In brief

On 26 July 2024, the Ministry of Energy Transition and Water Transformation (“PETRA“) announced the introduction of the Corporate Renewable Energy Supply Scheme (CRESS), set to commence in September 2024. This initiative aims to enhance corporate companies’ access to green electricity supply through an open grid access system whereby third parties can supply or purchase electricity via the grid network system with a predetermined system access charge.

The CRESS programme is part of the GREENS MADANI Initiative, or Government Renewable Energy Enhancement for Niche Sector, which aims to support the aspirations of the high-priority energy transition sector.

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Contents

1. The CRESS framework
2. General CRESS participation conditions
3. The benefits and impact of CRESS
4. Observations

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The CRESS framework

1. Under CRESS, eligible renewable energy (RE) generators and corporate companies can arrange for green electricity supply under mutually agreed terms through the existing supply system.
2. Corporate companies can obtain RE directly from identified RE generators with third-party access (TPA) or through the TNB grid network by participating in the New Enhanced Dispatch Arrangement (NEDA) market.
3. The Energy Commission will regulate the CRESS program, while the Single Buyer (SB) and Grid System Operator (GSO) will manage market and system operations, including access and dispatch.
4. TNB will continue to play its role as a utility electricity supplier, delivering the required electricity to corporate companies within and outside of the RE supply period.

General CRESS participation conditions

1. CRESS is open to new RE generators connected to the high voltage (HV) level of the grid and new or existing TNB users from the commercial and industrial categories who are looking for additional or new electricity supply demand.
2. RE generators and green consumers must connect directly through the grid network system.
3. Connection limits are based on the findings of the Power System Study (PSS).
4. RE generators should produce firm electricity supply to ensure reliability and system stability but they are able to provided non-firm outputs but at a higher system access charge. 

The benefits and impact of CRESS

1. Market liberalization: CRESS represents a progressive step towards energy market liberalization, reducing the risks and costs of the country’s electricity supply system while providing developers equal opportunities for healthy competition. As such, the focus of future RE development will shift from the usual PPA model to the CRESS program.
2. Investment and job creation: CRESS is expected to generate over RM10 billion in direct investments and create nearly 14,000 new jobs in the sustainable energy industry.
3. Carbon emission reduction: CRESS aims to increase RE capacity from the current 26% (10.6GW) to 40% by 2035 and 70% by 2050, reducing carbon emissions by 701,000 tCO2 per year.

Observations

There are still several questions surrounding this initiative including:

• Will there be a quota for participation and if so how much?
• How will the Energy Commission determine the participation, e.g., first come first serve or hollistic evaluation?
• How will liability be apportioned between the RE generators, GSO and corporate companies?

Hopefully the Energy Commission will provide further clarity by way of new guidelines and brief sessions as we move closer to the September 2024 implementation date. It seems clear that the system access charge will be predetermined (presumably by the Energy Commission) and it is hoped that the charge will not be too exorbitant to ensure a healthy and competitive participation process in CRESS.

Overall, the CRESS initiative represents a pivotal step in Malaysia’s pursuit of sustainable energy and market liberalization, showcasing the country’s commitment to renewable energy adoption and carbon emission reduction.

Source: Media Statement titled “CRESS Tingkatkan Akses Bekalan Elektrik Hijau Bagi Syarikat Korporat Di Malaysia” issued by PETRA, 26 July 2024

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