Electrification of energy demand

The digital economy has the potential to shift energy demand in multiple fronts, including: growing
usage of equipment powered by electricity; decentralization of energy production, with consumers
also playing the role of generators; and a shift in the consumer base from passive to active through
smart meters and internet-of-things that manage load and add flexibility to the energy grid. Some of
the impacts are more speculative, such as gradual reduction of global physical trade through
decentralized manufacturing via 3D-printing or widespread deployment of more efficient logistics
through driverless cars and trucks, both of which have the potential to reduce liquid fuel consumption
(Helm 2017). From energy-hungry data centers that serve as cloud storage to mobile phones at the
hands of hundreds of millions of users, the digital economy is powered by electricity. The backbone of
the contemporary economy runs on electricity, even for intensive and perhaps spurious usage, such as
purely bitcoin mining.

The challenges towards sustainable electrical sources

Over-dependency to Fossil Fuel

This highly dependency of fossil fuels coupled with the dwindling domestic fossil fuel reserves
constraint will definitely force Malaysia to import more fossil fuel at high market price where the fuel
price is volatile if thorough fuel mix diversification is not carefully consider. For power generation
sector, concerns are towards energy supply security for the fuels for the power plants. As stated in
section above, more than 80% of electricity is produced using coal and natural gas with almost equal
share among the two fuels. However, the declining domestic gas production and over stretching of
supply system has led to frequent supply interruptions in the power generation industry. As for coal,
almost all of the coals used in the power plants are imported. The amount of imported coal has
increased steadily for Peninsular Malaysia, increasing from 11.9 million tonnes in 2009 to 19.2 million
tonnes in 2011. In term of price, coal is subjected to market forces. The prices of coals even though
has been stable for decades have increased beyond 2003 and surged to a new level due to the increase
of global demand of the fuel source

Increasing dependence on energy imports

Increasing demand for fossil fuels, coupled with the depleting domestic fossil fuel reserves, is
expected to result in increasing the country’s net import. To fulfill the demand the primary energy
import has grown at a fast rate of average 7.2 percent per year while the primary energy export has
grown at a slow rate 1.9 percent per year. Malaysia’s is showing vulnerability on its energy security
particularly due to increasing dependency on oil import and compounded by the nature of oil market
and contract that normally allow for greater price volatility. Oil production has remain almost constant
from 1990 to 2010 at 0.2 percent average growth rate per year, on the other hand the oil primary
demand has grown at a fast rate of 4.8 percent per year from 1990 to 2010. In order to fulfill the
demand the primary oil import has grown at a fast rate of average 10.5 percent per year while the
primary energy export has shrink at a rate of 1.4 percent per year
Issues and challenges of renewable energy development

Financial barriers
Presently, many green energy projects are implemented. With the assistance of grants.
This is because new technologies bear a certain amount of uncertainty, thus it creates a
barrier for its development. This uncertainty results in high financing costs for research,
development
and deployment. This in turn artificially raises the price of clean energy options, delaying
their full integration into the energy marketplace. Frequently, the initial cost for efficient
equipment is substantially higher than the standard alternative and the payback period or
economic return may be unacceptable. Renewable or green energy projects generally face
difficulty in getting financing and bank loan approval due to the high risk involved and
also the lack of technical knowledge on the part of the financiers.

Technical barriers
there are uncertainty in some technologies that may not be suitable because of unreliable
power supply of some developing countries. Also, being unproventechnology, it may not
be able to survive competitively with more established options. Secondly, there is limited
local expertise on efficient practices and equipment handling. Thirdly, there is uncertainty
of securing the long term biomass supply and price volatility. Project that do not have
biomass residues associated with their operation are subject to price volatility in the
biomass market. Finally, the nature of the electricity tariff undermines renewable energy
efforts. Generation of energy from renewable resources is economically unattractive due
to high cost of energy generation and
availability of cheaper alternatives energy. The relatively high costs of energy generation
from
renewable resources, both in terms of investment costs and final energy costs, compared
to conventional energy further restrain the efforts to promote the utilization of renewable
energy

Information barriers
There is a lack of information and awareness on the benefits of renewable energy.
Investment allowances and capital allowances were made available for RE
implementation since 2008. However, not many companies are aware of the special
incentives. There is a clear need for government agencies to help and advise applicants
and potential recipients how to go about
applying for RE incentives and the need for more channels for dissemination of
information.