Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad says that through the Bill, the government will emphasise demand-side management, conducting energy supply and generation planning in a more holistic manner, aside from contributing to the national climate change agenda. (Photo by Zahid Izzani/The Edge)

KUALA LUMPUR (Oct 11): The Dewan Rakyat has passed the Energy Efficiency and Conservation Bill, which provides for compulsory energy audits of larger commercial and industrial electricity and gas consumers.

The Bill, which had been in the works for almost 10 years, was passed for third reading via majority voice vote in the morning session of the Dewan Rakyat.

Current energy efficiency regulations cover electricity, and do not require mandatory audits.

When enacted, the Energy Efficiency and Conservation Act (EECA) will regulate industrial and commercial users that consume 21,600 gigajoules of energy per annum — equivalent to RM2.4 million in annual electricity bills, or RM1 million in natural gas bills. Compliance is estimated to reduce electricity bills by up to 25%.

The EECA is set to cover 1,500 out of 27,000 industrial consumers, representing 70% to 80% of industrial consumption, as well as 500 out of 1.7 million commercial consumers making up 21% of commercial segment consumption.

It also requires compliance by office buildings measuring 8,000 sq m and above to meet at least a two-star rating under the National Building Energy Label requiring building energy intensity of at least below 250 kilowatt-hour/sq m per annum.

Currently, 300 government buildings comply with the requirements. The EECA will also eventually cover hotels and hospitals after future engagements by the ministry, with an estimated 4,102 buildings to be covered under the law.

The EECA will be enforced 12 months after it is gazetted, when then consumers have to conduct the first energy audit.

Subsequently, consumers will have a five-year period (one cycle) to meet compliance requirements, and will be levied with a penalty for non-compliance after the second audit. Penalties range from RM20,000 to RM100,000.

The average compliance cost — covering the appointment of a registered energy manager, implementation of energy management, and energy audits — for one cycle (five years) stands at RM120,000 a year for affected industrial users, and RM100,000 for commercial users.

“Six Asean countries already have energy efficiency regulation,” said Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad.

“Through this Bill, the government will emphasise demand-side management,” Nik Nazmi (Pakatan Harapan-Setiawangsa) said. “This approach will ensure the government conducts energy supply and generation planning in a more holistic manner, aside from contributing to the national climate change agenda.”

The mandatory energy audit can be conducted by any registered energy auditor. The intention is to have the respective industrial and commercial consumers to include energy managers and auditors within their talent pool for future compliance with the Act.

The final report on demand-side management was first tabled before the Cabinet in January 2018, before the Bill was mooted for tabling in Parliament in 2020 prior to the change in government. Subsequently, the Covid-19 pandemic resulted in the delays.

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