SINGAPORE INTERNATIONAL ENERGY WEEK

-----Energizing the World ----- with Clean Coal Technologies

31 October 2014

CONFIDENTIAL

Dato’ Abdul Razak bin Abdul Majid

Chairman, Energy Commission, Malaysia

As Malaysia advances towards a high-income economy, meeting the

increasing electricity demand will be a challenge

The country requires a fuel mix policy that would ensures long-term security of fuel supply

11,113 kWh

3,614 kWh

7,949 kWh

2,045 kWh

593 kWh 2,631 kWh

5,925 kWh

Electricity consumption per capita, 2009

CONFIDENTIAL

593 kWh

Energy Security

Energy

Security

Availability

of Energy

• If unavailable, no matter how much wealth one has one cannot obtain energy

supply.

• If available, but at extreme high price, not many can obtain energy supply.

Price of

Energy

Thus energy security or rather insecurity is the loss of welfare caused

by a change in price or availability*

*Source: IEA 2007, Energy Security and Climate Policy

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Agency Definition

International

Energy Agency

(IEA)

Uninterrupted physical availability of

energy at a price that is affordable,

while respecting environmental

concerns

Asia Pacific Energy

Research Center

(APERC)

Adequate energy supplies at

reasonable and stable prices to

sustain economic performance and

growth. APERC assess energy

security in terms of availability,

accessibility, acceptability and

affordability

World Bank

Sustainable production and use of

energy at reasonable cost in order to

facilitate economic growth and

improve the quality of peoples’ lives

United Nations

Development

Program (UNDP)

Continuous availability of energy in

varied forms, in sufficient quantities

and at reasonable prices

Commonly Used Definition for Fuel Security, Usually Takes Into

Account 4 Dimensions

Source: Frontier, MyPOWER

Electricity Supply Act

1990

An Act to provide for the

regulation of the electricity

supply industry, the supply

of electricity at reasonable

prices, the licensing of any

electrical installation, the

control of any electrical

installation, plant and

equipment with respect to

matters relating to the safety

of persons and the efficient

use of electricity and for

purposes connected

therewith.

CONFIDENTIAL

Recommended Fuel Security Definition

Following APERC’s definition, Frontier recommend a definition based on the 4 A’s of fuel security:

1. Availability • refers to the availability of both energy

resources and infrastructure.

2. Accessibility • refers to the reliability with which energy

can be accessed. Barriers to accessibility include political factors, economic factors and technological factors.

3. Affordability • refers to the cost of energy, the relative

importance of energy to the economy and the level of exposure to fuel price changes..

4. Acceptability • refers to environmental and social

considerations.

CONFIDENTIAL

Current Challenges on Fuel Security for Electricity Supply

• High dependence on depleting Peninsula gas supply

• Under investment and over-consumption due to gas pricing

• Limited reserve capacity in gas supply and aging, vulnerable

pipeline infrastructure

• Coal imports highly concentrated from Indonesia due to

limitations on tariff cost-pass through

• Frequent gas supply curtailment has led to increase usage

of high cost alternatives (distillate)

• Inability to pass-through tariffs for fuel security

• Increasing sensitivities to the environment

Affordability: cost to

users, and risk to the

economy (reliance)

Accessibility: barriers

and constraints (fuel

and supplier diversity)

Availability: resources

and infrastructure

Acceptability:

environmental, social

objectives

Situation perpetuates as MESI does not have an

actionable fuel mix/security policy*

* Based on New Energy Policy, fuel diversification policy is removed -- risk managed by ‘market’

Global Proven Natural Gas Reserves, by Region

Source: BP Statistical Review of World Energy CONFIDENTIAL

World Hard Coal/Brown Coal Reserves and Remaining Life*

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World Thermal Coal Market

Largest producer/

consumer, but small

trade

Biggest importers

Biggest exporters

Source: Frontier analysis of IEA

The Asia-Pacific thermal coal market relies heavily on exports from Indonesia and Australia and imports by the industrialised economies of East Asia: Japan, China, Taiwan and South Korea

Columbia, Russia and South Africa in particular are geographically poised to supply both the Atlantic and Asia-Pacific markets, and are therefore considered swing supplies

CONFIDENTIAL

Fuel Mix and HHI (2009) 2010 2010 2008

G7 Countries Coal Hydro Gas Nuclear Oil Total HHI Forest % of Land

Area* GDP per capita

(US$)** CO2 Emissions per

capita^

United States 45% 7% 23% 20% 1% 96.0% 0.30 33.0% 47153 17.96

United Kingdom 29% 1% 44% 19% 1% 94.2% 0.31 12.0% 36343 8.52

Japan 27% 7% 27% 27% 7% 95.5% 0.23 69.0% 42831 9.46

Italy 15% 17% 51% 0% 9% 92.2% 0.32 31.0% 34075 7.44

Germany 44% 3% 13% 23% 2% 85.1% 0.26 32.0% 40116 9.58

France 5% 11% 4% 76% 1% 97.3% 0.60 29.0% 39448 5.87

Canada 15% 60% 6% 15% 1% 98.1% 0.41 34.0% 46212 16.33

Non G7 Countries Coal Hydro Gas Nuclear Oil Total HHI Forest % of Land

Area* GDP per capita

(US$)** CO2 Emissions per

capita^

Australia 78% 5% 14% 0% 1% 97.4% 0.63 19.0% 50748 18.57

China 79% 17% 1% 2% 0% 99.2% 0.65 22.0% 4428 5.31

India 69% 12% 12% 2% 3% 97.8% 0.50 23.0% 1410 1.46

South Korea 46% 1% 16% 33% 4% 99.5% 0.35 63.0% 20757 10.48

Saudi Arabia 0% 0% 45% 0% 55% 100.0% 0.51 n.s 15836 16.57

Malaysia 31% 6% 61% 0% 2% 100.0% 0.47 62.0% 8373 7.57

Thailand 20% 5% 71% 0% 0% 96.0% 0.54 37.0% 4608 4.19

Indonesia 42% 7% 22% 0% 23% 94.0% 0.28 52.0% 2946 1.73

Vietnam 18% 36% 43% 0% 3% 100.0% 0.35 44.0% 1224 1.5

Fuel Mix for Power Generation

Sources: * Global Forest Resources Assessment, Food and Agriculture Organisation 2010 ** World Bank 2010 ^ World Bank 2008 CONFIDENTIAL

International Comparison on Other Countries HHI

Source: Frontier Economics CONFIDENTIAL

Historical fuel mix for electricity and HHI - Japan

Historical fuel mix for electricity and HHI - Indonesia

Historical fuel mix for electricity and HHI – South Korea

Historical fuel mix for electricity and HHI - Australia

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ES1

ES2

ES3

ES4

ES5

ES6

ES7

Global reserves-to-production ratios for gas, coal and oil.

Power sector reserve capacity.

HHI for fuel mix (i.e. gas, coal, oil, hydro) for the power sector.

HHI for fuel suppliers (i.e. domestic gas, Aus LNG, etc) for the power sector.

Net energy import dependence for gas, coal and oil for the power sector.

Gas, coal and oil stocks available to power sector.

CO2 emissions intensity for the power sector.

These Security Parameters are part of JPPPET plant up planning

7 Parameters for Formulating Fuel Mix Security

Emissions intensity of electricity, country comparisons 2009

World Bank Standard

(mg/Nm3) New Plant Proposal

(mg/Nm3)

Sulphur Dioxide 500 (emission) maximum 500 (emission)

Nitrogen Dioxide 500 (emission) maximum 500 (emission)

Carbon Monoxide 200 (emission) maximum 200 (emission)

Oxygen

Opacity

Stack Flue Gas Flow Rate 22m/sec (intermittent or short

term operation

Stack Flue Gas Temperature 135 degree C (performance coal)

CONFIDENTIAL

Aiming for fuel supply security through diversification

600mmscfd Gas (Gwh%)

900mmscfd Gas (Gwh%)

Unconstrained (Gwh%)

Singapore

China, Aust.

S.Korea

Thai, India

Indonesia

Japan

HHI

benchmark

• Existing plant costs based on SLA, PPAs; Future plant assumptions are based on Lab sessions with ST,TNB

• Fuel cost , Real basis, Coal at US$105/tonne, Gas at RM3/mmbtu increment every 6month until LNG price

• Load forecast based on ST figures as shared during Lab session

Source :Frontier, ST, MyPOWER, TNB

As presented and agreed at JPPPET on 10 April 2012 CONFIDENTIAL

LNG import prices to Japan and South Korea, crude oil import prices to

Japan

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Metalytics coal price projections (FOB)

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Difference in average generation cost reflective to the Base (sen

2011/12)

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The Future Will Be ‘Challenging’ – Unconstrained ‘Market’

* Nominal, inflation 3%

Source: Frontier, MyPOWER

Escalating Electricity

Tariff till 2018

• 30% higher than current

• Prices returns to competitive

path as sector diversifies

away from gas

Fuel Diversity beyond

2018

• Energy security benchmarks

shows vulnerability

Higher CO2 emission

intensity (tonnes/MWh)

Overpaying

Av. Tariffs

Coal Gas

Others

17% increase

Fuel Mix Share (%)

Unconstrained gas at USD 15/mmbtu

CONFIDENTIAL

1.5 1.4 1.3 1.2 1.1 1.0

Thank You