy sector
developments based on:
a. Supply
b. Utilization
c. The environment.

18. Supply
 The main aim is to extend the life of domestic
resources and diversify away from oil to
promote other energy forms.

19. Utilization
 Depends heavily on the industry and
consumers to integrate energy efficiency
programmes and develop demand-side
initiatives to curb consumption.

20. Environment
 Energy and the environment are linked at
every level, thus the requirement for
mandatory assessments to address negative
impacts.

21. 1. The Supply Objective:
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 least
cost options and diversification of supply
sources both from within and outside the
country

22. 2. The Utilization Objective:
To promote the efficient utilization of energy
and to discourage wasteful and non-
productive patterns of energy consumption;

23. 3. The Environmental Objective:
To minimize the negative impacts of energy
production, transportation, conversion, utilizat
ion and consumption on the environment.

24. 1. Secure supply - Diversification of fuel type
and sources, technology, maximize use of
indigenous energy resources, adequate reserve
capacity to cater for contingencies [adequate
reserve margin for generation, upgrading
transmission and distribution networks and
distributed generation (islanding);

25. 2. Sufficient supply - Forecast demand, right
energy pricing and formulate plans to meet
demand.
3. Efficient supply - Promote competition in the
electricity supply industry.
4. Cost-effective supply - Promote competition
and provide indicative supply plan to meet
demand based on least cost approach using
power computer software such as WASP;

26. 5. Sustainable supply - Promote the development
of renewable and co-generation as much as
possible.
6. Quality supply (low harmonics, no surges and
spikes, minimal variation in voltage) - Match
quality with customer demand with variable
tariffs;

27. 7. Efficient utilization of energy - Bench
marking, auditing, financial and fiscal
incentives, technology
development, promotion of
ESCOs, Labelling, Ratings, correct
pricing, energy managers; and
8. Minimizing Negative Environmental Impacts -
Monitor the impacts, improve efficiency of
utilization and conversion and promote
renewable.

28. Petroleum Development Act 1974
Established Petronas as the national oil
company and vested it with the responsibility
for
exploration, development, refining, processing
, manufacturing, marketing and distribution of
petroleum products.

29. National Energy Policy 1979
Set the overall energy policy with broad
guidelines on long-term energy objectives and
strategies to ensure efficient, secure and
environmentally sustainable supplies of
energy.

30. National Depletion Policy 1980
Introduced to safeguard the exploitation of
natural oil reserves because of the rapid
increase in the production of crude oil.

31. Four Fuel Diversification Policy 1981
Designed to prevent over-dependence on oil as
the main energy resource, its aim was to
ensure reliability and security of the energy
supply by focusing on four primary energy
resources: oil, gas, hydropower and coal.

32. Fifth Fuel Policy (Eighth Malaysia Plan2001-2005)
In the Eighth Malaysian Plan, Renewable
Energy was announced as the fifth fuel in the
energy supply mix. Renewable Energy is being
targeted to be a significant contributor to the
country's total electricity supply. With this
objective in mind, greater efforts are being
undertaken to encourage the utilization of
renewable resources, such as
biomass, biogas, solar and mini-hydro, for
energy generation.

33. Energy Efficiency and Renewable Energy (Ninth
Malaysia Plan 2006-2010) - The Ninth Plan
strengthens the initiatives for energy efficiency
and renewable energy put forth in the Eighth
Malaysia Plan that focused on better
utilisation of energy resources. An emphasis to
further reduce the dependency on petroleum
provides for more efforts to integrate
alternative fuels.

34.  As the population and GDP grow in the next
few years, the overall demand for energy is
expected to increase.
 Per capita consumption will see nearly a 20%
rise by 2010, and energy intensity of the
economy is also projected to increase.
 Total energy supplies are expected to increase
too, with crude oil and petroleum contributions
declining and natural gas and coal reserves
rising.

35.  The National Energy Balance (NEB) is designed
to present basic supply and demand data for
all fuels expressed in a common energy unit.
 It serves as an important reference in
formulating new policies for the energy sector.
 Key energy data and indicators allow policy
makers to implement programmes to meet
future energy demand and secure supplies.

36.  The NEB utilises the Malaysia Energy Database
and Information System (MEDIS) that acts as
an information centre for
economic, demographic and other energy
related data.
 The NEB is a cooperative effort by government
agencies, power utilities, independent power
producers, private oil companies and other
industries

37. Companies Providing Energy Saving Services:
 Pioneer status with tax exemption of 70% of statutory
income for a period of 5 years or Investment Tax
Allowance of 60% on the qualifying capital
expenditure incurred within a period of 5 years with
the allowance deducted in each year of assessment be
set-off against 70% of statutory income; and
 Import duty and sales tax exemption for equipment
used in the related project, which are not produced
locally. Equipment purchased from local
manufacturers is given sales tax exemption.
 These incentives are for applications received from 28
October 2000 until 31 December 2005. Companies are
required to implement their projects within one year
from the date of approval of the incentive.

38. Companies Which Incur Capital Expenditure For
Conserving Energy For Own Consumption:
 Accelerated Capital Allowance on related
equipment to be written-off within a period of
1 year. The incentive is effective from the year
of assessment 2003; and
 Import duty and sales tax exemption on
equipment used in energy conservation which
are not produced locally. Equipment
purchased from local manufacturers is given
sales tax exemption.

39. To encourage the generation of energy using biomass:
 Pioneer status with tax exemption of 70% of
statutory income for a period of 5 years or
Investment Tax Allowance of 60% on the
qualifying capital expenditure incurred within a
period of 5 years with the allowance deducted
each year of assessment to be set off against 70% of
statutory income; and
 Equipment used for the project will be given
import duty and sales tax exemption if not
produced locally. Equipment purchased from local
manufacturers will be given sales tax exemption.

40. The scope of the incentives is also extended to the
use of other sources of renewable energy as
follows:
a. Hydro power (not exceeding 10 megawatts)
b. Solar power.

41.  These incentives are effective for applications
received from 28 October 2000 until 31 December
2005. Companies are required to implement their
projects within one year from the date of approval
of the incentive.
 These incentives are for companies that sell energy
generated from resources that are renewable and
environment-friendly such as biomass, hydropower
and solar energy whereas companies that generate
such energy for their own consumption are not
qualified to receive this incentive.

42.  Energy drives the nation, its progress and aspirations.
The industrial sector not only contributes to economic
growth but fuels increases in energy demand.
 Industry is Malaysia’s second largest energy consumer
after transportation. Notwithstanding the immense
environmental problems derived from fossil fuel
use, rising market prices for energy place a heavy
burden on industry, government and consumers.
 To counter the negative effects of excessive and non-
productive use of energy, all energy users are urged to
maximize every unit of energy. The key to achieving
this goal is through successful execution of energy
efficiency.

43. SUCCESS STORIES:
 Cargill Palm Products Sdn. Bhd. – Invested RM
1.3 million on energy saving projects that lead
to RM 2.0 million in savings per year in energy
costs.
 Malayawata Steel Berhad – Decided to invest
RM 400,000 for cost-effective energy measures
after an energy audit, and now saves 6581 GJ at
the cost of RM 322,000, coupled with a
reduction of 1,256 tonnes of CO2 per annum.

44.  In line with Malaysia’s strategy to moderate
trends in increased energy intensity and avoid
wasteful energy usage, the Malaysian
Industrial Energy Efficiency Improvement
Project (MIEEIP), launched in 1999, led the way
to successful execution of EE improvement
initiatives in eight sub-sectors: wood, pulp and
paper, iron and
steel, cement, rubber, glass, ceramic and food.

45.  Nearly 60 companies in various manufacturing
and building sectors completed an energy
audit to identify energy saving measures
ranging from good housekeeping methods to
replacing inefficient equipment or processes.
 Collectively, the 54 industrial companies
audited stand to save over RM 22 million
annually by just implementing MIEEIP’s
recommended measures.

46.  Monetary benefits – An estimated savings of
RM 1 billion in energy-related costs for users
and additional savings – RM 5 billion - related
to investments in utility infrastructure.
 Save fossil fuels – Using energy efficiently
saves overall fuel consumption and extends the
lifetime of scarce reserves, all of which add up
to energy cost savings for users.

47.  Preserving the environment – Burning fossil fuels
emit noxious chemicals and massive amounts of
carbon dioxide (a greenhouse gas) into the
atmosphere that cause health risk and add to
global warming problems. Adopting EE strategies
reduces tonnes of these emissions that help protect
the environment.
 Improving foreign reserves – Successful EE
implementation translates into less money spent
on imported fuels and less money flowing out of
the country, thus leaving more to explore local
resources that earn, not deplete, foreign exchange.

48.  Energy Management Systems – A low cost measure
that can achieve 10% energy savings for industry and
business and recover investment costs within 3 years.
National energy consumption decreases by up to 5%
when EMS penetrates commercial operations.
 Standard Measures – Efficient technology at medium
cost is key for realizing energy savings. Applicable
across all sectors, high efficiency motors expect to
provide substantial energy savings of over RM 500
million.
 Co-generation Potential – Enhancing energy efficiency
from 35% to 90%, co-generation reduces energy use
and saves fuel loads by 25%. Initially high capital costs
are offset by long-term gains in the quantum of energy
saved.

49.  Independent Power Producers (IPP) - Electricity
supply service in Malaysia is vertically integrated
with three main electricity utilities – in
Peninsula, Sabah and Sarawak - operating
generation, transmission, distribution and supply
activities. In addition, there are 18 investor-owned
independent power producers supplying power to
these utilities. Several mini-utilities generate
electricity or purchase power from the main
utilities for their own use with excess power
supply sold to consumers within certain dedicated
areas.

50.  The Malaysian Industrial Energy Efficiency
Improvement Project (MIEEIP) – A leader in
building capacity to create energy saving
technologies and financial incentives, the
project conducts audits and engineering
services to plant operators, while promoting
energy monitoring and better design aspects.
The activities under the MIEEIP are
implemented for eight industrial sectors:
cement, ceramic, food, glass, iron & steel, pulp
& paper, rubber and wood.

51.  Building Design - Energy Efficiency in
buildings means using less energy for
heating, cooling and lighting. It also means
buying energy-saving appliances and
equipment for use in a building. Integrating EE
features into the architecture and conducting
energy audits ensures that mechanical systems
work together effectively and efficiently.

52.  Transportation – This sector is pivotal in the
growth and functioning of the Malaysian
econonmy, but it also consumes the most
energy. To offset scarce and expensive
petroleum fuels, viable alternative fuels –
natural gas and biofuels – can provide huge
savings for vehicles, especially when integrated
with improvements in public transportation.

53.  Residential - Electricity in this sector is
particularly very high and, together with the
commercial sector, represents almost 28 % of
the total demand for the country. That energy
is used for cooling and lighting our homes, to
operate appliances and machines, and water
heating as well as for cooking.
Placement, design, and construction materials
used affect the energy efficiency of homes.
Whereas, heat recovery and solar energy
technologies are some options that are
available to provide solutions for homeowners.

54.  The electricity supply industry in Malaysia was
privatised in 1990. There are three main
utilities in the country – Tenaga Nasional
Berhad (TNB), Sabah Electricity Sdn. Bhd.
(SESB) and Sarawak Electricity Supply
Corporation (SESCO). The power demand in
2000 was 10,600 MW, met by a total generation
capacity of 13,280 MW. 5,090 MW or 38% is
contributed by 13 independent power
producers (IPPs).

55.  At the end of 2003, power generation capacity
totalled 19.3 GW, a 23% jump from available
energy in the previous year that illustrates our
appetite for consumption. Most production –
92% - is in Peninsular Malaysia, with Sarawak
and Sabah each accounting for 4%. The peak
demand for Peninsular Malaysia was 11,329
MW, with just over 1000 MW for East
Malaysia.

56.  Investments in energy production continue as
the government expects US$9.7 billion to be
needed in the electric utility sector through
2010. To help reduce the reliance on natural gas
for power generation, the goal is to increase the
share of coal electricity generation to 30% in
2006.

57.  Six Independent Power Producers (IPPs)
generated 35% of the total grid-connected
capacity of 12,600 MW in 2001, with Tenaga
Nasional Berhad providing the remainder in
PM. In Sabah, 38% of 790 MW came from five
IPPs and SESB. Two IPPs in Sarawak produced
320 MW out of a total capacity of 880 MW, the
rest by SESCO.

58.  The manufacturing sector has a pivotal role to
play in energy management in Malaysia.
 As the largest consumer of energy, inefficient
use and wastage accelerates the depletion of
fossil fuel reserves and weakens the national
energy balance.
 For every unit of energy wasted, taxpayers’
money is indirectly burnt in the form of
government subsidies. However, the rise in
global energy costs now make energy efficient
a prime option to thwart price increases.

59.  Under Vision 2020, the industrial sector is set to
become the leading engine of economic
growth. Malaysia is also on the path towards
becoming a net importer of energy by the year
2010.
 So far the cushion of government subsidies has
created a safety net for energy consumers. For
Malaysian manufacturers, there is no better
time to start integrating energy management
measures as part of good practices to bolster
production and energy savings.

60.  Commercial and residential
buildings, alone, account for about 13% of total
energy consumption and 48% of electricity
consumption.
 Despite the variety of names - Low Energy
Office (LEO), Zero Energy
Building, Sustainable and Green building -
energy efficient buildings have the same
primary objective: to reduce energy use and
maximize utilization.

61.  Constructing energy efficient buildings in the
future helps Malaysia safeguard its depleting
energy resources.
 EE buildings increase construction costs up to 15%
higher than conventional designs, however
significantly low operating costs expect to offset
these initial expenditures.
 Everyone from architects, engineers, interior
designers, and researchers play important roles to
mold ideas into the creation of energy efficient
buildings.

62. SUCCESS STORY:
 Kuala Lumpur Securities Commission – Winner of the
ASEAN Energy Award for Energy Efficient Buildings, the
KLSC building shines as an example of technical know-how
and innovation that meets world standards in EE design
and function.
 Ministry of Energy, Communications and Multimedia
Building – Designed to showcase readily available and cost
effective energy efficient features, the MECM building in
Putrajaya stands as a replicable model for others to follow.
 Pusat Tenaga Malaysia Building – Based on the ZEO
concept, the PTM building aims to spearhead the realization
of utilization of energy efficiency and renewable energy i.e.
solar and become a national icon to promote future
endeavours in viable building energy management.

63. Start With the Energy Bills
 Collect all your fuel and utility bills and add up
the amount consumed over the last six months to a
year. If you calculate the costs on a per square
footage basis, then you can determine how your
bills compare with others and try to identify where
savings opportunities exist to lower your
consumption and monthly payments.
 After adding up the bills, choose to conduct an
energy audit or make an energy savings plan. List
all your energy management needs and determine
your priorities based on what you can afford to do.

64. No Cost Selections
 Turn off the lights in unused rooms and watch costs disappear
from view.
 Use the energy saving dial on your appliances, such as washing
machines and refrigerators.
 Don't waste water by turning on spigots before you're ready to do
the chore.
 Close off cooling vents in unused rooms and turn up the
thermostat to a comfortable, but not freezing, level of comfort.
 Repair all those leaky faucets and running toilet bowls to save 5%
on water bills.
 Close the curtains during the hottest part of the day to keep your
interior cool.
 Air-dry your clothes in the warmth of the sun, not a dryer, and
watch costs tumble down.

65. Simple and Inexpensive Options
 Install water efficient faucet head in your
kitchen and bathroom sinks and a water saving
showerhead that stops the cash drain.
 Clean or change the air filter on all your air
conditioning units.
 Install compact fluorescent light bulbs in the
fixtures you use the most.

66. Spend a Little More, Save a Lot More
 Conduct a comprehensive energy audit to
identify sources where energy costs are
inefficient.
 Seal and insulate all cooling ducts and have
regular check ups every year or two.
 Install additional faucet aerators, efficient
showerheads, and programmable thermostats.
 Shade your windows and add solar gain
control films to lessen the heat load in your
home.

67. Maximising Savings for the Future
 Install more compact fluorescent bulbs in your most
frequently used fixtures, even the ones outdoors. And
replace exterior incandescent lights with fluorescents
together with a timer or motion sensor if they're only
needed for a few hours at night.
 Make the sunlight work for you and convert to solar
water heating.
 Take stock and upgrade your water heater, air
conditioners, and refrigerator to more efficient models.
New units are really cost-effective when replacing old
units that suck up energy.
 Replace high-flow toilets with modern water efficient
toilets that use 50-80 % less water

68.  Transportation has a critical role to play in saving
energy.
 As the second most energy-consuming sector in
Malaysia, opportunities exist to implement energy
efficient measures; reduce dependence on fossil
fuels; and clean up the atmosphere in urban
centres.
 Already, under the Ninth Malaysia Plan, there is a
strategic shift from private to public transport to
increase the latter to 30% use in urban areas.

69. Currently, there are several transportation
programmes that are viable for Malaysia:
 Increased Use of Public Transport – Large
urban centres (Klang Valley, Penang and Johor
Bahru) can maximize energy saving potential
by increasing public transport to 50% by
2020, thus minimising urban congestion, air
pollution and safety problems and significantly
lowering fuel consumption attributed to the
rapidly growing car population.

70.  Development of Intelligent Transport
Information Systems (ITIS) - Improving traffic
flow with proper road network
capacity, together with better traffic
management (signal operation, ramp
metering, etc.), can reduce the problems related
to urban congestion. INSIAX, SMART?

71.  Strategic Improvement of Vehicle Efficiency –
Aimed at improving fuel efficiency for an
entire vehicle fleet, these measures are geared
towards establishing higher standards and
promoting technologies to offset rising petrol
prices. In addition to fuel cost savings, a move
to lighten the road load will lessen the strain on
the supply of transport fuels.

72.  Strategic Improvement of Vehicle Efficiency –
Aimed at improving fuel efficiency for an
entire vehicle fleet, these measures are geared
towards establishing higher standards and
promoting technologies to offset rising petrol
prices. In addition to fuel cost savings, a move
to lighten the road load will lessen the strain on
the supply of transport fuels.

73.  Improvement of Pedestrian Network –
Improvements for pedestrians
(walkways, public transport access, etc.)
reduces unnecessary intra-city trips by private
vehicles and decreases traffic congestion.
Connectivity with various transportation
modes and making pedestrians a priority in
planning helps to clear the roads from cars and
pollution in dense urban centres.

74.  Malaysia’s energy consumption per unit of
national output is high compared to most
developed countries and many developing
ones.
 The country’s industrial and transportation
sectors consume nearly 40% each of all
commercial energy use.

75.  Suruhanjaya Tenaga Malaysia
 Pusat Tenaga Malaysia