Malaysia - Commercial Guide
Environmental Technologies

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-08-19

Overview

In line with Malaysia's aim to become an inclusive and sustainable nation, Environmental Technology (ET), also commonly known as Green Technology (GT), has been identified as one of the drivers of the country’s green growth.  Under the Green Technology Masterplan Malaysia 2017-2030, the sectors identified were:

  • Renewable energy
  • Water purification
  • Air purification
  • Sewage treatment
  • Environmental remediation
  • Solid waste management
  • Energy conservation

Of these, two that stand out as representing the best prospects for U.S. businesses are Renewable Energy and Solid Waste Management.  Although at first glance both seem unrelated, a closer look reveals a close relationship between both of these sub-sectors.

Renewable Energy (RE)

Traditionally, Malaysia is dependent on conventional power generation, including natural gas, coal, and hydro.  As a signatory nation to the Conference of Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC), Malaysia pledged to reduce its Greenhouse Gas (GHG) emission intensity of Gross Domestic Product (GDP) by up to 45% by 2030 by implementing clean, sustainable, and renewable energy.

The Energy Commission of Malaysia estimated the historical demand growth of electricity in Malaysia to be around 2.5% per year. and based on this, they projected in their Malaysia Generation Development Plan 2019, that electricity demand for the period 2020-2030 is expected to grow at 1.8% p.a.  Over this same period, Malaysia will need about 10.0 GW of new capacity to meet its demand growth, replacing retiring plants and ensuring system reliability.  Catering to this forecasted demand, and in line with the Kyoto Protocol, the Government of Malaysia started to increase Renewable Energy (RE) in its fuel mix capacity (Table 1).

YEAR 

CAPACITY MIX 

Interconnect 

Hydro 

RE 

Gas 

Coal 

2020 

1.0% 

8.0% 

9.0% 

40.0% 

42.0% 

2021 

1.0% 

7.0% 

10.0% 

45.0% 

37.0% 

2022 

0.0% 

7.0% 

12.0% 

44.0% 

37.0% 

2023 

0.0% 

7.0% 

16.0% 

40.0% 

37.0% 

2024 

0.0% 

6.0% 

19.0% 

39.0% 

36.0% 

2025 

0.0% 

6.0% 

23.0% 

36.0% 

35.0% 

2026 

0.0% 

6.0% 

23.0% 

37.0% 

35.0% 

2027 

0.0% 

7.0% 

23.0% 

36.0% 

34.0% 

2028 

0.0% 

7.0% 

24.0% 

34.0% 

35.0% 

2029 

0.0% 

7.0% 

23.0% 

36.0% 

34.0% 

2030 

0.0% 

7.0% 

23.0% 

41.0% 

29.0% 

Table 1: Projected Fuel Mix 

Source: Energy Commission of Malaysia 

Solid Waste Management (SWM)

The waste generated in Malaysia in 2005 was 19,000 tons per day at a recycling rate of 5%. The quantity in 2019 was 38,000 tons, with a recycling rate of 17.5%.  This figure should grow to over 40,000 tons per day after 2020, despite a targeted recycling rate of 22.0%. With limited space for landfills and rising costs of disposal, there is increased pressure and urgent need to tackle the waste management issue and reduce the impact on the environment and the general well-being of the population. 

Aside from consumer and household waste, commercial waste generated from manufacturing activities is another source of concern.  To overcome the waste produced, the government is encouraging companies to undertake environmental management activities, such as collection, storage, composting, disposal, recycling of toxic and non-toxic waste, and Waste-to-Energy (WTE).

Renewable Energy Mix 

To attain sustainability in energy supply, Malaysia is looking at Renewable Energy resources that are indigenous to Malaysia and not imported from other countries.  The following prioritized list of Renewable Energy options includes:

  • Solar

Malaysia has excellent potential for solar generation uptake due to its location along the equator with monthly solar irradiation estimated at 400–600 MJ/m2.  The Energy Commission of Malaysia (EC) had since 2016 successfully initiated and carried out four bids processes to interested parties for the operation of Large Scale Solar Farms (LSS) in Malaysia.  The first LSS totaled 434 MW was in 2016, the second was 563 MW in 2018, and an estimated 500 MW for the third round of bidding in 2019. Large scale solar is a transparent mechanism for awarding LSS projects to achieve the government's RE target.

  • Waste to Energy (WTE)

Waste to Energy (WTE) involves any waste treatment process to convert non-recyclable waste materials into useable energy through a variety of methods, including combustion, gasification, pyrolization, anaerobic digestion, and landfill gas (LFG) recovery. Due to the considerable amount of municipal solid waste (MSW) produced daily in urban areas, attention is focused on MSW processing as the feedstock to such technologies. The most common and widely used MSW-to-energy technologies are incineration in a combined heat and power plant (CHP) and controlled landfill to capture methane from waste (LFG).

    • Biogas 

Biogas is typically produced by the Anaerobic Digestion (AD) of organic municipal waste, food waste, and sewage.  It has the potential to decrease the use of fossil fuels for power generation (Waste-to-Energy).  Food waste is one of the highest potential sources for biogas production. It is estimated that more than 40% of Malaysian MSW is food waste. High organic content in the food waste means this source has a high potential to be tapped; however, Malaysia lacks aggressive policies to expedite the implementation and improper management of waste, particularly at the source. Another factor to be considered is the location of biogas plants. The further the location is from the nearest connection point to export generated power, the more that the project's viability is reduced unless the biogas and energy produced are used for self-consumption. 

    • Biomass

Malaysia produces approximately 168 million tons of biomass annually from palm oil waste, rice husks, coconut waste, sugar cane waste, municipal waste, and forestry waste. Biomass's advantage is it can be easily pelletized and has attractive potential for co-firing in conventional power plants, which traditionally use coal or natural gas. Co-firing has lower emission of carbon dioxide, sulfur oxides, and nitrogen oxides, thereby reducing the greenhouse gas level. The drawback of using biomass is the reduction in the boiler's efficiency due to scaling and corrosion from the fly ash.

  • Small Hydro 

Malaysia is situated in a high rainfall area, and this factor alone makes Malaysia one of the largest hydropower potential areas. Small hydro plants, which are sometimes referred to as mini-hydro in Malaysia, are categorized as being under 30 MW. The smaller scale from 5 kW to 500 kW is classified as Micro Hydro. In Malaysia, these two categories of hydropower have untapped potentials as they are clean, sustainable, and do not contribute to greenhouse gas. These power plants have a lower environmental impact on its surrounding due to its smaller footprint. However, as most of these are located in rural or secluded areas, usually catering to a small population, making it challenging to derive substantial profit from the venture. With the uncertainty in the project costs, these small hydro plants are carried out by TNB more as a CSR project rather than a business venture. 

  • Wind

Wind power is considered as an RE option in Malaysia. However, Malaysia is regarded as a low wind speed area with a monthly mean wind speed of between 1.5 and 4.5 m/s.  There is a small pocket of areas on the east coast of Peninsular Malaysia, such as Mersing, Johor, and Kuala Terengganu, Terengganu, while in East Malaysia, Kudat, Sabah are identified as potential with an average wind speed of 3 m/s at 60-meter height.  The downside to Malaysia's onshore wind power is that viable wind speed occurs typically during the monsoon season in November to February. 

Key challenges for Environmental Technology deployment in Malaysia

The majority of businesses in Malaysia consist of SMEs. Like all SMEs globally, cash-flow and the bottom-line are essential factors that determine the survivability of the company.  To succeed in this market, the provider must first provide evidence of profitability while being environmentally-friendly. Malaysian SMEs are risk-averse and very conscious of their returns on investments, as these are the deciding factors at the end of the day. A quick return to a positive cash-flow will incentivize the deployment of these technologies. 

 Although this market is very relationship-based, it is also very price sensitive.  Providers must try to understand that the lowest price may not prevail and that fostering a good relationship with potential customers may not necessarily win if the pricing is considered too high.

 The government drives environmental technology; thus, the private sector expects the public sector to lead in the implementation.  To reach the targets on capacity penetration, the government must revisit and support the sectors with incentives and proper alignment in terms of policies and enforcement.  

Inconsistent policies and a lack of clarity in the demarcation of regulatory oversight are factors that the provider must overcome.  Various Ministries and agencies were overseeing the growth of environmental technologies before 2018, resulting in confusion and lack of holistic policies to the industry players and other stakeholders.

Leading Sub-Sectors 

Malaysia’s Vision 2020, launched in 1991, was to become a fully developed country by 2020. Although not fully achieved, this vision managed to put the majority of its population in the middle-income bracket. This milestone was achieved through its three Industrial Masterplans that emphasize the growth of the manufacturing sectors.

Malaysia’s success also led to other concerns such as energy security and waste management.  Being a manufacturing nation, it consumes a high amount of energy, which at the current rate will not be sustainable.  With higher disposable income, Malaysians are consuming more, leading to higher waste generation, which at the current rate will overrun all available landfills with household, municipal, and commercial solid waste.  

To address these concerns, the government is looking for solutions that:  

  • Increase efficiency of existing plants (both power and incinerators)
  • Explore renewable fuel sources 
  • Encourage the construction of new plants (more WTE and RE)

Opportunities 

As projected by the Energy Commission, it can be noted that over the next ten years, Malaysia will need to replace 10GW of power and to add another 5GW of RE into its grid.  

Projected New Capacity Installation and Decommissioning of Old Plants

Year 

CCGT (MW) 

RE (MW) 

Phase  In 

 Phase Out  

Phase In 

 Phase Out  

2020 

       1,440.00  

          322.00  

          462.00  

                    -    

2021 

       2,241.00  

                    -    

          688.00   

                    -    

2022 

                    -    

          915.00  

          672.00  

                    -    

2023 

                    -    

          720.00  

  

                    -    

2024 

       1,200.00  

       1,010.00  

          975.00  

                    -    

2025 

                    -    

          249.00  

       2,227.00  

                    -    

2026 

       1,200.00  

          675.00  

             94.00  

                    -    

2027 

          300.00  

       1,303.00  

             97.00  

                    -    

2028 

                    -    

          703.00  

             96.00  

                    -    

2029 

       2,300.00  

       1,486.00  

             94.00  

                    -    

2030 

       2,800.00  

       2,778.00  

             82.00  

                    -    

Total 

     11,481.00  

     10,161.00  

       5,487.00  

                    -    

Source: Energy Commission of Malaysia 

Note: numerals in italic are capacities that are already planned, awarded and work in progress 

Construction of new or refurbishing older plants with ET is one of the options to address the energy problem.  However, to conceive a sustainable waste management system that can address future energy needs and still maintain the balance between its environment, social and economic growth would be the most desirable. 

Malaysian Green Technology and Climate Change Centre (MGTC), an agency under the purview of Ministry of Environment and Water, is on a constant look-out for green technologies that can be implemented in Malaysia.  MGTC has a mandate to spearhead the growth of green technologies in the areas of Green Growth, Climate Change Mitigation and Climate Resilience and Adaptation.

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