The country faces the twin challenges of rising coal prices and fast-depleting gas reserves. The two fossil fuels make up almost 95 per cent of the peninsula’s generation mix, with hydropower accounting for another 5 per cent.

“The prospect of transferring future hydro-electricity to the peninsula has to be revived, especially with concerns over nuclear power” said Tenaga chairman Tan Sri Leo Moggie at an industry event in Singapore.

An earlier plan to build a 2,400 MW hydro-electric dam at Bakun in Sarawak to transmit power to the peninsula will now be used solely for Sarawak’s power needs.

However, other hydropower projects with a potential of up to 28,000 MW could be developed in Sarawak to feed the peninsula, said Moggie.

“In terms of practical development it may be less than 28,000 MW, but it is still very substantial,” he said.

Tenaga announced in 2009 that it will be part of a consortium to build a US$2 billion (RM6 billion) submarine cable carrying electricity from Sarawak on Borneo to the peninsula.

The company, which owns more than half of the total generation capacity installed on the peninsula, reported a 37 per cent drop in its second-quarter net profit last week and warned of a difficult year on soaring coal prices and insufficient gas supply.

Coal prices have risen more than 20 per cent to an average of US$103.8 per tonne in the second quarter from the first quarter.

Moggie also said that Malaysia needed to invest in liquefied natural gas (LNG) import facilities to help reduce dependence on coal. The country’s first LNG import terminal is set to start operations in August next year.

Nuclear power is also an option, though public opinion following the disaster at the Fukushima plant in Japan means Malaysia’s aim of having its first nuclear plant operating by 2021 faces hurdles, Moggie said.

“The nuclear option cannot be totally ignored. It is not a question of technical issues but public perception,” he said. — Reuters