Tenaga Nasional Berhad (TNB) is a publicly listed company headquartered in Malaysia, with 66.44% owned by government of Malaysia. In 2019, its revenue was US$12.45 billion and installed capacity was 15.72 GW (including majority owned assets ). It is the largest electricity utility in Malaysia, serving 9.2 million customers in peninsular Malaysia, Sabah and Labuan. TNB’s low-carbon transition plan is insufficient and unambitious, with no emissions target and plans to add only a small proportion of renewable capacity.
TNB is adapting its business model to take advantage of new low-carbon business opportunities. For instance, it is enabling households with solar PV to connect to the grid with its Net Energy Metering scheme and pays them a fixed price for electricity. The company has also established TNB Energy Services to provide energy management services, such as its Energy Performance Contracts, which aim to improve energy efficiency. Further, TNB is part of a joint venture to develop 10,000 electric vehicle charging stations over the next five to ten years and plans to roll out 9 million smart meters in peninsular Malaysia by 2026.
TNB states that it aims to reduce its emissions intensity but has not yet set emissions targets. The company’s poor emissions intensity performance may undermine the Malaysian government’s target of reducing economy-wide emissions intensity by 45% in 2030. To demonstrate to investors and regulators that it is serious about the low-carbon transition, TNB should set a science-based target that aligns with its well below 2-degree pathway. This sees its emission intensity falling to 422 gCO2e/kWh by 2023 and 258 gCO2e/kWh by 2030. TNB should also set intermediary targets to incentivise short-term action, as well as a long-term 2050 target to enable strategic consideration of the lifetime emissions of current and planned assets.
TNB is currently undertaking scenario analysis and seeking to understand its climate-related risks and opportunities. Based on this understanding, TNB should improve its low-carbon transition plan and climate-management processes. As well as setting emissions targets, this should involve estimating the investment required and likely future generation mix. TNB could also stress test its current and planned assets’ exposure to climate risks. Similarly, TNB should link its executive compensation to emissions reductions and take steps to sever the links between financial performance indicators and fossil fuel capacity growth.
TNB is expected to exceed its carbon budget by 2033 because of locked-in emissions from current and planned assets. Although the company is decommissioning several gas assets and building new large hydro assets with an approximate capacity of 1 GW, which will help reduce its locked-in emissions, it is continuing to build fossil fuel assets such as the 2 GW Jimah East coal power plant. Coal power plants are increasingly at risk of becoming stranded assets, which suffer premature write-downs or devaluations, due to falling profitability and regulatory risk. TNB should stop building coal generation and develop a plan to phase out existing coal assets.
TNB is awarded a trend score of =. If the company were reassessed in the near future, its score would likely stay the same. TNB’s emissions intensity is expected to increase from 570 gCO2e/kWh to 622 gCO2e/kWh between 2018 and 2023 because of the addition of new coal and gas electricity generation plants. TNB’s absolute emissions are likewise expected to increase between 2018 and 2033, meaning the company will exceed its carbon budget. TNB has initiated scenario analysis and is working towards implementing the Task Force on Climate-related Financial Disclosures recommendations. This suggests the company is likely to establish an emissions reduction target at some point.
TNB plans to increase its renewable capacity, excluding large hydro, to 1.7 GW by 2025. It also intends to introduce lower carbon fossil fuel assets and upgrade to a smarter grid that can accommodate a greater share of renewables.
In 2018, TNB Renewables was established to accelerate TNB’s renewables business growth in Malaysia. TNB is aiming to install 9 million smart meters by 2026. No information was found on how the company intends to finance its transition plan.
In 2019, TNB opened a 2 GW coal power plant and expects to complete a 1.44 GW combined-cycle gas turbine power plant in 2020. In 2019, 26.6% of R&D investment was spent on renewables, compared to 16.3% on conventional thermal generation.
TNB made almost no progress in reducing its emissions intensity, which fell from 573 gCO2e/kWh to 570 gCO2e/kWh between 2013 and 2018. The company’s renewable capacity (excluding large hydro) reached 0.373 GW in 2019, a long way off its 2025 target of 1.7 GW.
TNB has made little progress in decarbonising in recent years. This reflects an inadequate low-carbon transition plan, which lacks an emissions target and financial details. TNB’s non-large hydro renewable capacity target of 1.7 GW will have little impact as long as the company continues to build large coal and gas assets.
More about the company
Kuala Lumpur, Malaysia
Publicly listed, with 66.44% owned by government of Malaysia