PART 2: Why is Malaysia yet to realise its nuclear dreams?

Malaysia Nuclear Agency is mandated to promote the application of nuclear science and technology for national development

The sector still lacks the economic competitiveness.

Rapidly industrialising Malaysia has a long history as a nuclear player but is yet to convert its 45-year relationship flirting with the idea of harnessing nuclear power into a functioning, operational industry. Following Part One of our Malaysian Country Report, NFA continues to consider why this is the case.

In the first installment of our two-part Malaysian Country Report, we discussed the nation’s long journey toward the development of a functioning nuclear energy industry. Despite recent positive overtures from the IEAE, Malaysia has pushed its expected date to roll-out an operational NPP back to 2030. Nonetheless, Director-General of the Malaysian Nuclear Agency, Dr Mohd Ashhar Mohd Khalid, explains that the current non-existence of an operational plant does not mean that Malaysia does not already have a nacent industry. “Nuclear industry involves both power and non-power applications.” The Malaysian Nuclear Power Corporation is under statutory mandate to develop a nuclear power programme, while Nuclear Malaysia (the agency that is headed by Dr Ashhar) and other relevant stakeholders are working together to support the programme in various ways according to their roles and functions.

“There are issues and challenges in ensuring the success of this programme, namely public acceptance, knowledge and human resource management, financial and industrial infrastructure readiness, safety and security, waste management, legislation, regulatory, et cetera,” says Dr Ashhar. To address these challenges, he adds, IAEA has provided practical guidelines for newcomer countries to adopt in planning such a big task. This has assisted major stakeholders carry out their roles. Dhana Raj Markandu, Head of Nuclear Power Project Development at the Malaysian Nuclear Power Corporation agrees with his senior nuclear colleague. “More information can be disseminated to the public regarding the advantages and limitations of all the various sources of electricity currently being used and the role that each of them plays. This will help promote greater appreciation the various factors to be considered for electricity generation, namely economics and affordability, security and diversity as well as the environment.” Despite the Malaysian government’s claim that it hopes to generate figures close to 5% economic growth this year, low fuel prices are hampering the energy-generating powerhouse’s ability to expand according to Dhana.

“One of the challenges faced is the apparent lack of economic competitiveness of nuclear energy in the current environment of low fossil fuel prices. In this context however, the solution is to recognise that nuclear energy is a long-term option and that it is impossible to predict the volatile costs of fossil fuels on that timescale.” According to Dhana, the adoption of nuclear energy, along with the deployment of other (renewable) energy sources, should be viewed from the parallel perspectives of decarbonising the energy sector and diversifying the national energy mix. As with most elements of the nuclear debate, the long-term outlook must prevail.

Where do we go now?

While the dual challenges of overcoming negative public perception and low fossil fuel energy costs exist, Dr Ashhar is adamant that Malaysia can take the lead, at least in the region, regarding alternative applications of nuclear technology. “More countries are expressing interest and planning to use nuclear energy for electricity generations in the future including the use of nuclear technology for non-power applications which will present great opportunities” In terms of nuclear power generation, scaling down in order to reach the goal of going nuclear sooner rather than later, seems to be the name of the game.

The progress of small modular reactors is an interesting development to keep an eye on in the coming years due to their flexibility in deployment and reduced capital costs compared to the current fleet of large plants. “We believe that, subsequent development of nuclear energy will be dominated by development of Generation IV reactors and small modular reactors. Small modular reactors in particular based on current reactor technology are also planned by most vendors,” says Dr Ashhar.

“We expect that in five years’ time, the industry will continue its steady pace of development, adds Dhana. “All four units currently in construction in the United Arab Emirates would be operational, while there should be significant progress in the development of the projects in the United Kingdom and the restarts in Japan, among others. These would provide positive indications on the role of nuclear energy towards building a low carbon future.” Analysts are keen to see how new developments and innovations to be incorporated into current generation III/III+ designs will perform under operational conditions. Most of the designs are either still under construction or have only just come online in recent months (as of March 2017). Add to this, says Ashhar, “[I expect] the lessons learned from the Fukushima incident and safety issues to be incorporated [into new] technology. Vendors might also integrate and advocate open communication for stakeholder engagement [in the future].”

The way forward

Overcoming public misperceptions regarding nuclear power may in fact start with the better understood and less demonised applications of nuclear. Says Dr Ashhar, “While the public has some difficulties in accepting nuclear power; radiation technology and nuclear applications (other scientific applications such as in manufacturing, medical, agriculture, environmental) that support progress and development provide good assistance in overcoming the safety concerns raised by nuclear power.”

His suggestion that nuclear and radiation technology can help to enhance various industries and make significant contributions to social and economic development may be the path forward for the power industry’s goal of ultimate acceptance. Irrespective of public acceptance, nuclear power may be an unavoidable reality and, at the same time a saving grace for Malaysia’s future.

Malaysia’s current energy mix is significantly reliant on fossil fuels, namely coal and natural gas. Nuclear energy could be a potential option for large-scale low-carbon baseload electricity generation in Malaysia post-2030. “However there is yet to be a definitive decision on the matter,” concludes Dhana. “Any future use of nuclear energy should be considered in parallel with the deployment of indigenous renewable energy sources as well as the implementation of energy efficiency initiatives in order to effectively decarbonise the electricity sector.”

Break-out Opinion Questions Asked Over 1MDB-CGN

The mercurial nature of the Malaysian nuclear energy landscape leaves much to be discussed. If nothing else the purchase of 1Malaysia Development Bhd’s power assets by government-controlled China General Nuclear Power Corp has raised questions regarding Malaysia’s sovereign power independence, and at a time when relations between the two nations have been strained. KL-based Edra Energy (1MDB’s power assets) is the nation’s second largest power producer.

CGN plans to list Edra and ironically, the sale might bring some stability to the Malaysian power market and a boost to Malaysia’s equity markets, at a time when scandal-swamped 1MDB has other challenges to focus on. It seems too that the Chinese intend to get the job done with Edra Energy (now a full subsidiary of China General Nuclear Power) signing a 21-year power purchase agreement with Malaysian utility Tenaga, just last week. However, the deal marks the first in which an independent power producer (Tenaga in this case) has signed an agreement with a fully foreign-owned entity (CGN is state-owned no less).

Wishing to remain anonymous, one senior Malaysia nuclear official explain his reasons for both excitement and concern at CGN’s intrusions in the delicate Malaysian power environment. “Economically, the deal is very positive for our power sector and will certainly provide an indirect boost to our nuclear industry, due to incoming Chinese expertise. Our concern however, is political. Energy, not just nuclear, is a fundamental industry to this nation and we need to keep any foreign political influence under the guise of commercial deal-making from taking hold in check.

Our further concern is that our government is maintaining perhaps too much neutrality regarding deals which greatly affect our national interest.” Due to competing national interests, exporting ownership of nation’s essential facilities is always a politically risky business. Some elements of Malaysia press are even suggesting that CGN overpaid for Edra in the nearly 10 billion ringgit (US$2.3 billion) deal by about 10%, giving life to the implication that future Chinese influence and control of other power assets may have been bundled into the deal. This would certainly not be the first time shady backroom deals involving Malaysia SWFs and development corporations have escaped into the public domain. Could the bailout of 1MDB be payback for favourable arrangements for the Chinese with respect to certain major infrastructure projects? Dr Faustus would be proud.