Kuala Lumpur Energy Storage Equipment Subsidy

In Malaysia, energy subsidies are intended as a mechanism to keep energy affordable for its citizens. Subsidies do this directly, by enabling consumers to pay less for fuel, and indirectly, by making the goods and services that use subsidized fuel (such as public transport) cheaper by reducing input costs.

With renewables on the rise, battery energy storage systems (BESS) in Malaysia are becoming a necessity. Find out how BESS can help improve grid stability.

There is also a strong environmental reason for reducing fuel subsidies, given that they encourage wasteful consumption and make it more difficult for cleaner types of energy to compete. The Malaysian government has recognized these problems and emphasized energy subsidy reform in its national development strategies.

Transport fuel has been subsidized in Malaysia since 1983 and is now an intensely political issue. In 2011, more than 10 per cent of the government's operating expenditure was spent on fuel subsidies. This accounted for more than 43 per cent of its gross development expenditure (Ilias, Lankanathan & Poh, 2012).

On a per-capita basis, Malaysia had the third-highest fossil-fuel subsidies, spending US$199.6 per person in 2009, behind Brunei at US$804.1 and Russia at US$274.3 (IEA, 2011). The study also indicated that Malaysia spent 2.4 per cent of GDP on fossil-fuel subsidies, just behind Vietnam, with the highest expenditure by GDP at 2.8 per cent.

The project marks Peninsular Malaysia's first utility-scale battery storage project. Back in February, Tenaga had talked about a battery pilot project that it said would be “operated by Grid System Operator (GSO), and overseen by the EC”.