Powerwell International Sdn Bhd’s managing director Datuk Adam Yee (Photo credit: Powerwell Holdings Bhd)

KUALA LUMPUR (Feb 25): The energy sector faces challenges in addressing the demand and supply of the country, as Malaysia continues to increase energy consumption and inflict heavy subsidy burdens.

According to Powerwell Holdings Bhd unit Powerwell International Sdn Bhd’s managing director Datuk Adam Yee, challenges also exist on the supply side as the country faces the inevitable decline in finite non-renewable sources of energy, increasing energy supply costs, complex environmental issues and fragmented energy governance.

In an email interview with The Edge, Yee said that in terms of global developments, the energy sector will need to be future-proofed in meeting megatrend challenges such as the energy transition, as well as other regional and global socioeconomic, technological and geopolitical challenges that will impact the energy landscape.

Yee, who was previously Siemens Malaysia’s president & CEO, said there are also other challenges that might pose a concern for the Malaysian power distribution sector in 2023, which includes:

● Aging infrastructure and equipment;

● Power theft and non-technical losses;

● Increasing demand for power; and

● Renewable energy integration.

Yee said there also needs to be monitoring on the state of the country’s readiness for electric vehicles (EVs).

With automobile manufacturers releasing approximately 70 new EV models on an annual basis and the Malaysian government’s efforts to continue encouraging the rate of EV adoption, more consumers are slowly beginning to switch to the alternative, he said.

“This will result in the consumption rate of energy for consumer and commercial (sectors) to spike in the coming years,” he said.

He explained that although the adoption of EVs will ultimately help reduce fuel consumption and subsidy in the long run, in the meantime, energy providers would have to carefully manage their short-term strategy before the country reaches that level.

Yee said as more EVs are being used, the charging loads for the EVs will significantly increase, followed by the cost to reconstruct the current infrastructure around the country in order to support the charging ports. It is also important to keep in mind that the impact on mid-line equipment is crucial to ensure reliability because without transparency or visibility, utilities may be forced to overspend on overly-conservative upgrades for thousands of pieces of equipment.

Alternatively, the use of renewable energy (RE) is a formidable energy source for the EV charging infrastructure, he said.

Yee said the Malaysian power sector players are gradually learning about the challenges that they will face in the coming years, and they are already developing sustainable plans that are aligned with ESG (environmental, social, and governance) to ensure that they can overcome these challenges.

He said local energy and power sector players should keep in mind that with rapid technological progress and strong climate change policies, they should brace for an acceleration in energy transition processes.

“Energy transition refers to a structural shift of energy systems towards cleaner sources of energy.

“This transition involves a shift from fossil fuel-dominated usage with high carbon emission intensity to a higher rate of RE usage and lower carbon emission intensity,” he said.

Supply chain

Yee said various geopolitical issues have undoubtedly affected several supply chain sectors, including the power generation industry.

He said these disruptions range from logistics bottlenecks to shortages of raw materials and components, as well as labour shortages that have resulted in rising costs and a scarcity of essential electric supplies.

“These disruptions have also widened the gap between demand and supplies of electrical equipment and components, slowing the clean energy transition process.

“As a result, many electric power and renewable energy companies are revisiting their supply chain strategies and rebooting their approach to address supply chain risk management.

“In short, they are basically working to develop more secure and sustainable supply chains, while managing third-party risk to ensure resilience in the face of future disruptions,” he said.

On Powerwell’s prospects going forward, Yee shared that the rising inflation and the weakening of the Malaysian ringgit in the face of a strong US dollar have further increased cost pressures, stoking recession fears, which may cause the overall business environment to remain challenging for the group in the current financial year ending March 31, 2023 (FY2023).

However, he said the group will continue to keep a cautious outlook of its prospects during this period.

“As part of the group’s efforts to further strengthen its operational capacity, it has recently completed the installation of new machinery and equipment at its newly renovated factory in Kota Kemuning.

“The group has also expanded its Johor Bahru branch operations to include the production and assembly of mechanical control panels, with plans to continue implementing cost management measures by including a review of the production and supply chain processes to mitigate the impact of higher raw material prices on its business profitability,”he said.