News & Articles Cheaper electricity may be possible from April 2016
Cheaper electricity may be possible from April 2016
21 Oct 2015
Malaysia is moving a step closer to implementing daily power supply bids as practised in other developed countries.
While this may not be reflected immediately in monthly bills, the average savings may be reflected in subsequent months, once the new electricity pricing gets implemented in the first quarter of next year.
This new pricing system was announced by the Energy Comission (EC) late last month – as part of the New Enhanced Dispatch Arrangement (NEDA) – which introduces short run competition in daily bidding electricity prices among power generators.
These include independent producers with power purchase agreements (PPAs), Tenaga Nasional Bhd (TNB) generation with service level agreement (SLA) and merchant generators which don’t have any PPA.
The transition period to NEDA began on Oct 1 and its full implementation will be by first quarter of 2016, said the EC.
Although the move isn’t fully comparable to the likes practised in more developed countries, it is the first step for local power generators to save on power production costs, said an industry expert – which will eventually benefit consumers.
We can’t compare ourselves to mature markets like UK or Europe because the prices of power there are based on market rate. They don’t have subsidies from their governments.
In Singapore, for example, the independent power producers have to bid for power supplies daily and the prices are made public. But we are stepping in the right direction.
EC chairman Datuk Abdul Razak Abdul Majid also said the saving in generation cost can be in tens to hundreds of million ringgit. The savings will be reflected in economic saving for the country, he added.
For example, a mere 1% improvement in generation efficiency will enable a saving of about RM150 million a year in fuel cost, based on the current market fuel prices.
Based on the bidding process, generators with PPA or SLA bid their variable costs – fuel, operations and maintenance on a daily basis.
By offering heat rates and variable operating rates (VOR) lower than the rates in PPA and SLA, the generators are able to compete for more despatch and increase revenues, Abdul Razak explained.
Interest in NEDA had started to pick up as YTL Power International Bhd recently announced it would participate in the power bidding process as it welcomes the introduction of competitive market in Malaysian electricity supply industry.
While this may not be reflected immediately in monthly bills, the average savings may be reflected in subsequent months, once the new electricity pricing gets implemented in the first quarter of next year.
This new pricing system was announced by the Energy Comission (EC) late last month – as part of the New Enhanced Dispatch Arrangement (NEDA) – which introduces short run competition in daily bidding electricity prices among power generators.
These include independent producers with power purchase agreements (PPAs), Tenaga Nasional Bhd (TNB) generation with service level agreement (SLA) and merchant generators which don’t have any PPA.
The transition period to NEDA began on Oct 1 and its full implementation will be by first quarter of 2016, said the EC.
Although the move isn’t fully comparable to the likes practised in more developed countries, it is the first step for local power generators to save on power production costs, said an industry expert – which will eventually benefit consumers.
We can’t compare ourselves to mature markets like UK or Europe because the prices of power there are based on market rate. They don’t have subsidies from their governments.
In Singapore, for example, the independent power producers have to bid for power supplies daily and the prices are made public. But we are stepping in the right direction.
EC chairman Datuk Abdul Razak Abdul Majid also said the saving in generation cost can be in tens to hundreds of million ringgit. The savings will be reflected in economic saving for the country, he added.
For example, a mere 1% improvement in generation efficiency will enable a saving of about RM150 million a year in fuel cost, based on the current market fuel prices.
Based on the bidding process, generators with PPA or SLA bid their variable costs – fuel, operations and maintenance on a daily basis.
By offering heat rates and variable operating rates (VOR) lower than the rates in PPA and SLA, the generators are able to compete for more despatch and increase revenues, Abdul Razak explained.
Interest in NEDA had started to pick up as YTL Power International Bhd recently announced it would participate in the power bidding process as it welcomes the introduction of competitive market in Malaysian electricity supply industry.
Source: therakyatpost.com