‘Eco treasure’ Sabah could be Malaysia’s renewable energy leader

 

Several roadblocks to a greener future must first be addressed before Sabah can be turned into a renewable energy powerhouse.

PETALING JAYA: Power outages making headlines in 2022 are an embarrassment for all Malaysians and another reminder of the inadequacy of the nation’s energy grids.

For Sabahans, the severity of its impact on industries and hospitals is literally costing them their jobs and putting their lives at risk. Without proactive and workable policies and solutions, Sabah faces challenges attracting investments, and the quality of life for its citizens will continue to diminish.

Almost 25 years after the privatisation of Sabah Energy Sdn Bhd (SESB), inheriting aging infrastructure that has continued to dilapidate has, not surprisingly, brought recurring and unresolved transmission and distribution issues across the region.

With a current energy mix that still includes 11% from diesel (versus only 10% from hydro), the need for more renewable energy providers is clearly evident.

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If neighbouring Indonesia is willing to start from scratch, attract investments, and move its capital city to Borneo, Malaysia, at the very least, should start afresh with Sabah’s energy grid.

But before the abundance of resources available to turn Sabah into a renewable energy powerhouse can be harnessed, several roadblocks to a greener future must first be addressed.

With the image as an ecotourism hub and the welfare of its citizens at stake, the cycle of maintaining the status quo and inaction has to be broken.

The subsidies effect

In an effort to spur more independent power producers (IPPs) to contribute to their grid, generous subsidies have been offered with unintended consequences. With subsidies disproportionately allocated in favour of fossil fuel producers, fewer incentives have been available to encourage new renewable energy entrants.

As renewable energy advocate Adrian Lasimbang suggests, “a level playing field has to be established by revisiting the policies that have created a stagnant environment of producers comfortably utilising subsidies for profit rather than innovating and developing sustainable solutions”.

As Sabah moves closer to an era where its energy reserves are within decades of depletion, Lasimbang said, these subsidies have created a false sense of security and stifled the competitive landscape that renewable energy producers would otherwise flourish in.

The lack of incentives to move away from subsidised fossil fuels coupled with the higher investments and the longer return on investment (ROI) expected on renewable energy investments presents a challenge that requires strong leadership from within the government to recognise, prioritise, and foster energy security needs.

The money pit of increasing costs for maintaining the existing grid is already showing major cracks. With essentially a monopoly currently in control of the transmission and distribution, perhaps the development of a new green energy grid focused on and powered by renewable energy sources is needed.

Leong Yuen Yoong, of the Jeffrey Sachs Center on Sustainable Development and UN Sustainable Development Solutions Network Asia (SDSN-Asia) at Sunway University, shares some important insights.

“Southeast Asian countries have mainly relied on public funding for energy investments,” she said.

“A new energy infrastructure requires sizable investment and support. Governments can use public-private partnership (PPP) financing mechanisms to speed up the green transition and also meet increasing energy demand, without the risk of excessive debt burden and hence future fiscal distress.

“So, what is needed to supplement PPP in Malaysia is also international partnerships in the financing of green energy projects to fight climate change to benefit the whole world.”

With scores of palm oil mills capable of capturing methane using palm biomass and a network of waterways capable of powering Run of River hydroelectric plants, many viable and impactful solutions are already built into the landscape of the region.

With a goal of being carbon neutral by 2050, the investments of both domestic and foreign entities keen on utilising carbon credits and reducing future carbon taxes, can be encouraged with a plan for a robust renewable energy sector powering Sabah.

Attracting both private and foreign investments would be infinitely easier if large scale innovative and sustainable solutions were backed by proactive government policies tied to budgetary commitments and incentives of equal weight. - FMT