Deregulating the Electricity Market for the Peninsula Malaysian Grid Using a System Dynamics Approach

Competition among power producers is minimal in the current Peninsula Malaysia’s electricity market structure as it only happens during the proposal stage to build new power plants. Therefore, electricity generation is over-dependent on current national gas reserves and the importation of cheap coal from Indonesia to keep tariffs low as there is minimal competition among power producers. However, this is not a suitable long term and environmental-friendly solution as it increases carbon dioxide and other greenhouse gases (GHG) emission. Hence, this research utilises system dynamics method to study the effects of a single buyer model (SBM) transitioning into a wholesale competition market, and to propose a framework to deregulate Peninsula Malaysia’s electricity market. Results have shown that tariffs for end consumers are lower in the wholesale competitive market than the current SBM market even after incorporating expensive large-scale renewable energy.