Leading Malaysian electric utility Tenaga Nasional Berhad (TNB) is on its way to creating an advanced transmission and distribution (T&D) grid that can support the country’s energy transition goals by reliably supplying electricity generated from renewable sources to consumers. The state-owned integrated utility owns the majority of the provincial generation facilities and 100 per cent of the T&D network in Peninsular Malaysia. The company also holds an 80 per cent stake in Sabah Electricity Sdn Bhd, which is responsible for T&D operations in Sabah. TNB aims to achieve net zero emissions by 2050 in line with Malaysia’s climate change ambitions. To meet increasing energy demand and integrate upcoming renewable energy capacity in an efficient manner, the company has been focusing on developing a smart grid network that is reliable, resilient and flexible to meet the uncertainties of the future. A look at TNB’s network growth, recent initiatives and grid modernisation plans…

Existing network TNB’s installed generation capacity (equity capacity) stood at 15,911.3 MW at the end of 2021, an increase of around 1,078 MW from the capacity in 2020. Coal-based capacity accounts for 43.3 per cent of its total capacity followed by gas (36.1 per cent) and hydro (16.7 per cent). Renewable sources make up a share of 2.3 per cent in the total capacity and the remaining 1.5 per cent is oil based. In 2021, TNB produced 108,633.5 GWh of electricity, of which 92,538 GWh was generated from coal and gas sources, 7,458 GWh from hydro sources and 1,164 GWh from solar and wind sources.

Although renewable energy generation made up just about 7.9 per cent of the total energy generated in 2021, TNB is committed to increasing this share to 40 per cent by 2025. The company is making efforts to increase its investment in renewable energy generation by exploring new markets and technologies. TNB’s transmission division manages and operates the 132 kV, 275 kV and 500 kV networks of the national grid. Over the past few years, TNB’s transmission network has grown at a decent pace. The transmission line length stood at 28,339 ckt. km at the end of 2021, increasing at a compound annual growth rate (CAGR) of 5.54 per cent from the 22,840 ckt. km recorded in 2017.

About 89 per cent of the utility’s line length is in Peninsular Malaysia while the remaining is in Sabah.The number of substations increased from 439 in 2017 to 521 in 2021. TNB had 472 substations in Peninsular Malaysia and 49 substations in Sabah. The Malaysian national grid is connected to Thailand’s transmission system, operated by the Electricity Generating Authority of Thailand (EGAT), in the north via a high voltage direct current interconnection with a transmission capacity of 300 MW and a 132 kV high voltage alternating current overhead line with a maximum transmission capacity of 80 MW.The national grid is also connected to Singapore’s transmission system at Senoko in the south via two 230 kV submarine cables with a firm transmission capacity of 200 MW. As of the end of 2021, TNB’s distribution network comprised 750,176 km of distribution line length and 95,144 distribution substations.

Operational and financial performance

TNB’s system availability stood at 99.79 per cent in 2021, increasing from 99.78 per cent in 2020, while its transmission losses increased from 1.47 per cent in 2020 to 1.6 per cent in 2021. The utility has recorded a consistent increase in transmission losses in the last five years. TNB’s transmission system minutes lost stood at 0.086 minutes in 2021, recording a marginal increase over the 0.081 minutes recorded in 2020.

In terms of financial performance, the TNB Group’s revenue increased by 19.7 per cent to MYR 52.63 billion in 2021 as compared to MYR 43.98 billion in 2020. The higher revenue was due to higher electricity sales, which was in turn driven by higher consumption recorded for both residential and industrial customers, and an increase in fuel cost pass-through. TNB’s operating profits stood at MYR 8,083 million, recording a growth of 9.85 per cent in 2021, as compared to MYR 7,358.8 million recorded in 2020. The company’s profit after tax grew by 6.9 per cent to MYR 3.86 billion in 2021 from MYR 3.62 billion in 2020 due to an increase in operating profit as well as certain accounting gains. However, TNB’s debt to equity ratio increased from 0.63 in 2020 to 0.73 in 2021 due to a MYR 2,225.6 million increase in total borrowings. The utility spent MYR 8,459 million on capital expenditures in 2021, greater than the MYR 7,850 million spent in 2020.

Recent developments

Recently, in September 2022, TNB launched the MYR 500 million electricity supply strengthening project in Penang to ensure stable electricity supply and boost economic growth in the region. The project will be able to supply up to 2,000 MW of electricity from the national grid to Penang through an overhead transmission line from the mainland to maintain the island’s electricity supply. The 8.5 km monopole transmission tower project connecting the Perai Stesen Janakuasa (power station) Pencawang Masuk Utama (PMU) (main inlet substation) to the Light PMU in Penang will be built in parallel with the Penang Bridge, and is the second of its kind in Malaysia after Melaka.

This project will comprise 31 monopoles, of which six will be in the betel nut design, a unique design of the transmission line tower that resembles a betel nut, which is a direct reference to the origin of Penang’s name (Buah Pinang or Pinang fruit). The firm capacity on Penang Island will decline from 1,130 MW to 800 MW when the Gelugor power station, which is the only power station on the island, will end its service contract at the end of 2024. On the other hand, power demand will increase and, therefore, the new transmission line project will be crucial. The physical works, including construction of the tower foundation, installation of tower structure and conductor spanning works, will begin by the end of 2022. The entire project is expected to be completed by 2024.

In addition, TNB is actively participating in the establishment of the ASEAN Power Grid, one of the region’s largest and most visionary projects, which aims to fully integrate the Southeast Asian power grid system. In October 2022, the interconnector between Singapore and Malaysia was upgraded in a move to improve energy connectivity between the two countries. After the upgrade, the capacity of the interconnector has increased to around 1,000 MW of bidirectional electricity flow. The electricity interconnector is used for cross-border power trade in the Laos-Thailand-MalaysiaSingapore Power Integration Project (LTMSPIP). Electricity trade under the LTMS-PIP commenced in June 2022 under which Lao PDR began the export of 100 MW of hydropower to Singapore via Thailand and Malaysia using existing interconnections. This is the first multilateral cross-border electricity trade involving four ASEAN countries. The various technical, commercial, legal and regulatory arrangements under LTMS-PIP were finalised with extensive collaboration among the various parties including TNB and EGAT.

TNB is also proactively identifying transmission grid locations to better integrate the regional electricity market. TNB is also focussing on forging technology partnerships. In May 2022, TNB acquired a 49 per cent stake in an offshore wind farm company, Blyth Offshore Demonstrator Limited, marking its foray into the international offshore wind market. Further, TNB has established strategic alliances with CIGRE (International Council on Large Electric Systems) and the Belgian transmission system operator Elia to share industry best practices. In 2021, TNB successfully integrated variable shunt reactors into its high voltage transmission systems to help stabilise voltage during load variations.

Future-proofing the grid

To transform the grid in response to the evolving energy landscape, TNB is increasingly focusing on grid modernisation and digitisation. Under its Grid of the Future Initiative, TNB aims to build a next-generation grid that is smart, automated and digitally enabled to ensure maximum efficiency and reliability of power supply. The future grid will be equipped with self-healing capabilities to minimise supply interruptions as well as facilitate bidirectional power flow. Digitisation is a key part of TNB’s Grid of the Future Initiative under which key digital solutions, such as a smart energy management system, an advanced distribution management system, intelligent asset performance systems and expansion of the coverage for tracking and monitoring substations using internet of things (IoT) and geospatial technology will be implemented.

In 2021, the company launched seven key corporate digital initiatives including establishment of a centre of excellence for application programming interface, deployment of 16 robotic process automation to efficiently execute digital routine tasks, leveraging data analytics for applications like load profile analysis, establishment of a holistic telecommunication strategy framework, continuous improvement of TNB’s cybersecurity posture resulting in zero disruption to supply and operations caused by cyberattacks and the establishment of a robust cloud architecture.

Asset optimisation is another key element of the Grid of the Future. Some of the key initiatives on this front include implementation of an asset performance management system (Phase 2) for visualisation and analysis of an asset health index in real time, asset investment planning management that helps evaluate investment options in new assets to increase system availability, use of unmanned aerial vehicle light detection and ranging (LiDAR) system for transmission line route mapping, substation repair and maintenance process optimisation via drones, and advance automatic fault analysis system for improved decision-making during unplanned outages. Other measures include substation digital intelligent infrastructure, advanced distribution management system, distribution automation and volt-var optimisation.

On the distribution front, TNB has installed over 1.8 million meters of which over 900,000 smart meters were installed in 2021, surpassing its target to install 1.5 million meters (until 2021). These smart meters facilitate bidirectional transfer of information, allowing for full automation of the billing process and gives customers the capability of monitoring their electricity usage. The granular information provided by smart meters benefits not only customers but also enables operations to identify issues within the grid as well as consumer habits to better serve them. TNB aims to install 9.1 million smart meters nationwide by 2026. In addition, distribution automation systems (DAS) were installed for 3,520 substations in 2021, bringing the total number of substations with DAS to 20,797. The utility is also piloting virtual power plant technology, which utilises software and energy storage to enable future peer-to-peer generation among energy consumers.

Future outlook

TNB has earmarked significant investments for its T&D grid to enhance its network readiness and reliability. Under the Regulatory Period 3, which began on February 1, 2022, and will run until December 31, 2024, TNB will invest around MYR 20 billion in T&D. The company is set to expand geographically too, as it is scouting for international opportunities to expand its clean energy portfolio. In the coming years, TNB aims to continue focusing on modernisation and digitisation initiatives to create a futureproof grid that can support Malaysia’s energy transition goals.