This article first appeared in The Edge Malaysia Weekly on January 10, 2022 - January 16, 2022

WHAT exactly is happening at Tenaga Nasional Bhd’s retail division given that the much-hyped industry liberalisation has come to a halt since 2020, pending a review by the current government?

Recall that a few years ago, Tenaga set out to transform its retail division, with the intention of enabling the national utility company to compete with third parties to sell electricity directly to customers. Under the Malaysia Electricity Supply Industry 2.0 (MESI 2.0) programme, the idea was for an electricity retail market, where consumers get to choose their electricity providers, like how they subscribe to broadband services from different telcos currently.

Over the years, the main role of Tenaga’s electricity retail division was simply to manage the sale of electricity to end-customers, but that does not mean it is sitting around doing nothing else.

Tenaga’s chief retail officer Datuk Megat Jalaluddin Megat Hassan tells The Edge the company sees three main plays — EE, EV and RE, or energy efficiency solutions, electric vehicle charging infrastructure, and renewable energy participation from customers.

“Regardless of whether there is competition [domestically], we want to give the best solutions to customers comparable to the other markets.

“The first value we provide is cost savings and an improved lifestyle, such as through automated smart-home solutions.

“Customers also have sustainability ambitions and would like to participate as prosumers [who generate clean electricity at home to offset their bills].

“This is where the potential lies for retail — the idea is to be the Lazada of energy, where customers have all the solutions needed in the energy space and those adjacent to it,” Megat says in his first exclusive interview with The Edge.

In 2017, Tenaga experimented with the smart-home solution business through its Maevi (home energy management system) brand, which offers devices such as plug-and-play automated switches and sensors with remote monitoring and control.

Tenaga has since expanded to offer EE solutions for both small households and corporate customers, such as property developers and facility management companies, with past clients including KLIA and Institut Teknologi Petroleum Petronas (Instep).

“I think it’s an untapped market,” says Megat. “After really going into the market in the last few months, sales of our smart solutions went up two to three times. The base was not that big ... but we are seeing good response. We want to offer these solutions as a package.”

Big-ticket items such as refrigeration, ventilation and lighting each typically make up more than 15% of electricity bills. Services provided include optimisation of air-conditioning through software solutions, or switching to LED bulbs, which could reduce the lighting portion of bills by up to 75%.

Tenaga’s wholly-owned unit GSPARX Sdn Bhd also provides solar rooftop solutions, which has helped property owners — from occupants of terraced houses to those of factories — achieve anywhere between 50% to 85% in savings on electricity bills by generating their own RE.

While the market is rife with competition, GSPARX has so far captured 116 mega­watt peak (MWp) in generation capacity with 986 projects under its belt.

“Based on the current pricing [on equipment costs], if your bill is RM500 a month, you are in the money,” Megat says. “The bigger the property, the bigger the savings.”

In the mobility space, Tenaga has collaborated with parties like the Malaysian Green Technology and Climate Change Corp (MGTC) for the installation of EV charging infrastructure. However, the partnership has ended and Tenaga now plans to go it alone through wholly-owned unit TNB Energy Services Sdn Bhd.

“What we foresee is that we have to take the role of a leading company that introduces [the stations] ...  so we can encourage the population [to adopt EVs],” says Megat.

The company is already collaborating with several corporate partners, including logistics firm DHL Malaysia, car rental company SOCAR and auto sales group Sime Darby Motors to provide charging facilities where required.

It is also in talks with property developers and highway operators on future installations in public spaces.

“We also realise that EV infra can be provided by other parties. We are open to that. If any party wants to install the chargers, we will provide the electricity,” Megat says.

The backbone of Tenaga’s retail transformation is digital smart meters. Covid-19 hiccups aside, the utility has installed 1.8 million units nationwide, with a target of nine million units by 2025 at a total estimated cost of RM1.4 billion.

In the solar rooftop space, the device allows for a precise calculation to offset electricity bills. Additionally, data collected is shared with customers through the MyTNB mobile application, where customers can pay bills, see future usage estimates based on past trends and track daily consumption. The latter ultimately helps pinpoint areas to improve consumption habits, or to identify which equipment needs to be more energy-efficient.

As offerings increase, Tenaga has also introduced physical customer service outlets called “Kedai Tenaga”, with an online appointment booking system known as “TNB Temujanji”.

On the flip side, the transformation means a big change for the retail division’s 4,500 workforce, a majority of whom are meter readers. They are gradually being reskilled as their current role will be obsolete with the prevalence of digital smart meters.

It is a lot of work improving the digital and bricks-and-mortar communication channels, for a division that analysts had estimated would bring in just RM20 million, or under 1% of the utility giant’s annual net profit of billions of ringgit. For perspective, Tenaga reported a net profit of RM3.6 billion in its financial year ended Dec 31, 2020.

Moreover, how does energy efficiency among end-users help Tenaga — whose core business is in the generation, transmission and distribution of electricity — while it addresses the more urgent issue of environmental sustainability due to its carbon-heavy portfolio?

“[Improvements in the retail division] may not be measurable in respect of profit and loss, but they give big value to Tenaga,” Megat says.

“Retail is the ‘face’ of Tenaga. Regardless of how the generation, transmission and distribution business performs, Tenaga’s reputation with its 9.6 million customers lies with the retail segment.”

He adds that Tenaga’s venture into EE is aligned with the country’s Energy Transition Plan 2021-2040 to reduce the nation’s carbon emissions to 45% by 2030, through a gradual reduction of coal-generated energy to RE while encouraging the public to adopt a more sustainable and energy-efficient lifestyle.

“We could operate the business model [of selling as much electricity as possible] … but a utility company like us depends very much on customers. As their needs and values change, we need to stay close, because they will decide our success or otherwise,” Megat concludes.  

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